Tea market in Sri Lanka

Earlier Report Observations

The Sri Lankan tea market opened the period at 1 285 thousand tons in 2018, a year marked by concentrated buyer power at the Colombo Tea Auction which weakened competition and price formation. Volume declined to 1 208 thousand tons in 2019 before edging up to 1 222 thousand tons in 2020, as the COVID-19 pandemic disrupted business systems and access while also shifting supply chains and demand patterns.

A significant expansion to 1 524 thousand tons occurred in 2021, driven by increased production despite ongoing headwinds from macroeconomic factors and climate change. This was followed by a sharp contraction to 1 159 thousand tons in 2022, resulting from a drop in production influenced by global supply chain fluctuations and heightened competition from other tea-producing nations. The market recovered to 1 263 thousand tons in 2023 after the application of fertilizer following a two-year lapse boosted output, with the industry's resilience supported by Ceylon Tea's niche positioning and growing consumer trends toward healthy and sustainable products.

Looking ahead to 2024, industry factors pointed to continued currency volatility and the influence of the 'Tea for Oil' barter agreement with Iran, which held promise for supporting tea prices even as production levels remained below their earlier peaks.

Production tea in Sri Lanka

In kind, 2017-2020, K t

On the global stage, Sri Lanka ranked as the world's fourth-largest tea producer during the period from 2017 to 2020.

Top producers of tea, 2017-2020

World map of production of tea, 2017-2020

Following two consecutive years of decline, tea production in Sri Lanka saw an uptick in 2020. That year, the country produced 1,500 thousand tonnes of tea, representing a modest increase of 0.7% compared to 2019. Over the broader period from 2017 to 2020, production fell by 8%, which translates to an average annual decline of 2.7%. The lowest production level was recorded in 2019 at 1,490 thousand tonnes, while the steepest drop occurred in 2018 with an 8.0% decrease.

Annual dynamics of production in Sri Lanka in kind, 2017-2020, K t

In value, 2017-2020, M $ US

After experiencing a two-year downturn, the value of Sri Lanka's tea production rebounded in 2020. That year, tea output was valued at 6,995 million US dollars, marking a 2.8% increase from 2019. From 2017 to 2020, however, the production value declined by 18.6%, averaging an annualized rate of 6.6%. The lowest value was observed in 2019 at 6,805 million US dollars, with the most significant reduction taking place in 2018 at 12.2%.

Annual dynamics of production in Sri Lanka in value, 2017-2020, M $ US

Exports tea from Sri Lanka

Exports in kind, K t

In 2020, Sri Lanka's tea exports totaled 285.1 thousand tonnes, reflecting a 1.6% decrease from the previous year. The export volume reached its lowest point in 2018 at 222.3 thousand tonnes, while it peaked in 2019 at 289.6 thousand tonnes. The most substantial decline occurred in 2018 with a 22.5% drop, followed by the largest increase in 2019 at 30.3%.

Annual dynamics of product's exports from Sri Lanka in kind, 2017-2020, K t

Between 2017 and 2020, Sri Lanka's tea exports in volume terms were distributed across numerous markets. The top three destinations—Iraq (13.3% of exports), Turkey (11.8%), and Russia (11.7%)—collectively accounted for just 36.9% of total export flows.

Structure of product's exports in kind by countries, 2017-2020

World map of product's exports from Sri Lanka in kind, 2017-2020

Exports in value, M $ US

Tea exports from Sri Lanka grew for the second year in a row in 2020, reaching a value of 1,330 million US dollars. This figure showed minimal change compared to 2019. Over the period from 2017 to 2020, export value declined by 12.1%, equivalent to an annualized rate of 4.2%. The lowest value was recorded in 2018 at 1,119 million US dollars, which also saw the sharpest decline of 26.0%. In contrast, 2019 experienced the largest increase at 18.1%.

Annual dynamics of product's exports from Sri Lanka in value, 2017-2020, M $ US

The distribution of Sri Lanka's tea exports by value from 2017 to 2020 was highly diversified. The leading markets—Russia (11.3% of export value), Turkey (10.3%), and Iraq (9.5%)—together made up only 31.1% of total flows, with the remaining 68.9% spread across a wide array of other countries.

Structure of product's exports in value by countries, 2017-2020

World map of product's exports from Sri Lanka in value, 2017-2020

Imports tea to Sri Lanka

Imports in kind, K t

Sri Lanka's tea imports declined for the third consecutive year in 2020, dropping to 6.8 thousand tonnes. This represented a 9.5% decrease from the previous year. From 2017 to 2020, import volumes fell by 29.2%, averaging an annualized decline of 10.9%.

Annual dynamics of product's imports to Sri Lanka in kind, 2017-2020, K t

During the 2017–2020 period, India and China dominated Sri Lanka's tea imports by volume, jointly accounting for 82.2% of total flows. Other sources contributed smaller individual shares.

Structure of product's imports in kind by countries, 2017-2020

World map of product's imports to Sri Lanka in kind, 2017-2020

Imports in value, M $ US

In 2020, the value of tea imports into Sri Lanka stood at 16 million US dollars, indicating a significant reduction of 17.1% from the year before. Between 2017 and 2020, import value decreased by 34.5%, which corresponds to an annualized rate of 13.2%. The most pronounced decline took place in 2018 at 24.7%, while 2019 saw the largest increase at 4.9%.

Annual dynamics of product's imports to Sri Lanka in value, 2017-2020, M $ US

From 2017 to 2020, India (42.0% of import value), China (37.0%), and Kenya (15.3%) were the primary sources for Sri Lanka's tea imports by value. Together, these three countries comprised 94.2% of total import flows.

Structure of product's imports in value by countries, 2017-2020

World map of product's imports to Sri Lanka in value, 2017-2020