“Technology-enabled platforms are the future of the beverages category.”
I read this somewhere recently, and it made me think.
Tea has been traded in pretty much the same way for decades—certainly for as long as I have been in tea (showing my age here, 33 years!). Those ways have worked and delivered value and price to both buyer and seller.
However, times have changed and consumer expectations have changed too—meaning that how we buy and sell is also changing.
In her article in World Tea News back in June of last year, What Are Some of the Most Important Business Issues in the Tea Industry Today?, Indiana Lee very articulately laid out some of the areas that are key to staying relevant and driving sales—sustainability and ethical sourcing, enhancing transparency and traceability, e-Commerce and automated processes, and keeping up with trends and data analytics. She correctly asserted, “Enterprises must commit to effective research and communicate with industry partners to effectively identify and meet the challenges of today, as well as those that are likely to come down the road in the near future.”
I couldn’t agree more.
As the consumer’s wants and needs change, global modes of trade also change and shift. The way we do business in tea is also changing, and we with it. To remain relevant, we will be buying and selling differently.
Specialty tea trading is poised to pioneer many of these changes due to its very nature, and this is why.
The producer dynamics tell us that it is artisanal and small-batch. It is high-cost production, with high levels of customization and selectivity. The small producers are spread out globally, so creating critical mass for efficiency is not straight forward—in fact, it is difficult. To add to that, export market access remains tough, and local consumption of these teas at origin is extremely low to non-existent.
The market itself is highly fragmented and unstructured unlike the commodity tea market—this is the nature of disruptive innovation and it is great—but it means logistics and routes to market are much more complex with limited options. Many operators also look to buy quantities as small as 5kgs, to then blend or repack. At the same time, many of these operators want to source direct from the producer and bring to the fore the people and product story of their sources. This is a key differentiator in this market.
The nimbleness and size of production that once held these producers back now puts them in an optimal position to adapt with the market, adopt new innovations, and leapfrog ahead.
With a high D2C, primarily online presence, this market is high value, with consumers willing to pay good money for good tea. The market also addresses the consumer need for tea knowledge and education in various ways from online to on-pack.
This specialty consumer is not just looking for hydration in a cup or stem glass of tea, they are after an elevated sensorial experience that immerses them in quality and even luxury—the look and feel of the leaves, the aroma and taste—the whole shebang. They want it to be good for them, be produced and sourced in an ethical manner, and have clear transparency about the value chain. People and planet protection in making the tea is expected as a basic standard, and not just as a certification badge, but real tangible action on the ground.
So when it comes to specialty teas, the current ways of sourcing and supplying clearly could be improved and moved to be in line with this market’s needs.
Imagine being a new, small, online specialty tea seller of a luxury brand who wants to source teas from six different origins, all in small quantities. You want it fresh and direct from the producers. You don’t know where these growers are, how to organize payments and logistics, or even how to assure the quality you are getting is high. Of course you could go to a trader/agent who can do all of the above for you, and that is what most operators do.
But Indiana pointed out in her article that due to the ongoing growth of the digital landscape, “there has certainly been a range of significant changes in production methods, distribution channels, and marketing strategies, among others.”
For a buyer, having an online platform that does all of the above is certainly an innovative way to source, and some would find it much more in tune with their need for speed, quality, choice, and delivery assurance. For the small producers, this opens up more markets as more buyers are able to see and buy their teas, and it gives them direct visibility. It enables price discovery for their teas and helps them build long-term relationships with the buyers.
The scene is set—there are many small producers globally in exactly this position, looking to find buyers. Simultaneously, there are numerous small- to medium-sized brands and buyers seeking to find fast and assured direct sourcing from small authentic producers of quality specialty teas.
zenGate Global has been working away in the background, and I have been privileged to be exploring their Palmyra Platform and what it offers with Sam Lambert, one of the co-founders. According to zenGate's site, Palmyra is an "ecosystem which enables the tokenization and listing of certified commodities for spot and futures trading between businesses around the world." Palmyra connects the full ecosystem of stakeholders across the value chain, providing a cheaper, more transparent, and accessible enterprise-grade solution for users.
“One of the most common challenges we came across was the ability for buyers to directly access a wide range of producers from all around the world," says Sam Lambert, COO of zenGate Global. "Our Palmyra pioneer producers have incredible stories, many of them with strong social initiatives as well such as reducing domestic violence and improving access to education. The benefits of direct market access are enormous, not just for the producers, but the entire communities.”
The team traveled to Sri Lanka in December last year—undoubtedly one of the specialty quality producing origins for tea—to meet with stakeholders and players in the small specialty sector. We also met with the regulators, authorities, and key bodies, like the Sri Lanka Tea Board and the Brokers Association. The mission was to work out a collaborative approach to help the small artisanal and specialty producers reach more export markets, get visibility, and secure enhanced prices for their teas.
We tasted over 80 cups of different specialty teas together and explored using the Cambridge 5S specialty tea classification system to assess and articulate quality. We also shared thoughts on emerging trends in the specialty market for tea and beyond.
We explored benefits of collaborations, which are many and diverse—from work to bring out the best quality and storytelling to data capturing and embedding transparency, traceability, and impact communication. We also discussed co-building marketing strategies, leveraging digital tools, and much more.
The ecosystem that Palmyra will work in creates jobs in Sri Lanka, enables digital trade and innovation, and ultimately positions the Sri Lankan tea sector in step with the new trends and expectations in specialty tea sourcing.
The ecosystem leverages new innovative technologies focused on improving trust, such as blockchain-based traceability and cross-border escrow and payment solutions. It is also supported by the Cambridge 5S tea classification system, a bespoke piece of work created by myself working with the International Trade Centre in 2021 to bring clarity, quality identification, and articulation for specialty tea.
zenGate Global will be at World Tea Expo March 18-20, 2024 speaking about harnessing the power of data and traceability to foster trust in the tea industry. They will also be sharing more about the Palmyra Platform and how to onboard as a Palmyra Pioneer.
Register for a conference pass, and you can attend their session, "Driving Data Purity Through Traceability," on Tuesday, March 19 from 10:30am - 11:15am in Room #S113/114.
Plan to Attend or Participate in World Tea Expo, March 18-20, 2024
To learn about other key developments, trends, issues, hot topics and products within the global tea community, plan to attend World Tea Expo, March 18-20, 2024 in Las Vegas, co-located with Bar & Restaurant Expo. Visit WorldTeaExpo.com.
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