Unilever suggests two-tier tea market instead of supply controls

Sept 03, 2007 (LBO) – Tea producing countries should aim to produce better quality, certified tea and not try artificial supply controls to raise prices, an official from the multinational Unilever said. Ian Neathercoat, Senior Resident Manager, Supply Chain Compliance Controller, Unilever Supply Chain Company, Europe, advocates the creation of a two-tier tea market producers who are certified and those who are not.

"We'd like to see tea prices much higher ourselves," he told an international tea convention held in Colombo last week, in response to a question why tea prices have stagnated for a long time and why buyers do not pay more to producers.

One of the key topics at the conference was how to get a better balance between supply and demand and how producers can get better prices for their tea whose prices have stagnated until recently.

Forecasts suggest that supply is growing faster than demand for tea in the beverage markets a trend that producers worry could result in lower prices.

Neathercoat said Unilever's function is that of basic value creation and higher prices would both help the company as well as growers.

"The issue is the over supply of tea," he said.