Tea in Russia: big consumption & big spending fuel market

Tea and Russia are perfect partners – and as the world’s largest importer, it’s a goldmine for foreign manufacturers.

In this article we will dive into how the sector offers enormous potential for international suppliers in Russia, the top market trends, and how exporters can get their products in front of Russian buyers.

Tea: Russia’s true national drink

Tea is a relatively mature market in Russia, mainly thanks to its long history. The brew was introduced to the nation in the 17th Century, and since then it has grown to become a favourite for Russians from all walks of life. The figures speak for themselves. Take a look at the below to see the impressive scale of Russia’s tea sector:

• World’s biggest tea importer with imports worth $548 million (2016)
• Russia alone accounts for 9% of worldwide tea imports
• It’s the world’s fourth largest consumer of tea, and second largest in Europe, with 1.3kg consumed per person per year
• 94% of Russians drink tea regularly
• $2.9 billion retail sales (2016)

The market is also expected to keep on growing at a CAGR of 1% a year, which suggests a steady supply and demand relationship between suppliers and consumers. It is also worth noting that tea is one of the biggest product sectors unaffected by Russia’s food embargo – so US, EU producers, and those in other affected countries, can get their products onto the market with little to no hassle.

Russian consumers prefer black tea

In terms of market share, black tea dominates. 865 of tea consumed in Russia will be some form of black tea. Green tea follows with a 9% share, while herbals only cover 1% of total Russian tea consumption. Other niche varieties make up the remaining 4%. According to General Director of Milford Tea’s Russian wing Ilya Blinov, packaged teas occupy 63% of the market in material terms, and 70% in value. Mr Blinov also states that, at present, Russians are trending more towards mid-priced products, instead of premium varieties.

The reason for this is simply cost. While Russia is coming out of a recession, its consumers are still price conscious. The same goes for loose leaf tea. Sales are falling off of this product group as it is often packaged in glass bottles – something which drives up unit costs.

Russia looks global for its tea supplies

Russia actually boasts some of the most northerly tea plantations in the world, in the Krasnodar region. Despite this, its tea output is nowhere near enough to cover domestic demand. Russian buyers therefore look around the world to fill supply gaps.

Unsurprisingly, thanks to its vast tea growing acreages, Asia is responsible for the bulk of Russia’s imported tea. Four of the top five suppliers are from the continent. By supplies, the top tea exporters are:

• Sri Lanka - $160m exports – 29% export share
• India - $145m exports – 26% export share
• Kenya - $77.4m – 14% export share
• China - $487.7m – 8.7% export share
• Vietnam – $29.6m – 5.4% export share