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Market Research Report This Project is co-financed by the European Union and the Republic of Turkey Technical Assistance for the Establishment of Rize Tea Research and Application Centre TR07R1.10-04/001 MARKET RESEARCH REPORT OCTOBER 2017 1 Bu proje Avrupa Birliği ve Türkiye Cumhuriyeti tarafından finanse edilmektedir Table of Contents Turkish Tea Industry .................................................................................................................. 3 Global Tea Industry .................................................................................................................... 3 Rize Tea Research and Application Center ................................................................................ 4 Rize Tea Industry SWOT Analysis ............................................................................................ 6 Strengths ................................................................................................................................ 6 Weaknesses ............................................................................................................................ 6 Opportunities ......................................................................................................................... 7 Threats .................................................................................................................................... 8 Factors Related to Variables of Brand Image for Tea Companies in Light of a Research .... 8 Figures on Importation and Exportation of Tea Products (trademap) ................................. 12 2 2 Bu proje Avrupa Birliği ve Türkiye Cumhuriyeti tarafından finanse edilmektedir Turkish Tea Industry Tea cultivation is carried out along a belt stretching from the Georgian border in Eastern Anatolia Region to Fatsa county in Ordu. Tea is grown in Ordu, Giresun, Trabzon, Artvin and particularly Rize in that region which is one of the regions with the highest potential among all tea-growing areas in the world. Temperatures never fall below zero Celsius in some Asian countries like China, India, and Sri Lanka because of the equatorial climate which permits farmers to grow tea during the whole year. Temperature falls below zero Celsius in our country where four seasons can be observed and tea fields are not cultivated for 6 months. Snowfall during the winter gives Turkish tea an important characteristics. Pesticide is not applied to tea fields in our country because of that property which makes our tea the most natural variety in the world unlike other varieties of tea grown elsewhere. Turkish tea has the potential to become the product of highest quality sold at the highest price in the global market because of its structural difference, but it requires an effective promotional campaign. In the eastern Black Sea region around 205,000 farmers grow tea on a total area of 760,000 dekars. The yield of tea leaves varied between 1,150 and 1,300 thousand tons in the past five years. There are a total of 197 active factories in the Turkish tea industry. Of them, 46 belongs to Çaykur and 151 are owned by the private sector. 154 of those factories are in Rize, 29 are in Trabzon, 10 are in Giresun, and 4 are in Artvin. They include 48 large-sized, 76 medium-sized, and 73 small-sized factories. According to data for 2014, 50 % tea leaves was processed by Çaykur and 40 % by the private 3 sector. 49% of the quantity processed by the private sector was processed by large-sized enterprises which were followed by medium-sized firms with 30% and small-sized firms with 12%. Global Tea Industry Tea plant is grown on approximately 2,461 thousand hectares across the world and 45 countries grow tea plant. China ranks first with 943 thousand hectares in terms of the area of tea fields and Turkey ranks sixth with 77 thousand hectares after India, Sri Lanka, Kenya, and Indonesia. Global dried tea leave production is 3 million tons. Turkey ranks fifth in terms of dried tea leaves production over 225 thousand tons and fourth in terms of per capita annual tea consumption (2.3 kg/person). Turkey has an important place in the global economy in terms of the production of tea, the second most popular drink after water. Consumption of Turkish tea is generally limited to the domestic market. The Tea Research and Application Center will play a key role in opening up Turkish tea and thereby giving a fresh imputes to regional development. A look at the fundamental problems of the industry shows that the tea industry's competitiveness and the quality of tea produced is not at a sufficient level. Thus, improper tea growth has a negative effect on the plant quality and hence on product quality. Factors that have a negative effect on competition include low SME competitiveness and poor cooperation and and coordination between players in the industry. 3 Bu proje Avrupa Birliği ve Türkiye Cumhuriyeti tarafından finanse edilmektedir Rize Tea Research and Application Center When the center becomes operational, the competitiveness of tea-processing SMEs will be enhanced particularly in terms of quality and product standards by applying new technology and research methods and cooperation and coordination will be ensured. The Tea Research and Application Center (TRAC) also aims at finding a solution to problems facing SMEs regarding access to infrastructure and technology thanks to its processing and packaging plant. Training and consulting services will teach tea growers more efficient production and marketing techniques. Promotional activities will be carried out within the country and abroad for making Rize tea a special brand as part of the project. Studies on different tea brands on high demand will be carried out in order to achieve product diversity and to increase Turkey's share of the global tea market while SMEs will receive contributions regarding R&D and innovation. Rize Tea Research and Application Center Project and applied research methods to be employed as part of the project will be aimed at finding direct or indirect solutions to those problems. An analysis of factors that causes manufacturer SMEs to have low competitiveness indicates that there is no quality and product standard applicable to the production of tea products. High production costs make optimization in production impossible. Turkish tea is not sufficiently known particularly in international markets. Thus, tea producers have problems regarding both efficiency and quality and access to the market. The project has been designed to find solutions to some of the problems summarized above and to contribute to the 4 resolution of some others. Efforts aimed at providing manufacturer SMEs with more opportunities to access the market while increasing the visibility of tea basically aim at to contribute to the resolution of problems regarding access to the market and they are expected to prepare the ground for strengthening cooperation and coordination among the players in the industry. The center is anticipated to consist of three main units that would devise solutions to the problems summarized above. Applied research and development activities will be carried out in the applied R&D unit in order to produce tea products of higher quality in a more efficient manner. R&D results will be communicated to SMEs by the Training and Consultancy Unit which will also provide quality supervision services. The Marketing and Foreign Trade Unit will operate the common packaging plant and conduct researches in order to increase possibilities for access to the market. The tea research and application center is also designed to develop a tea literature which will comprise the past, current, and future state of foreign and Turkish tea varieties and processes from sowing to the consumer's cup. A Tea Promotion Group is planned to be formed by bringing together organizations active in tea production in the region. The purpose is to coordinate and spearhead efforts such as advertisements and awareness raising in order to promote Rize tea brand in domestic and international markets. 4 Bu proje Avrupa Birliği ve Türkiye Cumhuriyeti tarafından finanse edilmektedir Different types of teas produced will be offered to customers in order to observe how people respond to their taste at mobile and stationery tea houses which have been designed as part of the project and be a part of the center. Results will be used for R&D efforts in order to contribute to the development of new products. The Pilot Fertilizer Production Plant to be built is designed to minimize the environmental impact of waste tea resulting from tea production while ensuring sustainable tea production. Waste tea will be used as organic fertilizer in order to contribute to the prevention of problems arising from environmental pollution and misuse of waste. Samples will be taken from tea fields where organic fertilizer will be applied and soil analyses will be done at laboratories at the center in order to produce organic fertilizer successfully. A formula required for producing fertilizer that will provide substances needed by soil will be developed. The formula will be applied to the pilot tea field and the tea fields of other growers who will volunteer. The fertilizer formula will be updated according to regional needs and be capable of meeting soil requirements as a result of analyses to be conducted annually. The production and quality of Rize tea will be registered after obtaining a Rize Tea Geographical Indication as a result of technical works to be undertaken. Organizational infrastructure
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