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. Last Updated: 07/27/2016

Tea Holds Its Own, Coffee Catches Up

Russia's huge tea market is under attack from growing coffee consumption, but industry players say the trend is unlikely to overturn the population's traditional preference for the cup that cheers.

Russia consumed more than 150,000 tons of tea last year, making it the world's largest importer. Two-thirds of this came from India, which supplies about 100,000 tons a year.

But while tea imports have remained more or less stable, coffee is growing by leaps and bounds. A walk around Moscow reveals sparkling new coffee bars everywhere — all of which have sprung up in the past few years.

"Coffee consumption is rising by over 10 percent per year in Russia," International Coffee Organization head Michael Heath told a news conference Wednesday. "But there is potential for more."

Russia's 145 million population and rising disposable income will ensure future growth, he said, noting Chinese consumption was rising by 30 percent annually.

While exact figures are not available, a study commissioned by coffee firms estimates about 32,000 tons was consumed in Russia in 2000, a figure that could rise to 38,000 tons this year and represents a manifold rise over Soviet-era levels.

Most of this comes from Brazil and India though imports are rising of Colombian and other coffees as well.

Consumption patterns are also changing. While soluble coffee still dominates the market, consumption of green and roasted coffee is growing faster. Imports of the latter rose 17 percent in 2000, compared with a 15 percent rise for instant coffee.

"This is a sign of a maturing market and improving economy," said Ramaz Chanturya, editor of industry magazine Tea and Coffee in Russia. "Coffee is linked closely to socio-economic factors, above all to living standards."

Tea on the other hand has remained fairly stable, though the proportion of quality tea seems to be slowly rising.

Tapan Chakraborty, Russia and CIS head of India's Tea Promotion Board, said Russian tea imports from India would remain stable at about 100,000 tons per year for the next five years.

"The coffee market is growing in a very noticeable manner. But Russians are traditional tea drinkers, and in most of the country tea still is the norm," Chakraborty said.

Chanturya agreed, noting that 80 percent of the coffee imported was consumed in large Russian cities.

India's market share is being eroded, not only by coffee but also imports from Sri Lanka, China, as well as quality teas from Britain. It accounts now for 70 percent of Russia's tea imports, down from 95 percent in Soviet times.

"Our market share is smaller. But because of overall market growth, export volumes have not fallen," Chakraborty said, adding that his board was planning how to hang on to the Russian market.

"There is now a segment that is willing to pay higher prices for better tea, and we are preparing to compete for that market."

Market players agree that tea is unlikely to be toppled from its pedestal. They note that tea consumption will grow in volume as Russian per head consumption of tea is about a third of British levels.

Alexander Malchik, head of the Russian Coffee Producers' Union, believes tea will always have a niche in Russian hearts.

"We expect coffee consumption will rise, but it doesn't mean people will stop drinking tea. Coffee consumption is linked to changing lifestyles, not big changes in tastes," he said.