In this report, we study the investment dynamics of the global tea industry. There are over 53 publicly traded tea companies worldwide, predominantly listed in the major tea producing countries India, China, Japan, Sri Lanka, Kenya and Taiwan. The total tea industry market capitalisation is ~USD 7 billion. Between 2000-10 tea consumption has grown at a CAGR of 3.6% from 2.9 million MT in 2000 to 4.0 million MT in 2010 compared to coffee (the closest substitute) consumption CAGR ~1.8% from 5.8 million MT in 2000 to 6.9 million MT in 2010 (Table 6). We recommend long term investors invest based on our focus list (Table 1). Our focus list consists of global tea majors that have strong balance sheets, with low leverage (debt/equity) ratio of 0.3x and high free cash flow to EBITDA of over 50%. These companies represent more than 85% of the total tea industry market capitalisation, revenue and EBITDA.
Tea is an aromatic beverage usually prepared by pouring boiling hot water over dried leaves of the ‘Camellia Sinensis’ plant.2 Tea is one of the most widely consumed beverages in the world. Tea consumption is increasing worldwide due to its perceived health benefits as it contains a high level of polyphenols, a type of antioxidant, which protects cells from the DNA damage that causes cancer and also reduces the risk of developing coronary artery disease.
Approximately 4.2 million metric tonnes (MT) of tea is produced annually (2011). India and China together hold a dominant position in the global tea industry. China is the largest tea producer in the world with ~37% share, India has a ~23% share and Kenya & Sri Lanka together have a 17% share in global tea production (Figure 1). These top 4 producers together control more than 75% of global tea production.
Tea is an aromatic beverage usually prepared by pouring boiling hot water over dried leaves of the ‘Camellia Sinensis’ plant.2 Tea is one of the most widely consumed beverages in the world. Tea consumption is increasing worldwide due to its perceived health benefits as it contains a high level of polyphenols, a type of antioxidant, which protects cells from the DNA damage that causes cancer and also reduces the risk of developing coronary artery disease.
Approximately 4.2 million metric tonnes (MT) of tea is produced annually (2011). India and China together hold a dominant position in the global tea industry. China is the largest tea producer in the world with ~37% share, India has a ~23% share and Kenya & Sri Lanka together have a 17% share in global tea production (Figure 1). These top 4 producers together control more than 75% of global tea production.