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Georgian tea: Ex-Soviet republic intends to bring its struggling tea industry back to life
STiR Tea & Coffee International / August 2016

By Larry Luxner

Twenty years ago, few Westerners had any clue that Georgia, a former Soviet republic in the Caucasus, boasts a winemaking tradition dating back 8,000 years. These days, Georgian vintners — cultivating an astonishing 525 indigenous varieties of grapes in a country half the size and population of the U.S. state that shares its name — sell their reds and whites in upscale wine shops from New York to London.

Georgia now hopes to replicate that success with its moribund tea industry.

Despite the obvious differences between wine grapes and tea leaves, comparing the two crops isn’t as farfetched as it seems. Until the USSR’s collapse in 1991, Georgia provided 95% of the tea consumed by Russia, Ukraine and the other 12 republics.

Thanks to mass mechanical harvesting, production peaked at 152,000 metric tons in 1985, with 60,000 hectares of tea under cultivation. That would have made Georgia the world’s fourth-largest tea exporter, had it been an independent country at the time. But this was all about quantity, not quality — and as was the case with wine, that’s precisely what Georgian entrepreneurs and government officials now want to change.

Unlike wine, tea cultivation in Georgia dates back only to 1847, when the first tea bushes appeared in western Georgia. Decades later, a wealthy merchant named Konstantin Popov decided to grow tea for export along the Black Sea coast in Chakvi, a small town in Adjara province just north of the Turkish border.

Following an 1892 trip to China to study large-scale tea production, Popov came back with a team of Chinese workers led by one Lao Junzhou of Guangdong. Lao spent years researching the crop and how to improve it. He eventually became the manager of a factory in 1901, and in 1924 the Soviet government awarded him the Red Banner Order of Labor for his efforts. In 1930, the USSR Tea and Subtropical Cultures Research Institute — to this day the only entity of its kind in Europe — was founded in Anaseuli.

Despite a decline during the Khrushchev years in the 1960s, tea exports remained an important source of revenue for Georgia — especially the low-quality “Stalin tea” sold in two-kilogram bricks for the equivalent of 60 cents each to consumers in Mongolia.

“Tea was an important industry during the Soviet period. We produced more than 100,000 tons annually, mostly black tea,” said Levan Davitashvili, Georgia’s deputy minister of agriculture. “But the plantations were abandoned when the Soviet quota system fell apart, and there was no organization to look after them.”

Shortly after Georgia declared independence in 1991, said Davitashvili, the new country became embroiled in a civil war that killed thousands, crippled the economy and ravaged agriculture in general.

“At the same time, the market opened and we were no longer the only supplier of tea to the former Soviet Union. It was hard to compete with Sri Lanka and China,” he said. “But the biggest problem is that during communism, nobody had experience running a business in a market economy. So these companies suffered in the new environment. Right now, the tea plantations are in very poor condition.”

I saw that with my own eyes during a week-long reporting trip to Georgia in June. Sponsored by the Ministry of Foreign Affairs and arranged by the country’s embassy in Washington, the visit took me westward from Georgia’s ancient capital, Tbilisi, in the east to the booming Black Sea resort of Batumi. Along the way, me and three journalist colleagues toured three wineries, explored the ruins of half a dozen Orthodox churches and inspected the so-called “administrative border” of barbed wire erected by the Russian military that separates Georgia from South Ossetia, one of its two breakaway republics (the other is Abkhazia, which was home to many tea plantations that are now off-limits).

We also visited the Nagomari tea plantation, located in the hills about 60 kilometers east of the Black Sea, along the main highway from Kutaisi to Batumi. There, our little group met Kakha Nachkebia, the plantation’s technical manager. Through an interpreter, he told us how the region’s soil is ideal for growing tea, as is its climate (the temperature falls to -3 C in winter) and its altitude of 1,120 meters above sea level.

A former electrician, Nachkebia, 42, has been working in tea for the last five years. He said the plantation’s 33 employees harvested just over one metric ton of tea leaves last year, but that an expansion under way will boost that to 15 tons annually within a few years.

“In the 1990s, after the USSR collapsed, it was horrible for us Georgians. Everything stopped. Life froze. The industry was dead,” he said. “But now we have a private company, and I have great hope that the industry will come back again.”

Nana Kirmelashviki owns the Nagomari Tea House in Tbilisi as well as the plantation we visited. She said tea pluckers receive 2.20 Georgian lari (94 cents) per kilo, up from one lari (43 cents) two years ago. An average worker can pick 10 to 12 kilos of leaves per day, earning the equivalent of $11 — a respectable daily wage for a farmworker in this formerly communist country.

“There is so much tea in the world, and there are so many manufacturers like China and India. But we have a chance,” said Kirmelashvili, who has begun rehabilitating her 10-hectare tea garden with a grant from the European Neighborhood Program for Agriculture and Rural Development (ENPARD), an initiative funded by the 28-member European Union.

“We have decided to rehabilitate part of the plantation and start growing organic tea. I think that’s the future for Georgia’s tea industry,” she said, explaining that ENPARD is giving her company €40,000 over a five-year period. Nagomari will put up €8,000 of its own money for the project.

In early June, tea industry representatives gathered at the Argo Hotel in Kutaisi at an event co-sponsored by the Georgian government and ENPARD. According to George Misheladze, chief of the country’s Agricultural Cooperative Development Agency, 40 of Georgia’s 1,496 farm co-ops are in the tea sector — but only 21 of those 40 are actually operational. Together, these 21 co-ops own 46 hectares of land, though co-op members own about 200 hectares. Under the agency’s “Georgian Tea” program, the state co-finances a maximum 2,500 lari (about $1,065) per hectare for rehabilitation.

“We will help tea producers throughout the value chain — not only plantations but also co-financing to buy processing machinery,” said Davitashvili, estimating that the program costs about six million lari ($2.6 million) and targets 3,000 hectares for restoration over the next two years.

“Theoretically, thousands of people could be working in the tea industry, but right now, there are very few, he said. “Farmers need proper machinery. We have to start this year, because it takes several years to fully restore the plantations.”

Davitashvili said Georgia is currently producing about 3,000 tons of tea, of which 2,000 tons is being exported. Leading producers include Geoplant and Althaus.

“The potential for Georgian tea is pretty significant,” he told STiR. “We expect $20 million in tea exports once we have this restoration process underway within three or four years. What we export right now is very cheap.”

Temuri Yakobashvili, Georgia’s former ambassador to the United States, now runs the New International Leadership Institute, a Washington-based think tank. He says his country’s tea industry “was not a natural development, but very much the child of Soviet planning” back in the 1920s and 1930s.

“Some apparatchik in the Kremlin decided that Georgia was supposed to grow tea because the climate was appropriate,” he said. “It was assigned tea as a division of labor. Georgian tea had no free-market value because it had a guaranteed buyer.”

Yakobashvili, a critic of the current government in Tbilisi, says efforts to revive the tea industry are rooted more in nostalgia than in the real world of supply and demand.

“Wine is a traditional Georgian product cultivated in traditional areas, but most of the wine we were selling to the Soviet Union was not real wine; it just had a label, and we suffered the consequences. Since the Russian market has collapsed, the wine industry has suffered serious losses, so we’ve directed the whole wine market to the West.”

Pretty much the same, he said, happened with tea.

“We started using combines during Soviet times, but if you really want to produce high-end tea, it has to be hand-picked. Otherwise, it won’t work,” said the former diplomat. “It comes down to this: how many people are ready to spend half a day under the sun picking tea leaves? In Soviet times, you could impose it. But the Soviet Union is long gone, so do you really have a potential market?”

Irakli Gurchumelia certainly thinks so. He’s the owner of Bio Universal Georgia, a company formed in Armenia in 2007 by Gurchumelia’s partner, Tigran Saakian.

“Our tea is oriented mainly for the Georgian market,” he explained during an interview in Batumi. “When the Soviet Union collapsed, the tea industry was destroyed as well. Unfortunately, during the last 15 years, all the tea has disappeared, but now they’re reviving the industry. Even the government is helping farmers invest additional money, in some cases giving grants to improve the plantations.”

Operating under the Manna Tea label, the company produces eight types of herbal tea using leaves imported from Sri Lanka. It also has a Los Angeles-based division known as Tanan Import Export Inc.

“Our target market is mainly Europe and the United States,” he said. “We don’t sell the tea in Georgia because everybody in Georgia drinks plain tea, not with herbs. And we know that organic tea is a little more expensive than ordinary teas.”

But come September, the company will start sourcing its teas from Guria in western Georgia; its products will be rebranded as Manna Artisan.

“Before, all the tea came from Sri Lanka and India,” he said. “Some herbs, like thyme, chamomile and mint, we can buy in Georgia, The problem is that we produce organic and non-organic as well, and it’s quite difficult to get organic herbs in Georgia.”

In 2015, the company’s U.S. sales generated $200,000, while its sales in Germany came to €80,000. But next year, it will triple production, said Gurchumelia, noting that locally sourced Georgian tea is about 40% cheaper than importing tea from Sri Lanka.

Gurchumelia said his company has already invested $500,000 to ramp up production, and will pour in another $300,000 next year. Bio Universal’s teas are already available in boutique tea shops in Tbilisi as well as in Los Angeles and Chicago; they’ll be sold in New York as well later this year.

I asked Gurchumelia if tea can really come back stronger than ever. “Maybe one day,” he said, “especially if the government continues giving additional grants.”

To that end, Davitashvili — the deputy agriculture minister — said some farmers now grow hazelnuts, kiwis and other profitable crops where tea bushes once flourished. In the Samegrelo region, he said, most tea plantations were substituted with hazelnuts.

“But we still have places where plantations can be restored easily without waiting six or seven, years and we see international potential in terms of marketing,” said the agriculture minister, adding that “there’s a lot of interest from Chinese producers, because they see we have an excellent climate for tea production. This is the northernmost subtropical area where we don’t have plant diseases, so there’s no need for pesticides. And as there has been no intensive cultivation for years, we have the potential to produce organic tea — a product demanded by the Chinese market.”

In the beginning, he said Georgia will focus on domestic sales as well as exports to fellow ex-Soviet republics like Russia, Ukraine and Kazakhstan. Later, it will move on to other markets like Mongolia and China, with generous technical assistance from the Chinese Ministry of Agriculture — a rather fitting tribute to China’s Lao Junzhou, who helped get Georgia’s tea industry got off the ground more than 120 years ago.

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