The annual volume of the Russian tea market in 2002 has grown. It has demonstrated persistent increase in terms of volume by 3% and in terms of value by 7%. The source of the growth is the increase of the population income and number of the tea factories in Russia, improvements in the production and logistics functions, development of the retail chains.

For the last several years there has been a stable growth of the bulk tea import to Russia. After the tariff rates for the import of the bulk and packed tea had been differentiated it became more profitable to carry out the secondary processing and packing of the bulk tea on the territory of the Russian Federation. This led to the dramatic change in the import structure - the share of the bulk tea import increased from 30% in 1998 to 68% in 2002. The state investment policy triggered the intensive development of the tea production capacities in Russia and facilitated the present situation when all the major tea market operators have their own packaging factories in Russia. Orimi Trade started to operate its tea factory located in Leningrad Oblast in the year 2000. Accordingly to the opinion of the industry experts the tea factory "Nevskiye Porogi" is one of the most up-to-date tea packaging factories in Europe.

India has for long time played the leading role in the structure of the tea import to Russia. After the cancellation of the state benefits in the form of the tax concessions for the goods imported from India the share of the Indian tea in the overall import volume decreased. In the new market reality Indian tea lost the competition to the tea from Ceylon which proved to have better price/quality ratio and took second place in terms of volume on the Russian market. In the year 2000 the market share of Indian tea amounted to 71% but it has been decreasing ever since. In 2001 India still remained the major supplier of tea to Russia with the share of 50% in the overall import mix. 2002 totals show that Ceylon tea has 39% share of all tea import while Indian tea has only 33 %.

The average annual per capita tea consumption in Russia is 1 kg. Around 95% of the Russians drink tea. The tea is drunk mainly hot that is why it is a seasonal product with the consumption rate peaks in winter months. The average hot beverages per capita consumption mix in Russia is the following: the average Russian drinks 3 cups of hot beverages daily, half of the population drink daily two cups of tea and one cup of coffee.

When buying tea the Russian consumer first of all pays attention to the brand name. 86% of those who buy tea limit their choice to 3 brands. Around 70% of tea buyers demonstrate the persistent loyalty to the brand. During the last half a year around 21% of them has refused from the previously bought brand. The most commonly mentioned reasons for switching to another brand are the following: change or worsening of the tea flavour or ability to buy a more expensive product.

As to the tea bags segment Russia repeats the pattern of the European tea market. We consume more tea bags with every year. In 2002 the share of tea bags on the Russian market has increased from 7% to 12%. Accordingly to the industry experts this growth will continue in the future (for comparison purposes, the share of tea bags on the tea market of Great Britain today amounts to 90%).

The increase of the tea bag sales is by many explained not only with the increased population income but also with the influence of the Russian producers on this market. The tea in tea bags becomes cheaper and more tasty as the national producers understand better than anyone else the high requirements to tea quality put forward by the Russian consumers. Thus for the production of the tea bags they choose the grades that are not worse than traditional leaf grades in terms of flavour and aroma.

With the growing popularity of the healthy life style the green tea popularity also is growing. Its market share in 1998 amounted to only 2% of the overall market volume and in 2002 it has grown to 4,2%. The demand for green tea is mainly concentrated in large cities and we can not yet speak of the overall dramatic national demand increase. However, tea market specialists forecast further growth of this segment.