What is Tea Trade Finance?

Tea has been consumed by human beings for thousands of years, and is grown widely around the world. Shifting consumer demands are increasing global demand for tea products more broadly, and specifically more “specialist” tea products. To help meet this rising demand, TFG can support tea producers and traders by offering tailored financing to support new ventures which bring their products to new customers and markets, and subsequently grow their profits.

Tea Trade Finance

The UK is the largest European market for tea, followed by the major Western European economist and Poland. Whilst overall consumer demand has remained strong, multiple trends are driving fluctuating prices and production outputs in the sector. Recent studies lauding the health benefits of tea and significant tie ups between health retailers and social media influencers have generated rising interest in green, herbal and fruit teas. Premium products and brands are gaining market share in the hospitality and retail sectors as consumers look for interesting, quality products, and consumer concerns about sustainability and traceability are driving focus onto producers’ global supply chains.

Trade Finance Global has supported a number of tea traders struggling with their international operations. Firms engaging in international trade are exposed to cashflow risks, as the lengthy time delays between paying international suppliers for imported goods receivable and receiving payment for forwarding those goods to wholesalers and retailers squeeze otherwise profitable businesses. This can lead to firms missing out on meeting new or growing orders they know to be profitable because they do not have the cash within their business to continue to service their regular client orders. Trade Finance Global can provide products to address both these issues. By providing trade finance to such firms, TFG can support these profitable transactions and allow firms to invest in them, meet their suppliers’ expectations, and grow their profit margins.

Products financed

Key tea products include:

Black tea
Green tea
Flavoured teas
Fermented teas
Other tea products

Tea Finance Requirements

You are running an established tea trading business
Your business is creditworthy (although capital requirements are not usually required for trade finance)
Your planned venture is estimated to be profitable

How the transaction works

Firms applying for trade finance undertake a straightforward credit application process by providing an overview of the firm’s finances and a clear plan for the proposed venture. TFG’s experts will assess this proposal and, having approved it for credit, will work identify possible lenders and construct a bespoke financial product on terms best suited to the firm’s financial outlook. Uniquely, trade finance does not require stringent capital guarantees to underpin the finance; instead, the product will be usually only require backing by a firm’s profitable accounts receivable. Once approved, TFG will oversee the venture to guarantee financial security to both parties in the transaction. Through the use of trade finance tools (such as letters of credit), exporters and importers will receive the payment and goods they respectively require. Once resolved, the buyer will be extended lengthy structured repayment terms on their finance, to enable them to sell the receivable in question and repay the loan from booked revenue.

What is the SIC Code for Trade in Tea?

The processing of tea is covered by a single SIC code – 10831. The wholesale of tea products is covered under the wider SIC code for wholesale of coffee, tea, cocoa and spices – 46370.

Separate trade finance pages exist for Coffee Trade Finance, for Confectionery Finance (which covers trade in cocoa) and for broader Food & Drink Trade Finance.

Full tariff schedules for tea are available on gov.uk.

Case Study

Wholesaler, Tea Trade

Trade Finance Global provided a flexible source of credit to a speciality tea trader to help them meet several one-off large orders for their product from new clients abroad.