Vietnam’s Tea Exports Down as Concerns Regarding Quality Grow

Vietnam

Market & Price Trends

Published Jul 11, 2022

Vietnam is among the top five tea exporting countries in the world, which primarily exports low-priced and unbranded raw tea. Its main markets are Taiwan, Pakistan, and Russia, with a limited hold on high-income markets like the EU and the UK. During the first five months of 2022, tea exports from Vietnam recorded a YoY decline of 12% in volume and 7.2% in value. Over the years, tea exports have been falling due to low quality and a lack of brand value in the international markets. Most of the time, Vietnamese tea quality and safety norms are not able to meet the standards (pesticide residues) of the global tea industry. The country needs to focus on improving productivity and quality and investing aggressively in processing in order to produce high-quality tea.

Vietnamese tea has been gaining popularity across the world, and the country is one of the top five nations for tea export output across the globe. The country is home to about 124,000 hectares of tea estates, 500 tea processing facilities, and 500,000 mt of annual dry tea production capacity. Based on information provided by the Vietnam Tea Association, 90% of the country’s tea output is exported in raw form. Vietnamese tea usually fetches lower prices in the global market and is usually branded by tea traders in importing countries. Vietnamese tea is exported to over 70 countries and territories, but there continues to be fluctuations due to the lack of strong branding in international markets. The average export price of Vietnam’s tea in the global market is only about USD 1,100 per ton, while the average tea price in the world market hovers around USD 2,200 per ton.

In the first 5 months of 2022, Vietnam’s tea exports reached 41,400 mt and were worth USD 69.9 million. This is a YoY decline of 12% in volume and 7.2% in value over the same period in 2021. A slight increase was also seen in the average export price of tea, which reached USD 1,689 per ton, up 5.4% over the same period in 2021. Vietnamese tea exports were going to three countries which had low entry barriers - Pakistan, Taiwan (China), and Russia. Vietnam failed to place its foothold in large markets with high and fastidious requirements, such as the US and EU. Furthermore, Vietnamese tea has been facing quality control issues in its largest market—Pakistan—which has resulted in lower exports. In addition, demand for Vietnamese green tea is very limited in Pakistan as the country has a strong taste for black tea, inevitably affecting lower export volumes.

Vietnam's Tea Exports, January to April

Source: Calculated using data from ITC Trademap.

In general, Vietnamese tea quality and safety norms are not able to meet the standards (pesticide residues) of the tea industry, leading to the inability to meet the requirements of many export markets of developed countries. These norms are only becoming more stringent in large tea markets like the EU, the US, and Russia. In the last few years, the value of tea exported from Vietnam to the EU has decreased markedly in both value and volume due to subpar quality and an inability to compete with tea products from other countries. Based on a review done by VietnamNet, Vietnam has the potential to boost tea exports by taking part in the USD 37.5 billion global tea industry. To do this, the country needs to focus on improving productivity and quality and investing aggressively in processing high-quality tea.