Bloomberg News

Taste for South Africa’s Rooibos Tea Attracts Starbucks

April 17, 2012

A bundle of unprocessed rooibos tea in South Africa. Photographer: Obed Zilwa/AP Photo

A bundle of unprocessed rooibos tea in South Africa. Photographer: Obed Zilwa/AP Photo

Business is brisk these days for the 600 or so growers of rooibos, a caffeine-free herbal tea unique to South Africa’s Western Cape province whose clients include Starbucks Corp. (SBUX:US)

Production of the crop more than tripled to 14,000 metric tons the past decade as farmers expanded rooibos plantings to meet demand from companies including the world’s largest coffee shop operator and Nestle SA (NESN), the biggest food company.

Tea consumption is increasing as health-conscious consumers spurn sugary and caffeinated beverages. Rooibos, like green tea, contains antioxidants that boost the immune system, calcium and fluoride. The drink constitutes about 10 percent of the herbal tea market and 1 percent of a global tea market that has an estimated value of $23 billion, according to the South African Rooibos Council.

“Five years ago, rooibos was really quite a niche product,” said Paul Jefferies, a London-based herbal tea buyer for Tata Global Beverages Ltd. (TGBL)’s Tetley, which sells about 300 tons of the tea a year under its Red Bush label. Thanks to “a very strong marketing campaign, sales have been on a steep upward curve.”

Starbucks offers vanilla rooibos “herbal infusion” while Nestle sells rooibos-flavored yogurt. Hain Celestial Group Inc. (HAIN:US) introduced its African Orange Mango Rooibos tea to the U.S. seven years ago.

Specialty Teas

Specialty teas including rooibos account for about 9 percent of the $2.1 billion U.S. tea industry. The U.K. saw a 300 percent increase in rooibos sales from 2003 to 2007. Associated British Foods Plc (ABF)’s Twinings tea division said rooibos now makes up 2.6 percent of its sales, with Unilever NV (UNA)’s Lipton unit also ranking among the top sellers.

“The demand for rooibos tea has increased rapidly during the last few years,” Carl-Olof Skeppstedt, creative director at London-based tea consultancy Tatler & Brown Ltd., said in an e- mail. “Taste, health benefits and the lack of caffeine are some of the main reasons for the increase.”

The biggest export markets for rooibos, which counts Nobel Peace Prize-laureate Desmond Tutu among its fans, include Germany, the Netherlands, U.K. and the U.S., according to the South African Rooibos Council.

Traditional Rooibos Uses

Rooibos, Afrikaans for red bush, was first popularized outside of South Africa during World War II when Allied nations had trouble obtaining tea from Asian countries.

Needle-like leaves from the 6-foot (almost 2-meter) shrub, native to an area northwest of Cape Town that includes the Cedarberg mountains, have been used in traditional medicine for generations to treat allergies, digestive issues and colic. Rooibos extract is used as well in soap and cosmetics. That’s resulted in the product going more mainstream, found from Paris street markets to London grocers.

About 5,000 people work at rooibos farms and processing plants, one of the biggest employers in South Africa’s semi- desert Suid Bokkeveld region, where the jobless rate can exceed 80 percent.

Changing weather patterns may pose a threat to the industry’s success. Government-commissioned research shows temperatures in South Africa may rise as much as 3 percent and rainfall may drop as much as 10 percent by mid-century, with the rooibos-growing area considered among the most vulnerable.

Hardy Plant

“If as they predict temperatures would go up 1 or 2 degrees, rainfall were to go down a bit, we’d be in trouble,” Martin Berg, managing director of Rooibos Ltd., which operates the country’s biggest processing factory, said in an interview.

Willie Nel, 45, who grows rooibos near Clanwilliam, about 230 kilometers (145 miles) north of Cape Town, is banking on the hardiness of the plant to keep his 3,550-hectare (8,770-acre) farm and the 60 workers it employs going. The crop is endemic to a region where summer heat can hit 48 degrees Celsius (118 degrees Fahrenheit).

“There is no other production plant you can grow here,” Nel said, gesturing at hundreds of rooibos bushes that stretch across the sandy fields he has farmed for 25 years.

“We are dealing with an indigenous plant that’s adapted to harsh conditions,” Guy Midgley, head of the South African National Biodiversity Institute’s climate and bio-adaptation unit, said by phone from Cape Town. “The risk will definitely rise in the longer term but that’s two decades out.”

Nel said he has yet to notice a change in weather patterns that pose a threat to his livelihood and expects to continue farming rooibos until he retires.

“Maybe my sons will feel the impact,” he said.

To contact the reporter on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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  • SBUX
    (Starbucks Corp)
    • $81.27 USD
    • -0.16
    • -0.2%
  • HAIN
    (Hain Celestial Group Inc/The)
    • $117.25 USD
    • 0.23
    • 0.2%
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