Global tea markets closed 2025 on a divergent trajectory, with price movements across India, Kenya, and Sri Lanka reflecting distinct supply conditions, demand dynamics, and policy influences as the sector moves into early 2026.
India Tea Prices
In India, prices softened in the final quarter, with the average November price declining to USc 272.43/kg. Improved supply availability, combined with slower buying activity, exerted downward pressure on the market, resulting in a 9.3% drop between August and November and an 11.3% year-on-year decline. While production growth over April–November remained marginally positive, momentum slowed in the latter half of the year as intermittent heavy rainfall, reduced sunshine, and labor pressures affected leaf quality and plucking efficiency, particularly during the second flush. Trade uncertainty, notably ongoing US tariffs, further dampened buyer sentiment, limiting near-term upside despite relatively stable auction activity.
Kenya Tea Prices
Kenya, by contrast, saw firmer prices supported by tightening supply and steady auction demand. The average November price rose to USc 227/kg, marking a 6.2% increase since August and a modest 1.5% rise year on year. This strength has emerged despite a contraction in underlying fundamentals. Tea production declined by nearly 10% in the January–September period due to erratic rainfall, labor constraints, and localized pest pressures, while exports fell by a similar margin. Nonetheless, consistent participation from Middle Eastern and European buyers has helped sustain auction prices, supporting mildly bullish sentiment for Q1 2026.
Policy developments add complexity to Kenya’s outlook. The removal of minimum prices for old tea in August 2024 has enabled the clearance of long-held stocks, freeing up storage capacity, but also introduced downside risk if lower-quality volumes return to the market at discounted levels. Concurrently, government-led initiatives to support value addition—including plans for common user packaging facilities, warehousing for value-added teas, and discussions around a special economic zone—point to longer-term structural support even as near-term supply constraints persist.
Sri Lanka Tea Prices
Sri Lanka’s market remains comparatively stable. Average auction prices in November held at USc 396.47/kg, broadly unchanged on both a quarterly and annual basis. Production and exports edged higher in 2025, supported by favorable weather in the central highlands and steady demand for Ceylon tea, although labor shortages and cyclone-related disruptions continue to pose structural risks that could constrain output and raise costs moving into 2026.
Figure 1: Tea Prices in India, Kenya and Sri Lanka
Exports underline divergent market dynamics
Export performance across origins highlights how price trends are not always aligned with volume momentum. India’s tea exports rose to 228.52 million kg in January–October 2025, up 6.5% year on year, driven by strong shipments to traditional markets in the Middle East and Europe and growing diversification efforts. This resilience in export volumes contrasts with softer domestic pricing, underscoring the impact of trade uncertainty and shifting buyer behavior on price formation.
Sri Lanka’s exports also strengthened, rising to 239.31 million kg in January–November 2025. Volumes were spread across a broad range of destinations, led by Iraq at 36.77 million kg, followed by Russia, Türkiye, Libya, the UAE, Chile, Iran, and China, highlighting sustained global interest in Ceylon tea ahead of Q1 2026. Kenya, meanwhile, saw exports decline by 9.7% in the January–September period, reflecting weather-driven supply constraints despite continued access to a diversified buyer base.
Taken together, these trends point to an increasingly fragmented tea market, where origin-specific supply conditions, policy shifts, and trade relationships are shaping prices and flows more decisively than global demand alone.
Written by Sammy Rolls
