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Tea prices sore as world production falters

It emerged yesterday that tea prices have risen again for the third consecutive quarter. Tea production organisation TPEC (Tea Producing and Exporting Countries), the body which manages tea output from the T8, eight of the largest tea producing countries, announced that it was again cutting supply amid fears of global economic slowdown in the hot drinks sector. The action follows a similar decisions made days earlier in both coffee and hot chocolate markets. It was announced by Franz Zickler, vice president of TPEC, that output would be cut by 2.3% to 83 million barrels of tea per day (approximately 280 million standard pots of tea).

Left: TPEC Headquarters: shaped like a giant teapot

The move was said to be motivated by a general downturn in economic conditions, which has resulted in a global fall in the demand for tea bags. The demand for loose tea has similarly been affected. Dr Zickler, speaking at a press conference at TPEC headquarters in Calcutta, India, said “This [cutting output] is a direct result of economic influencers which are impacting on our industry.”

Responding to an accusation that the move may have been motivated by pressure from large tea producing corporations to reduce output in order to artificially increase prices, Mr Zickler, former CEO at PG Tips, said “[the accusation] …is totally false. It is in no way an attempt to artificially increase prices to benefit the interests of PG Tips”. He added, rather hastily, “Or anyone else for that matter!”

Sandra Bywater, spokeswoman for hot drinks consumer watchdog BrewCom responded angrily amid reports that leading UK supermarket Sainsbury’s has announced it is to increase the price of its Red Label Tea by 7 pence as a direct result of the TPEC move. Ms. Bywater suggested the price rise was “completely unacceptable and against the public interest”. Other supermarket chains are expected to announce similar price rises for tea-related products in the coming days. An official for the Department of Trade and Industry (DTI) was quoted in several national newspapers as saying that the price rise was “…not good for the economy”

News of the cut in output has alarmed economic analysts as historically a slowdown in the hot drinks market has often served as a precursor to a more wide ranging depression. Tea’s Up’s dubious economics “expert” Michael Court explains that “As the price of tea rises as a result of the initial strong demand, we see an inflation-caused spiralling effect which reduces demand, and if this is in conjunction with inflation in other sectors (as has been seen), the downturn can only be exacerbated by the fall in tea demand, onset due to the reduction in demand for complimentary tea related goods such as cakes, biscuits, and china tea mugs. In addition to this, with less tea in offices, productivity and morale falls”

The news was met with despair in many quarters. Speaking to s’Up’s Angela Frankenberg, office worker Gary Jeremies, 27, said “In my office, we have to pay 11p for a cup of machine tea. It tastes nasty as it is without the bitter taste of the inevitable 1 or 2p increase in the prices”. It is forecast by the DTI that machine tea prices shall rise by an average of 1.3p year on year, compared with previous years of relative price stability.

Fears raised by certain experts that the onset of price rises within the tea sector (and the hot drinks sector in general) would lead to street riots have, so far, been unfounded. A police spokesman we reached for comment indicated branded the suggested tea-related violence was “tabloid hysteria,” although he expressed reservations about the police’s ability to cope with crime as the machine tea price rises in the station may “price junior officers out of the market”.