Facts, Production, Consuming.
There are four types of tea - white, black, green and oolong
In the UK alone, last year, we each on average consumed 2.3kg of tea - equating to 138,000 tonnes of tea for the whole country.
The UK is ranked and worlds biggest tea consumer in the world, followed by Turkey, Ireland and Bangladesh.
In 2003, 3.15 millions tonnes of tea was produced worldwide.
The largest producer was India, followed by China, Kenya and Sri Lanka.
China overtook India in 2006.
A Scarce good is a good that doesn't have a unlimited supply. In 2008, the world grew and sold 3.75 million tonnes of tea - an increase of 0.6 million tonnes since 2006. Tea is being sold at $2.40 a kg across the world and is currently sold at Tesco for £4.29 a kg which equates to 1.3 pence a tea bag. Tea is revelativily cheap to produce, and so its also cheap for us. However, there are also many substitues such as coffee, hot chocolate and most other drinks.
In 2008, China was hit with a freak snow storm that wiped out 30% of the tea farms in China. 10% of tea trees were frozen to death. This forced the production green to slow down by 40% and production was halted for almost a month. With this, the price of green tea then had to increase by 30% so that the costs could be covered.
This caused both supply and demand to decrease. Because the supply DECREASED, the price of green tea had to INCREASE. This mean that some customers decided NOT to buy the green tea because it got too expensive – thus leading to a DECREASED DEMAND.
In 2006, China became the worlds largest producer of tea, overtaking India and producing an extra 0.6 million tonnes of tea when compared to the years before. This made the supply of tea increase by 20% that year.The price of tea when down that year by 14 cents a kg.
Because the supply increased, the price of tea had to decrease. This meant that some customers decided to buy MORE of the tea because it was cheaper - thus leading to a increased demand.
IS TEA ELASTIC OR INELASTIC IN TERMS OF DEMAND?
Demand for tea is very elastic because as the price of rice increases, there are many substitutions which consumers may switch too – such as coffee.