Russia's tea, coffee sellers see more profits this year

Russia's tea, coffee sellers see more profits this year ; MOSCOW (February 09, 2011) : Tea and coffee companies in Russia pin their hopes for profits this year on a growing taste for exclusive varieties, more brewing samovars and possibly lower tariffs. Russians, the world's top tea drinkers, may sip more as economic crisis wanes, Ramaz Chanturiya, the head of the Rusteacoffee lobby, told Reuters.

Russia imports more than 99 percent of its tea and is expected to raise consumption to the pre-crisis level of 170,000 tonnes this year, compared to 160,000 in 2010, he said in an interview. "Two years ago, we forecast that we would have a significant gain in the 2010 tea consumption - but it didn't happen. The market has shrunk," Chanturiya said.

"We are still hoping the market volume will grow this year." Russia is expected to import 180,000 tonnes of raw tea, and export the excess, mainly in form of teabags,primarily to the Ukraine, Kazakhstan, and Eastern Europe, he added.

The main revenue source for companies operating in Russia will be consumers' growing taste for more expensive products, such as green teas, and the overall rise in global prices for the beverages. Although the cost of tea and coffee production is rising as well, it is compensated by zero import rates on raw product for companies, such as Swiss Nestle and North American Kraft Foods, which have facilities to process and package tea and coffee in Russia.

Import tariffs were expected to remain at zero for the raw product, 15-20 percent on packed tea and 10 percent on coffee, Chanturiya said, adding that if Russia enters World Trade Organisation this year, tariffs will be lowered. Russia hopes to join the World Trade Organisation by the end of 2011. Russia takes its tea black and sweet, often with lemon. It grows just 0.2 percent of the tea it consumes, all in its Krasnodar region in the south.

"There is a good potential for us to market locally grown tea and herbal tea with the approaching 2014 Winter Olympics in Sochi, which is located in Krasnodar region, where we grow the tea," Chanturiya said. But for the moment, the industry in Russia focuses on increasing imports from Kenya, and keeping tea inflows from Sri-Lanka, China, Vietnam and Indonesia.

India, which used to be Russia's top tea supplier, has lowered exports as it faces increasing demand at home. Russia imports all its coffee, mostly instant. Green beans which are processed locally make up 60 percent of the import. "Coffee may see a slight downward correction," Chanturiya said. "The coffee market is saturated, and fluctuation is only possible in terms of cost segments. But the total consumption volume is already fixed at 112,000-114,000 tonnes. For the latest updates PRESS CTR + D or visit Stock Market news Today

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