Tea Importers Consider Opening Packaging Units
16 February 2015
Read by 3284 persons
Their decision is motivated by potential gains following the adjustment of customs duties on tea. The estimated investment in a packaging unit is between 25 and 30 MDH. The additional turnover for packaging manufacturers and printers is estimated between 250 and 300 MDH per year.
Since January 1, tea imports have been subject to new customs duty rates. Thus, imported bulk tea is now taxed at 2.5% compared to 25% previously. And imports of packaged tea have seen their customs duties fall from 40% to 32.5%. This represents an overall differential of 30% between the two types of products, leading to two major consequences for the tea sector. According to a member of the Association of Tea Professionals in Morocco (APTM), the readjustment should result in "a transfer of the packaging industry from producing countries like China to Morocco." He indicates that some importers are even considering setting up packaging units within 6 to 9 months. According to him, the development of this activity will lead to significant investments and the creation of many jobs. According to estimates from tea professionals, the cost of a packaging unit is between 25 and 30 MDH. In addition, the transfer of packaging to Morocco will result in an additional turnover of 250 to 300 MDH for Moroccan packaging manufacturers and printers. "This is an annual turnover based on a volume of 250 million tea boxes," emphasizes an operator who wishes to specify that currently, out of the six professionals in the sector, three of them partially package their tea. A fourth operator, who prefers to remain discreet, announces his packaging unit for next April.
According to the profession's figures, locally packaged tea accounts for 10 to 12% of the current supply.
Smuggled imports currently represent 20% of locally consumed tea
The second equally important consequence of the readjustment of customs duties is the decrease in the price competitiveness of smuggled tea, which has strongly disrupted the sector since 2013. According to statistics communicated by the organized professionals of the sector, smuggled imports currently represent 20% of locally consumed tea. Overall, they come from the southern provinces, particularly Laâyoune, through which nearly 5,000 tons transit per year, or nearly 10% of the country's total imports. The Oriental region, and more precisely Melilla, from where, according to professionals, approximately 8,000 tons of tea come per year, is also a major entry point.
In fact, the reduction in customs duties was decided in reaction to the development of illegal imports and in response to the request of the organized operators in the sector, who had previously created their association to defend their interests and raise awareness among the authorities of the harmful effects of smuggling on their activity. And it is still within this framework that the development of a reference standard for Moroccan tea has been included, which has been transmitted to Chinese partners in order to raise their awareness of the need to guarantee a quality product.
The financial gain from the reduction in customs duties is reduced by the appreciation of the dollar and the increase in VAT
However, the reduction in customs duties will not have an immediate effect on the consumer price. And the professionals explain: "For now, we have our tea stocks purchased in October or November 2014, cleared on the basis of the old rates; we must therefore sell them." Furthermore, they insist on specifying that "the price of tea fluctuates because it depends on climatic hazards and therefore on the level of production in China." Without forgetting that the trend in this country, the main supplier of Morocco, is towards increasing tea prices due to the increase in labor costs following the rural exodus of young people and the increase in local demand following the improvement in purchasing power.
Tea importers also argue that the financial gain from the reduction in customs duties has been eroded by the variation in the dollar and the increase in the value-added tax rate, which has increased from 14% to 20%. Regarding the dollar, they note that its rate recorded an increase of nearly 16% against the dirham between December 2014 and January 2015. Today, the price of tea varies from $1,500 to $6,000 per ton. Quality teas are even purchased between $8,000 and $9,000 per ton.
Given these factors, the decrease in the selling price will not occur before a few months. A kilo is currently sold between 50 DH for an entry-level product and 200 DH for a high-end tea. National consumption of this beverage is estimated at two kilograms per inhabitant per year. In the order of 3 billion DH and growing by 3 to 5% per year, the market is dominated by six large importers, including the Belkhdar, Belfkih, Sultan, Somathès, Asta and Itkane groups. Some 400 brands are distributed there. It must be said that green tea is now seriously competing with coffee and new consumption trends, including iced tea and infusions.
Aziza Belouas.
Lavieeco.com
Published on February 15, 2015.
Posted online on February 16, 2015.
Since January 1, tea imports have been subject to new customs duty rates. Thus, imported bulk tea is now taxed at 2.5% compared to 25% previously. And imports of packaged tea have seen their customs duties fall from 40% to 32.5%. This represents an overall differential of 30% between the two types of products, leading to two major consequences for the tea sector. According to a member of the Association of Tea Professionals in Morocco (APTM), the readjustment should result in "a transfer of the packaging industry from producing countries like China to Morocco." He indicates that some importers are even considering setting up packaging units within 6 to 9 months. According to him, the development of this activity will lead to significant investments and the creation of many jobs. According to estimates from tea professionals, the cost of a packaging unit is between 25 and 30 MDH. In addition, the transfer of packaging to Morocco will result in an additional turnover of 250 to 300 MDH for Moroccan packaging manufacturers and printers. "This is an annual turnover based on a volume of 250 million tea boxes," emphasizes an operator who wishes to specify that currently, out of the six professionals in the sector, three of them partially package their tea. A fourth operator, who prefers to remain discreet, announces his packaging unit for next April.
According to the profession's figures, locally packaged tea accounts for 10 to 12% of the current supply.
Smuggled imports currently represent 20% of locally consumed tea
The second equally important consequence of the readjustment of customs duties is the decrease in the price competitiveness of smuggled tea, which has strongly disrupted the sector since 2013. According to statistics communicated by the organized professionals of the sector, smuggled imports currently represent 20% of locally consumed tea. Overall, they come from the southern provinces, particularly Laâyoune, through which nearly 5,000 tons transit per year, or nearly 10% of the country's total imports. The Oriental region, and more precisely Melilla, from where, according to professionals, approximately 8,000 tons of tea come per year, is also a major entry point.
In fact, the reduction in customs duties was decided in reaction to the development of illegal imports and in response to the request of the organized operators in the sector, who had previously created their association to defend their interests and raise awareness among the authorities of the harmful effects of smuggling on their activity. And it is still within this framework that the development of a reference standard for Moroccan tea has been included, which has been transmitted to Chinese partners in order to raise their awareness of the need to guarantee a quality product.
The financial gain from the reduction in customs duties is reduced by the appreciation of the dollar and the increase in VAT
However, the reduction in customs duties will not have an immediate effect on the consumer price. And the professionals explain: "For now, we have our tea stocks purchased in October or November 2014, cleared on the basis of the old rates; we must therefore sell them." Furthermore, they insist on specifying that "the price of tea fluctuates because it depends on climatic hazards and therefore on the level of production in China." Without forgetting that the trend in this country, the main supplier of Morocco, is towards increasing tea prices due to the increase in labor costs following the rural exodus of young people and the increase in local demand following the improvement in purchasing power.
Tea importers also argue that the financial gain from the reduction in customs duties has been eroded by the variation in the dollar and the increase in the value-added tax rate, which has increased from 14% to 20%. Regarding the dollar, they note that its rate recorded an increase of nearly 16% against the dirham between December 2014 and January 2015. Today, the price of tea varies from $1,500 to $6,000 per ton. Quality teas are even purchased between $8,000 and $9,000 per ton.
Given these factors, the decrease in the selling price will not occur before a few months. A kilo is currently sold between 50 DH for an entry-level product and 200 DH for a high-end tea. National consumption of this beverage is estimated at two kilograms per inhabitant per year. In the order of 3 billion DH and growing by 3 to 5% per year, the market is dominated by six large importers, including the Belkhdar, Belfkih, Sultan, Somathès, Asta and Itkane groups. Some 400 brands are distributed there. It must be said that green tea is now seriously competing with coffee and new consumption trends, including iced tea and infusions.
Aziza Belouas.
Lavieeco.com
Published on February 15, 2015.
Posted online on February 16, 2015.
