Tea Consumption in Pakistan: Culture & Economy

Tea, locally known as "chai," holds a significant place in Pakistan's culture and daily life, serving as more than just a beverage but a social ritual that brings people together. Pakistan stands as one of the world's largest tea importers, reflecting the nation's deep-rooted tea culture.

In 2023, Pakistan imported tea worth $611 million, making it the largest tea importer globally. The primary sources of these imports are Kenya ($513 million), Rwanda ($26.7 million), Uganda ($23.7 million), Vietnam ($14.7 million), and Tanzania ($9.77 million). Despite being a major importer, Pakistan also exported $18.9 million worth of tea in the same year, with the United States ($8.8 million) and Saudi Arabia ($1.5 million) being the top destinations.

The domestic tea market in Pakistan is substantial and growing. In 2024, the combined revenue from at-home and out-of-home tea consumption is projected to reach $2.16 billion. This figure is expected to grow at an annual rate of 8.62% from 2024 to 2029, potentially reaching a market volume of $2.57 billion by 2029. Per capita revenue from at-home tea consumption is anticipated to be $6.92 in 2024.

Social Significance of Tea in Pakistan

Tea consumption in Pakistan transcends economic metrics, deeply influencing social interactions and daily routines. It is customary to offer tea to guests, making it an integral part of hospitality. Tea stalls, known as "chai dhabas," are ubiquitous across urban and rural landscapes, serving as communal spaces where people from various backgrounds converge. These establishments not only provide affordable refreshments but also foster social cohesion by acting as informal meeting points. In many regions, tea breaks serve as moments of relaxation and discussion, allowing people to engage in political debates, business negotiations, and social gatherings.

Tea is a staple in Pakistani households, with per capita consumption estimated at 1.2 kilograms annually as of 2023, making Pakistan one of the highest tea-consuming nations globally. Regardless of socio-economic background, tea is a unifying cultural element, enjoyed by people from all walks of life. The high consumption rate reflects its role in social bonding, hospitality, and daily rituals. In workplaces, tea breaks are essential, providing employees with a brief respite to recharge and engage with colleagues. Similarly, in educational institutions, tea vendors cater to students and faculty, reinforcing their role as a drink that fuels discussions and learning.

While tea is widely appreciated for its taste and cultural significance, its health implications have drawn attention in recent years. Moderate tea consumption has been associated with potential health benefits, such as improved cardiovascular health, stress relief, and antioxidant properties, which could contribute to better public health outcomes. However, the way tea is commonly consumed in Pakistan, high in sugar and dairy, raises concerns about its contribution to diet-related health issues. Excessive intake of sugary or overly milky tea has been linked to the rising prevalence of diabetes and obesity, particularly in urban areas. According to the Pakistan Diabetes Leadership Forum (2023), over 33 million Pakistanis are living with diabetes, and dietary habits, including frequent consumption of sugary tea, are a contributing factor.

Pakistan's rapidly growing population, now exceeding 240 million, is a key driver of increasing tea consumption. With an annual population growth rate of 2.4%, demand for tea is expected to continue rising. Urban areas, where lifestyles are faster-paced and tea breaks are more frequent, account for nearly 40% of total tea consumption. As urbanization accelerates, projections indicate that 50% of Pakistan's population will live in cities by 2050, further boosting tea demand. This sustained growth in tea consumption underscores its enduring cultural significance while presenting both economic opportunities and health challenges that need to be addressed.

Economic Impact of Tea Consumption on GDP

Pakistan is one of the largest importers of tea globally, primarily sourcing black tea from Kenya, which accounts for 70% of total imports. In 2023, Pakistan imported tea worth approximately $650 million, reflecting its significant share in the country's overall import expenditures. The heavy reliance on imported tea puts immense pressure on foreign exchange reserves, particularly during periods of currency volatility. With the Pakistani rupee depreciating by over 20% against the US dollar in 2023, the cost of tea imports has increased, further straining the country’s trade balance. The rising demand for tea, coupled with fluctuating exchange rates, underscores the urgent need for policies aimed at reducing import dependence and promoting local production.

Although Pakistan imports most of its tea, there is a small but expanding local tea industry, particularly in regions such as Mansehra, Swat, and Azad Kashmir. According to the Pakistan Agricultural Research Council (PARC), domestic tea production has grown by 15% over the past five years, reaching an annual output of 1,500 metric tons in 2023. While this figure is still far below national consumption levels, investments in tea farming and processing could help reduce import dependency, create employment, and contribute to GDP growth. Encouraging local tea cultivation through research, subsidies, and training programs could enable Pakistan to develop a self-sustaining tea industry over the long term.

Tea consumption also plays a crucial role in employment generation. The tea supply chain, from importers to wholesalers, retailers, and street vendors, supports millions of livelihoods across Pakistan. Small-scale tea stalls, known as "chai dhabas," are a vital part of the informal economy, employing an estimated 2.5 million people nationwide. These tea vendors not only provide affordable refreshments but also sustain businesses in tea-related industries, such as dairy, sugar, and disposable packaging. Strengthening Pakistan’s tea sector through policy support and investment could enhance economic resilience while sustaining employment for millions.

Challenges and Opportunities in Pakistan’s Tea Industry

Pakistan’s heavy reliance on tea imports poses economic and health challenges, yet it also presents opportunities for local production, economic diversification, and export potential.

One of the most pressing concerns is the high cost of tea imports, which places significant pressure on Pakistan’s economy. In 2023 alone, Pakistan imported approximately $650 million worth of tea, making it one of the largest tea-importing nations. The depreciation of the Pakistani rupee, which fell by over 20% against the US dollar in 2023, has further escalated import costs, increasing the burden on foreign exchange reserves.

Another critical challenge is the health impact of tea consumption patterns in Pakistan. Traditional tea, often consumed with excessive sugar and milk, contributes to rising cases of diabetes and obesity. Healthcare costs related to these issues are estimated at $3 billion annually, with over 33 million Pakistanis currently living with diabetes, according to the Pakistan Diabetes Leadership Forum (2023).

Additionally, climate change and global supply chain disruptions threaten Pakistan’s tea supply. Adverse weather conditions in key tea-producing countries like Kenya and Sri Lanka led to a 10% increase in global tea prices in 2023, making imports even more expensive.

Despite these challenges, Pakistan has significant potential to develop its own tea industry. The Pakistan Agricultural Research Council (PARC) estimates that the country could produce up to 10,000 metric tons of tea annually by 2030 if investments in research, farming infrastructure, and processing facilities are made. Expanding local tea production could reduce dependency on imports while boosting agricultural GDP and creating jobs.

Another opportunity lies in the rising demand for healthier tea options, such as green tea and herbal infusions. This market segment has grown by 20% over the past two years, particularly in urban areas where consumers are becoming more health conscious. Encouraging the consumption of unsweetened and herbal teas can promote healthier lifestyles while reducing sugar-related health issues.

Finally, exporting locally produced tea to Middle Eastern and Central Asian markets could provide a new revenue stream for Pakistan. Establishing tea plantations and branding Pakistani tea as a premium product could attract international buyers, helping to diversify the economy and enhance foreign exchange earnings.

Conclusion

Tea consumption in Pakistan is more than just a cultural tradition; it has significant economic, social, and health implications. As one of the world's largest tea importers, Pakistan’s dependence on imported tea places substantial pressure on its economy, especially in light of the rupee’s depreciation and fluctuating global tea prices. However, the expanding local tea industry presents an opportunity to reduce import dependency, create jobs, and contribute to GDP growth. With proper investment and policy support, Pakistan has the potential to establish a thriving domestic tea sector.

Socially, tea continues to be a unifying force in Pakistani society, serving as a symbol of hospitality and a means of social engagement across different communities. From chai dhabas to corporate offices, tea remains an integral part of daily routines and interactions. However, concerns about excessive sugar and milk consumption highlight the need for greater awareness of healthier alternatives, such as green tea and herbal infusions.

The future of Pakistan’s tea industry depends on a balanced approach, reducing import reliance, promoting local tea cultivation, and encouraging healthier consumption habits. As Pakistan works toward economic resilience and improved public health, the tea industry stands as both a challenge and an opportunity, offering potential for economic growth while preserving a beloved cultural tradition.

Please note that the views expressed in this article are of the author and do not necessarily reflect the views or policies of any organization.

The Author is affiliated with the Department of Agricultural Economics, Faculty of Social Sciences, Sindh Agricultrue University, Tando Jam, Sindh, Pakistan and can be reached at tahmeenasolangi12@gmail.com

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