South Africa's tea industry challenges and business strategies : a case study of Ntingwe Tea Estate.
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Date
2012
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Abstract
The South African tea producing industry has been in decline since 2000 due to a host of
industry factors such as significant increases in production costs occasioned by a regulated
labour market, unfavourable international tea prices, removal of tariffs and increased
competition from African tea producing countries. This culminated in closure of most of the
tea estates leaving a few estates in precarious financial positions and operating on a stringent
budget, funded mainly through government grants.
The study focuses on issues affecting Ntingwe Tea Estate specifically and the tea industry in
South Africa in general, in an attempt to find solutions to the challenges and to establish
sustainable business strategies for the industry. Further, the study seeks to assist the tea
industry stakeholders to gain knowledge and insight about the challenges experienced locally
and globally and to understand the business strategies that have been pursued successfully in
other tea growing countries and explore those that will steer the local tea industry into
sustainability. The study also highlights policy initiatives which if implemented will assist in
steering the industry into sustainability. A combination of qualitative and quantitative
analysis was used in order to identify the specific challenges affecting South Africa’s tea
industry. Forty participants purposively chosen for their knowledge, experience and
information about the tea industry in general and with Ntingwe Tea Estate in particular made
up the sample. Qualitative data was collected using an open-ended questionnaire, yielding a
response rate of 50%. High production costs labour, low skills and labour productivity
levels, lack of technical support, removal of tariffs, competition from low cost producing
countries, exchange rate fluctuations and pending land claims were identified as key
challenges of the tea industry in South Africa. The re-imposition of tariffs, changes in
minimum wage determination, preferential procurement, development of the small-holder
sector and government support in development of a national brand and a buy local tea
campaign were identified as the policy initiatives to steer the tea industry. Business strategies
to be considered for implementation by Ntingwe Tea Estate included focus on production of
specialty quality tea, development of a unique originality brand, development of a small-scale
sector, introduction of cost saving technology and creating partnerships with established tea
producing companies and an emphasis on ethical production and organic certified teas.
Description
MBA University of KwaZulu-Natal, Durban 2012.
Keywords
Tea trade--KwaZulu-Natal--Management., Theses--Business administration.