The tea market in the United Arab Emirates (UAE) witnessed significant growth and transformation between 2017 and 2021, influenced by various trends, drivers, and restraints.
Emirati Tea Market Size 2017-2021
The tea market in the UAE increased at a compound annual growth rate (CAGR) of 5.04%. As a result, it reached 373.60 million USD in 2021.
The consumption per capita of tea in the UAE showed an overall increase in the period 2017-2021. Until 2021, it grew at a CAGR of 3.60% to reach 37.775 USD per capita.
In 2021, the tea market in the UAE was dominated by black tea, which accounted for 84.7% of the total volume. It was followed by green tea and other tea with shares of 12.8% and 2.5%, respectively.
Broken down by retail distribution channels, the tea market in the UAE was led by supermarkets and hyper markets. In 2021, they accounted for 41.8% of the total volume. That left 58.2% to all other retail distribution channels in the same year.
Imports and Exports of Tea in the UAE
The imports of tea to Hungary in the period 2017-2021 decreased at a CAGR of -8.61% to reach 211.96 million USD.
The exports of tea from Hungary in the period 2017-2021 increased at a CAGR of 9.18% to reach 267.90 million USD.
As a result, the trade balance of tea in the UAE changed from a trade deficit (2017-2018) to a trade surplus (2019-2021). In 2021, the trade balance was equal to 55.94 million USD.
Key Trends in the United Arab Emirates Tea Market
In recent years, consumer showed higher interest in products that promote immunity, relaxation, and overall wellness. Tea, traditionally valued for its health benefits, gained renewed attention in the UAE. Varieties infused with functional ingredients like turmeric, elderberry, and ashwagandha prevailed, as they are known for their support of cellular health and antiviral properties.
Karak Chai is a cultural staple in the UAE, blending tea leaves with cardamom, ginger, saffron, milk, and water to create a rich, creamy beverage that resonates deeply with Emirati traditions. Popular outlets like Project Chaiwala and FiLLi tea capitalized on this cultural affinity, expanding the appeal of Karak Chai across the country. The drink’s simplicity, accessibility, and cultural significance ensure its continued popularity, even as it evolves with modern culinary trends, such as its incorporation into ice cream and French toast.
The introduction of a sugar tax in 2017, followed by its expansion in 2019 to include sugar-sweetened beverages, had significant implications for the tea market in the UAE. While Karak Chai largely evaded the tax, the widespread use of sugar in its preparation highlights a tension between traditional tastes and the growing health consciousness among UAE consumers. The rising prevalence of diabetes, cardiovascular diseases, and obesity in the region underscores the importance of healthier alternatives, such as green tea, which is shown to improve insulin sensitivity and support overall health.
Drivers in the Tea Market in the UAE
Government initiatives aimed at promoting healthy lifestyles, coupled with the rise in sports and fitness activities, encourage the consumption of tea as a fitness-friendly beverage. Tea’s hydrating, detoxifying, and metabolism-boosting properties make it an ideal drink before, during, and after workouts, further increasing its appeal among health-conscious consumers.
Product innovation also plays a critical role in expanding the Emirati tea market. The introduction of unique flavors, such as Bergamot-flavored Earl Grey and blends inspired by Middle Eastern spices like ginger and cloves attracts adventurous consumers seeking both indulgence and authenticity. The growing demand for matcha, known for its nutrient-rich profile and health benefits, exemplifies the trend, though its high cost remains a barrier for wider adoption.
Moreover, the rise of e-commerce transformed consumer purchasing behavior, offering convenience and variety. Although online tea sales still represent a small fraction of total sales, the growing preference for online shopping, accelerated by the COVID-19 pandemic, suggests potential for future growth in the channel.
Restraints in the Emirati Tea Market
The COVID-19 pandemic significantly disrupted supply chains, leading to factory closures and a decline in out-of-home tea consumption. While the pandemic initially spurred a surge in tea sales due to panic buying and increased health awareness, overall sales in 2020 declined compared to the previous year. The pandemic’s broader economic impact, including job losses and reduced consumer spending, further constrained market growth.
Geopolitical tensions introduced additional economic challenges. The Russian invasion of Ukraine led to inflationary pressures, rising commodity prices, and increased transportation costs, all of which are expected to affect the tea industry’s profitability in the coming years.
The tea market in the UAE also faces competition from alternative beverages like coffee, bottled water, and fresh juices. The diversity of available beverages and the maturity of competing industries pose significant challenges to tea producers, who must continually innovate to maintain and expand their market share.
Climate change presents a long-term threat to tea production. The increasing frequency of extreme weather events and rising global temperatures negatively impacts tea plantations, reducing yields and driving up raw material costs. These environmental challenges, combined with the volatility of global commodity markets, represent significant risks for the future of the tea market in the UAE.
Forecast for the United Arab Emirates Tea Market
Under the base forecast scenario, the Emirati economy is expected to show steady growth in the medium term. As a result, the Emirati tea market is expected to reach 420.73 million USD by 2027.
If the Hungarian economy does not reach expectations, it will show declining rates in the medium term. In this case, the tea market in Hungary will fall to 311.20 million USD by 2027.
If the Hungarian economy exceeds expectations, the tea market in the UAE is forecast to reach 486.52 million USD by 2027.
