Market Update

Volume 14 No 4 O c t o b e r — December 2018

PERFORMANCE OF TEA INDUSTRY IN 2018 AND PROSPECTS FOR 2019

Year 2018 began with a lot of optimism in importer countries also depreciating against the backdrop of an excellent year (2017) that the US Dollar. was witnessed in terms of tea prices. The Sri Lankan tea production in 2019, conse- first quarter commenced on a high, with the quent to the Government’s decision to lift the quarterly auction average being recorded as ban on the use of Glyphosate (weedicide) is the highest ever. However, as the year pro- likely to give much relief to the producers gressed, the Sri Lankan tea industry had to and in particular, to the large-scale planta- face numerous obstacles. tions which would be able to carry-out the Consequent to banning of Glyphosate by the required agricultural practices to achieve the Government of Sri Lanka, tea growers and full potential of the plantations. Further the large plantations, in particular, were forced Government’s decision to allow a more liber- to use alternative products for the control of al policy on fertilizer should contribute favor- weed growth, resulting in MCPA levels ably. Needless to say, subject to extreme higher than permitted for exports to Japan. weather conditions not being a reality. How- In and around May, US sanctions on Iran ever, ageing tea bushes and low productivity were imposed which had a cascading impact levels would be a downside. on Auction prices in Colombo, particularly Demand growth in China and India, consider- for the Low Grown (Tippy) . There was ing the magnitude of these two markets, is some optimism for tea prices to turn around likely to influence prices and consumption is towards June/July following the strengthen- expected to outstrip production. USA too ing of oil prices and the weakening of the Sri could be singled out as a fast-growing mar- Lankan Rupee. However, this too did not ket, particularly for instant tea and work out to be a reality following the weak segments, whilst imports from Sri Lanka to the US have shown quite a significant growth Tea Production 2 economies in most Middle Eastern countries and Russia, resulting in currencies in the in 2018.

Tea Marketing 2 General Overview Economy Tea Industry Tea Exports 4 The widening trade deficit, tight conditions Improving economic prospects in some countries in the global markets and excessive specula- in the MENA region is worth noting. Despite the tion in the domestic market exerted pressure Trade Fair Participation 5 political and economic turmoil in some coun- on the exchange rate, and the Sri Lankan tries, the MENA region has remained a huge

rupee depreciated by 15.9 per cent against market for . 54.80% of all Ceylon Tea Global Tea Scene 6 the US dollar thus far during 2018 up to 27 exports during the year 2018 were to the MENA December. Region. In value terms it was 50.66% during the Headline inflation, based on both the Na- year 2018. Iraq was the leading importer of Cey- Research Update 7 tional Consumer Price Index (NCPI) and the lon Tea during 2018 with a quantity of 38,351 Colombo Consumer Price Index (CCPI), MT at a growth of 9.76% over the corresponding remained in low single digit levels. Core period of last year, followed by Turkey (35,445 inflation also remained subdued thus far in MT), Russia (30,294 MT) and Iran (23,547 MT). 2018. Taking the region as a whole the picture that Editors: Although inflation remains subdued and emerges is that India’s export to the region is on Tharanga Abeysekara Nalaka Sanjeewa economic growth remains below potential, the increase. While both Sri Lanka and Kenya Tea Promotion Division the Monetary Board of the Central Bank was were facing difficulties in their export dealings to of the view that it is appropriate to continue Iran with regard to remittances due to the sanc- E-mail the current monetary policy stance to stabi- tions. Sri Lanka exported 47,164 MT of tea to [email protected] lize overall economic conditions and domes- Russia and CIS region in 2018 which shows a

Web-site tic financial markets in a context where decline of 4,468 MT compared to the year 2017. www.pureceylontea.com there has been an uptick in private sector Russia and the CIS Region have absorbed credit as well as continued pressure on ex- 17.35% of total Sri Lanka’s tea export volume of ternal reserves. 271,777 MT in 2018. Tea market update Volume 14. No. 4 P A G E 2

+ Tea Production The crop and Tea production in 4th quarter 2018 conveys Table 2 - District wise tea production comparison

2018/2017 (Kg) 9.2% positive growth which resulted in 6.78 Mkgs. posi- tively impacted to the aggregative production during the Growth Admin District 2018 2017 Growth period compared to 4th quarter of 2017. % Ratnapura 68.58 70.99 -2.41 -3.39 Table 1 - Tea Production during the fourth quarter Nuwara Eliya 59.60 58.26 1.34 2.29 2018/2017 (Units :MKg) Galle 43.20 45.72 -2.51 -5.50 Matara 35.93 38.75 -2.81 -7.26

Oct - Dec (MKg.) Change Kandy 35.72 33.44 2.28 6.81 Category 2018 2017 Qty (MKg.) % Badulla 26.33 28.07 -1.74 -6.21 Elevation Kalutara 21.39 20.41 0.98 4.81 High 17.12 14.47 2.65 18.35 Kegalle 10.73 9.10 1.63 17.88 Medium 12.75 10.55 2.20 20.88 Matale 1.44 1.38 0.06 4.24

Low 50.66 48.73 1.93 3.95 Colombo 0.81 0.78 0.03 3.21 Hambantota 0.12 0.19 -0.07 -35.99 Total 80.53 73.75 6.78 9.20 Total 303.84 307.08 -3.24 -1.05 Processing Method Orthodox 73.24 67.66 5.58 8.24 The highest tea production district Rathnapura recorded 68.58 Mkgs production which captured the major por- CTC 6.63 5.59 1.04 18.50 tion of 23% from the cumulative tea production in 0.66 0.49 0.17 35.54 2018. But the district conveys a negative growth com- Total 80.53 73.75 6.78 9.20 pared to 2017 which affected cumulative production negatively. Moreover the major tea producing districts The cumulative production of 2018 recorded 303.84 Galle, Matara & Badulla recorded negative impact con- million kg which was nearly 1% minus growth / 3.24 secutively by 2.51, 2.81 & 1.74 Mkgs which affected to Mkgs marginal drop in production compared to 2017. extend the deficit in 2018. However, the significant Both high and medium elevations production had signif- growth reflected in Nuwara Eliya, Kandy, Kaluthara & icantly increased by 20% which accounted the overall Kegalle assisted to reduce the risk of extending the pro- production in the segment nearly 5 Mkgs. The added duction deficit further in 2018. performance of 2 Mkgs. by the tea small holding sector supported to record the figure in low elevation over 50 Tea Marketing Mkgs.

Chart 1 – Cumulative and Monthly tea production Table 3 –Teas Sold and prices fetched in fourth comparison 2018/2017 quarter 2018/2017 Unit: Qty-Mkg,Rs/Kg

Eleva- 2018 2017 tion Qty Price Price Qty Price Price (MKg) (SL Rs) (US$) (MKg) (SL Rs) (US$) High 13.03 576.35 3.27 12.19 646.81 4.22 Medium 11.61 523.40 2.97 10.54 568.67 3.71 Low 41.12 600.30 3.41 45.10 645.10 4.20 Total 65.76 581.98 3.31 67.84 633.53 4.13

The scenario had also been continued in the 4th quarter 2018 where the national average price was declined to The Chart-1 illustrates monthly as well as the cumula- Rs. 581.98 per Kg. The price was tive crop details from January to December in 2017 and steady remained at Rs. 633.53 in 2018 respectively. The overall trend was in line with the 2017. However the 8% drop in figures in 2017 except for the period from June to Sep- national average price compared tember 2018. The red line conveys the drop in tea pro- to 2017 calculated the serious duction during the same period compared to 2017. price drop in all three elevations.

PUBLICATION OF TEA PROMOTION DIVISION—SRI LANKA TEA BOARD Tea market update Volume 14 . No. 4 P A G E 3

+

Table 4: Teas sold and prices fetched by Table 6 –Most Traded Grade wise quantity sold distribution channels (Qty:Mkg, Price Rs./Kg) and price comparison during the 4th quarter 2018

Fourth Quarter Sold Qty Avg. Grades Different chan- 2018 2017 (Kgs) Price nels Qty Price Qty Price (Rs./ ORTH-FBOPF1/FBOPF 6,234,927.00 659.84 (MKg.) (Rs./Kg.) (MKg.) Kg.) ORTH-FOP/OP1/OP 6,093,738.00 638.45

Public Auction 63.87 578.81 66.78 632.29 ORTH-BOPF 5,517,749.00 565.94

Private Sales 1.51 677.72 0.68 703.23 ORTH-OPA 5,129,778.00 504.61 Direct Sales 0.38 730.08 0.37 728.63 ORTH-BP/BM 4,798,247.00 410.84 ORTH-FBOP1/FBOP 4,542,735.50 678.39 Total 65.76 581.98 67.84 633.53 ORTH-FP/PEK 4,539,949.50 756.92 ORTH-PEK1 3,639,883.00 814.75 According to the Table 4, 63.78 Mkgs tea were sold at Rs. ORTH-DUST1 3,599,299.00 579.36 ORTH-BOP 3,111,905.00 608.85 578.81 in the Colombo Tea Auction during the 4th quarter 2018. The figure depicted the 4% lesser in terms of volume ORTH-BOP1A 3,074,411.00 403.66 ORTH-PF1 2,634,916.00 508.49 sales as well as 8% drop in terms of price compared to the same FGS. 1,616,410.00 346.77 period in 2017. ORTH-BOP1 1,602,265.50 719.14 BOPA 1,532,269.00 545.57 Table 5 – Sub District Auction average Prices comparison ORTH-FNGS1 1,452,966.00 443.40 as at December 2018/2017 (Rs/Kg) ORTH-FBOPFSP/EXSP 462,191.50 804.25 OTHER 6,180,935.55 481.66 January to December 2018 Total 65,764,575.55 581.98 Sub District Price Change change Table 6 above shows that, the highest quantity of 2018 2017 % per kg 6.2Mkgs offered to Colombo Tea Auction by Or- thodox FBOPF1/FBOPF grade teas and fetched Nuwara Eliya 579.04 598.57 -19.53 -3.26 average price level of Rs.659.84/Kg during the Westerns (8 areas) 585.79 613.18 -27.40 -4.47 forth quarter. The volume of 6.09Mkgs was sold in Orthodox FOP/OP1/OP grade and average price Mediums(9 areas) 520.65 556.92 -36.27 -6.51 registered at Rs.638.45 per kilogram. Highest aver- Uda Pussellawa(2 age price of Rs.814.75 per kilogram achieve by Or- 507.51 560.30 -52.79 -9.42 areas) thodox PEK1 and Orthodox FBOPFSP/EXSP grade Uvas(8 areas) 535.12 574.77 -39.65 -6.90 teas average price level is Rs.804.25 per kilogram Low Growns(10 are- during the forth quarter. 604.88 642.32 -37.44 -5.83 as)

Average price 581.93 618.18 -36.25 -5.86

The average tea prices seriously dropped by 5.86% (in Rupees 36.25) in 2018 compared to the previous year. The prices weak- ening had existed in almost all the tea producing sub districts.

Uda Pussellawa sub district region was the far below price level as reported compared to the other five region. Low grown plan-

tations performed best as usual with the sale price average at

Rs.604.88/Kg below the previous year.

PUBLICATION OF TEA PROMOTION DIVISION— SRI LANKA TEA BOARD P A G E 4 Tea market update Volume 14. No. 4

Tea Exports P A G E 4

Table 7 - Export comparison for each month during the Table 9 -Top ten destinations of Pure Ceylon tea fourth quarter (Units: Qty-MKg, FOB - Rs. /Kg) from Jan– December 2018/2017 Units: Qty - MKg

Total 2018 2017 Change Change Country 2018 2017 Exports % Category Qty % 2018 2017 Qty Qty Qty FOB FOB FOB (MKg) (MKg) (MKg) Iraq 38.35 34.94 3.41 9.76 14.1 12.6 Turkey 35.45 37.81 -2.36 -6.25 13.0 13.6 October 22.42 833.49 24.64 811.18 -2.22 22.31 Russia 30.29 32.79 -2.50 -7.62 11.1 11.8 Iran 23.55 27.04 -3.49 -12.92 8.7 9.7 November 20.58 841.87 22.57 816.35 -1.99 25.52 Libya 13.40 10.83 2.57 23.70 4.9 3.9 December 24.44 820.65 22.93 803.88 1.51 16.77 UAE 10.70 15.23 -4.53 -29.73 3.9 5.5 Azerbaijan 10.55 12.27 -1.72 -14.03 3.9 4.4 Total 67.45 831.40 70.14 810.46 -2.69 20.94 Syria 9.91 7.28 2.63 36.19 3.6 2.6 China 9.16 9.47 -0.31 -3.32 3.4 3.4 The average FOB price during the 4th quarter 2018 in- Chile 7.46 7.00 0.45 6.45 2.7 2.5 Total creased by Rs. 20.94 while quantity of exports had gone 188.81 194.67 -5.86 -3.01 69.5 70.3 Exports down marginally by 2.69 Mkgs compared to the same peri- od in 2017. The quantity exports in December 2018 had Except re-export volume conveyed 1.51 Mkgs positive growth in quarter number 04 The Turkey pushed back to the second place by Iraq comparatively. and claimed a number 01 Ceylon Tea exporting Table 8 – Tea Exports comparison during the year country in world 2018. This attributed to the fact (2018/2017) Units: Qty-MKg, FOB—Rs/Kg, Value– Rs. Millions that retrieval of economic activities which facilitated the international trade as well as confidence built The cumulative quantity exports had recorded 282.36 among the Iraq business community after long run Mkgs in 2018 which was marginally 6.6 Mkgs lesser than internal conflicts period. Moreover the Ceylon Tea

2018 2017 Change % Change Category Qty FOB Value Qty FOB Value Qty FOB Value Qty FOB

Bulk 164.22 722.90 118,715 169.36 725.25 122,825 -5.1 -2.34 -4,110 -3.03 -0.32 Packets 85.43 805.18 68,785 86.51 792.79 68,583 -1.1 12.39 202 -1.25 1.56 Tea Bags 17.28 1,473.11 25,454 17.81 1,382.51 24,619 -0.5 90.60 835 -2.96 6.55 Instant Tea 2.48 1,319.49 3,272 2.12 1,250.83 2,651 0.4 68.66 620 16.98 5.49 Green Tea 2.37 1,698.62 4,026 2.40 1,538.90 3,697 0.0 159.72 329 -1.35 10.38 Sub Total 271.78 810.41 220,252 278.20 799.35 222,376 -6.4 11.06 -2,124 -2.31 1.38 Re-Exports 10.59 1,086.20 11,499 10.79 1,016.08 10,963 -0.2 70.12 536 -1.85 6.90 Total 282.36 820.75 231,750 288.98 807.44 233,338 -6.6 13.31 -1,588 -2.29 1.65

2017. Moreover the total revenue/ export income recorded exports to the Libyan market recorded a 23.73% Rs. 231.7 Billion which also was 0.6% decline compared to positive growth compared to previous year. The evi- previous years export income. The major category of ex- dent fact from the above table revealed that first top ports in terms of Bulk, Packets & Tea Bags conveyed nega- ten countries absorbed nearly 70% tive growth, whilst the positive growth of Instant Tea ex- of total exports in 2018. ports had not placed significant impact to the total quantity of exports / export income in 2018.

PUBLICATION OF TEA PROMOTION DIVISION— SRI LANKA TEA BOARD

Tea market update Volume 14 No. 4 P A G E 5

Trade Fair Participation

AGROFOOD WEST AFRICA INTERNATIONAL FAIR WORLD TEA AND EXPO IN INDIA - FROM IN IVORY COAST - FROM 20TH TO 22ND NOVEMBER 29TH NOVEMBER TO 01ST DECEMBER 2018 2018 The 6th World Tea and Coffee Expo was held on 29th The 5th edition of agrofood & plastprintpack West Africa November to 01st December 2018 at the Nehru Center was taken place for the first time in Abidjan from 20 to 22 in Mumbai. Sri Lanka Tea Board has participated for November at the Radisson Blu Hotel Abidjan Airport. Or- this expo with one private sector Tea Exporting Compa- ganized by the German trade fair specialists’ fairtrade ny; Chelcey Holdings (Pvt) Ltd. Sri Lanka Tea Board Messe and its Ivorian partner 2A Consult, this professional Booth was officially inaugurated by the Consul General trade show was aimed at both West African industry and of Sri Lanka Consulate General Office in Mumbai. craftsmen: farmers, herders, food and beverage manufac- turers, food retailers and catering and hotel professionals. And also to the plastics, printing and packaging industry.

Sri Lanka Tea Board was organizing a group stand occu- pying five booths (45 sq m) while participating with the following exporting companies. 1. Ceylon Tea Marketing (Pvt) Ltd. 2. Imperial Tea Exports (Pvt) Ltd. 3. Millennium Teas (Pvt) Ltd. 4. Avenrich Trading (Pvt) Ltd. Best Tea Factory– Large Scale

World Food Ukraine Exhibition 2018

Sri Lanka Tea Board along with two private sector tea companies namely M/s. Teas (Pvt) Ltd and M/s. Tea Talk (Pvt) Ltd participated at 21st edition of World Food Ukraine exhibition while organizing a group stand for Ceylon Tea. The exhibition was held in Kiev, Ukraine from 23rd to 25th October 2018.

World Food Kazakhstan Exhibition 2018

Foodex Saudi 2018 Trade Exhibition in Jeddah from Sri Lanka Tea Board participated at 21st edition of Cen- th th 12 to 15 November 2018 tral Asian International Food Industry Exhibition, World Food Kazakhstan, while organizing a group Sri Lanka Tea Board was organizing a group stand while stand for Ceylon Tea. The exhibition was held in Al- participating with the following exporting companies. maty, Kazakhstan from 31st October to 02nd November 1. Tea Tang (PVT) Ltd 2018. The Ceylon Tea group stand was occupied by Sri 2. Enrich Tea & Food Exports (Pvt) Ltd Lanka Tea Board , M/s. Mabroc Teas (Pvt) Ltd and M/s.

Premier Natural Teas (Pvt) Ltd Saudi Horeca 2018 Trade Exhibition in Riyadh, Saudi th th Arabia - 27 to 29 November 2018

Sri Lanka Tea Board along with two private sector tea companies; Shan Teas (PVT) Ltd and Meezan & Exports (Pvt) Ltd participated.

PUBLICATION OF TEA PROMOTION DIVISION— SRI LANKA TEA BOARD Tea market update Volume 14. No. 4 P A G E 6

P A G E 6

Global Tea Scene

Tea Production Table 12. Country wise tea Exports Comparison Global production reported an increase of 56 (2018-2017) Unit: MT Mkgs for the period of 12 months as per statistics Period Change published by ITC. This is primarily on the back of Country of 2018 2017 Growth % crop gain in Kenya, which accounts for around 21% of months the total black tea production globally. Given Kenya’s Kenya Dec 474,862 415,715 59,147 14.23 status as the world’s largest exporters of black tea, production levels from the country are likely to have a China Mar 84,858 85,942 (1,084) (1.26) considerable impact on global demand-supply dynam- ics for the year. Tea production of Kenya is forecasted Sri Lanka Dec 271,777 278,195 (6,418) (2.31) to exceed the 500 Mkgs mark by 2020. Taiwan Dec 8,788 7,653 1,135 14.83

Table 10 -Global tea production comparison in Bangladesh Dec 644 2,568 (1,924) (74.92) 2018/2017(MT.) Indonesia Oct 42,047 46,164 (4,117) (8.92) Growth PRODUCTION Month 2018 2017 (MT) Malawi Nov 33,484 28,674 4,810 16.77 N E INDIA 12 1,093,120 1,087,110 6,010 Tanzania Nov 24,311 24,808 (497) (2.00) SOUTH INDIA 12 218,550 234,650 (16,100) India Dec 249,110 251,910 (2,800) (1.11) BANGLADESH 12 82,134 78,949 3,185

SRI LANKA 12 303,843 307,720 (3,877) Uganda Oct 44,268 37,253 7,015 18.83

KENYA 12 492,999 439,858 53,141 Total 1,234,149 1,178,882 55,267 4.69 MALAWI 12 50,588 45,582 5,006

TANZANIA 12 35,170 31,814 3,356 Source: ITC

UGANDA 11 52,954 47,666 5,288 As showed in above table 12, 10 countries reported TOTAL 2,329,358 2,273,349 56,009 their export performance. Asian countries accounted for the highest volume and dollar value worth of tea Table 11- Average prices in major auction centers exports, but below the last year level in total. Home as at December 2018-2017(Qty:MT) 2018 2017 Change 2018 / 2017 Auction Centers Qty (MT) US$/Kg Qty (MT) US$/Kg Qty (MT) US$/Kg Kolkata 158,694 2.46 168,265 2.46 (9,571) (0.01) Cochin 47,966 1.81 49,107 1.81 (1,141) (0.01) 79,338 3.12 79,579 2.45 (241) 0.68 Mombasa 458,369 2.43 397,694 2.81 60,675 (0.38) Jakarta ------Colombo 288,061 3.60 295,875 4.07 (7,814) (0.47) Guwahati 177,459 2.13 165,551 2.16 11,908 (0.03) Malawi 8,964 1.84 8,537 1.84 427 0.00 World 1,218,851 2.68 1,164,608 2.91 54,243 (0.23) Source: ITC According to table 11, average global price for tea to the three leading black tea shipping nations ac- during in 2018 came down to US$ 2.68 which was counted for the major decline of tea exports in 2018 nearly 8% drop compared to 2017. The Ceylon Tea as against last year.is important to note that, tea ex- prices at Colombo Tea Auction remained as the high- ports by Kenya has increased their exports signifi- est. The increase price at Chittagong Tea Auction was cantly giving alarm to black tea exports from other the only positive move in 2018 whilst the prices of all origins in future. other auction centers had presented negative growth.

PUBLICATION OF TEA PROMOTION DIVISION—SRI LANKA TEA BOARD Tea market update Volume 14. N o. 4 P A G E 7

rd th World of Tea, Tehran, Iran 2018 (3 - 5 December 2018) RESEARCH UPDATE

World of Tea Tehran, Iran 2018 Trade Exhibition was held in A newly discovered, naturally low- tea plant Hotel Esteghal (Former Hilton Hotel) in Tehran from 3rd to Hongyacha, a Naturally Caffeine-Free Tea Plant 5th December 2018. World of Tea Tehran, Iran 2018 Trade from Fujian, China Exhibition was a Tea trade exhibition in Iran and this time 16th edition of the exhibition. This Trade Exhibition focuses on trade buyers/potential business persons from Iran.

The COTECA (Coffee, Tea, Cocoa Global Industry Expo 2018)

Hamburg - traditional trading hub and Europe's most important import port for coffee, tea and cocoa - is the venue for the COTECA. Trade Exhibition was held from 10th to 12th October 2018 in Hamburg, Germany Participants were, 1. Ceylon Tea Land (Pvt) Limited 2. Damro Exports (Pvt) Limited 3. Sri Lanka Tea Board

Leaves and young shoots of a rare wild tea that is low in caffeine. Credit: American Chemical Society

Hongyacha (HYC) is a type of new wild tea plant dis- covered in Fujian Province, China. This tea is helpful to the healing or prevention of disease in its original grow- ing area. However, research on this tea is limited. Re- sults showed that HYC displayed obvious differences in its morphological characteristics compared with Cocoa tea (Camellia ptilophylla Chang), a famous caffeine- free tea plant in China. Theobromine and trans- , but not caffeine and cis-catechins, were the dominant purine alkaloids and catechins detected in HYC. HYC might contain abundant gallocatechin-(4 → 8)-gallocatechin gallate, 1,3,4,6-tetra-O-galloyl-β-d- glucopyranose, and (−)-gallocatechin-3,5-di-O-gallate,

which were not detected in regular tea. We also found that the TCS1 of HYC was distinct, and the responding recombinant protein exhibited only theobromine syn- thase activity. The obtained results showed that HYC is a new kind of caffeine-free tea plant and may be used for scientific protection and efficient utilization in the future.

PUBLICATION OF TEA PROMOTION DIVISION—SRI LANKA TEA BOARD Tea market update Volume 14. No. 4 P A G E 8

in most tea plants. The researchers conclude that naturally Tea drinkers who seek the popular beverage's soothing low-caffeine HYC could possibly become a popular drink flavor without its explosive caffeine jolt could soon have because of its distinct composition and unique health ben- a new, naturally low-caffeine option. In a study appear- efits ing in ACS' Journal of Agricultural and Food Chemistry, scientists report that a recently discovered wild tea plant Tea drinkers who seek the popular beverage's soothing in China contains little or no caffeine and, unlike many flavor without its explosive caffeine jolt could soon have industrially decaffeinated products, could potentially a new, naturally low-caffeine option. Scientists report that provide many of the health benefits of regular brewed a recently discovered wild tea plant in China contains teas. little or no caffeine and, unlike many industrially decaf-

feinated products, could potentially provide many of the In 2017, Americans drank nearly 4 billion gallons of tea, health benefits of regular brewed teas. according to the Tea Association of the USA. The asso- ciation estimates that up to 18 percent of those drinks were decaffeinated. To decaffeinate tea, manufacturers Trade and statistics inquiries: often use supercritical carbon dioxide or hot water treat- Sri Lanka Tea Board ments. However, these methods can affect the brew's 574,Galle Rd, Colombo – 03. flavor and destroy compounds in the tea associated with Tel :2587814,2582122 Fax : 2587341 lowered cholesterol, reduced risk of heart attack or stroke, and other health benefits. Recently, scientists discovered hongyacha (HYC), a rare wild tea found in the mountains of southern China. Local residents believe it can it can cure colds, soothe stomach pain and relieve a host of other ailments. But little is known about its structural makeup or its chemical composition. Liang Chen and colleagues sought to close that gap.

The researchers used high-performance liquid chroma- tography to analyze HYC buds and leaves collected dur- ing the growing season. In addition to finding several potentially health-promoting compounds not found in regular tea, they determined that HYC contains virtually no caffeine. Digging deeper, they found this was be- cause of a mutation in the gene encoding the enzyme tea caffeine synthase, which promotes caffeine production

PUBLICATION OF TEA PROMOTION DIVISION— SRI LANKA TEA BOARD