Tea is one of the most consumed beverages in the world, and for good reason. It’s comforting, versatile, and deeply rooted in cultures across continents. But did you know that Indonesia, with its lush landscapes and rich colonial history, was once a powerhouse in global tea production?
Today, Indonesia still plays a key role, but its tea industry faces challenges that could hinder its global potential. From aging plantations and climate change to competition from palm oil, there’s a lot to unpack. Yet, the good news is this: Indonesia still has the chance to reclaim its spot among the tea giants—if it plays its cards right.
Let’s dive deep into Indonesia’s tea sector, its export potential, and the road ahead.
Ideal Conditions, Global Demand
Tea thrives in consistent climates with moderate temperatures and humidity—traits commonly found in tropical and subtropical highlands of Asia. It’s no surprise then that over 60% of the world’s tea is cultivated in this region. Countries like China and India dominate the market, accounting for nearly half of global production.
Indonesia, with its cooler highlands and historical plantations, is perfectly suited for tea. However, despite the natural advantage, the country’s production has been declining due to a mix of mismanagement, aging crops, and shifting priorities.
A Rich Legacy, a Struggling Present
Tea cultivation in Indonesia dates back to the Dutch colonial era. The country used to be a major player in the global tea market. But since the early 2000s, the industry has been in decline—largely due to low profitability and outdated farming methods.
Many smallholder farmers, who own over 50% of the tea plantations, have switched to more lucrative crops like palm oil and vegetables. Still, demand—especially domestic demand—has been growing, driven by Indonesia’s booming beverage industry and increasing consumption among younger consumers.
Numbers That Matter
As of 2014, Indonesia had about 121,000 hectares of tea plantations. West Java leads the charge with nearly 90,000 hectares, accounting for roughly 70% of national production. Yet, this area is shrinking year by year, with a reported decrease of over 1,100 hectares annually.
In terms of output, Indonesia currently produces around 140,000–147,000 tons of tea per year. That’s a far cry from India’s 1 million tons or Sri Lanka’s 329,000 tons. In fact, Indonesia’s tea output has dropped by 1.7% annually over the past decade, while competitors continue to grow.
Export Landscape
Nearly half of Indonesia’s tea production is exported, with key markets including Russia, the UK, Pakistan, Malaysia, and the US. In 2015, Indonesia exported around 70,000 tons, generating about IDR 2 trillion in foreign exchange. But there’s a catch: only 6% of those exports were value-added products. The rest? Bulk tea.
Bulk exports mean lower margins and missed opportunities for branding and differentiation—two things modern consumers increasingly value. Meanwhile, processed tea products in the domestic market alone generate nearly IDR 10 billion annually—five times the value of exports.
Domestic Challenges
Indonesia’s tea consumption per capita remains relatively low—just 0.32 kg per year in 2014, compared to the global average of 0.57 kg and Turkey’s whopping 7.54 kg. With much of the high-quality tea being exported, the domestic market is left with lower-quality leaves, often processed by smallholders without access to modern equipment or best farming practices.
Worse yet, many of these small-scale farmers lack financial resources, agricultural training, and access to high-quality clones. Most still grow tea from seeds, resulting in lower yields—about 900 kg per hectare compared to the ideal 2,500 kg/ha.
External Pressures: Climate and Regulation
Climate change is hitting Indonesia’s tea plantations hard. Even a 1°C rise in temperature can reduce tea yields by up to 5%. Events like El Niño have devastated crops, causing production drops of up to 30% in some years. In regions like Puncak, Bogor, higher temperatures have become a serious concern.
Then there’s the anthraquinone issue—a compound found in some Indonesian teas that led to bans in the European Union starting in 2015. EU regulations limit anthraquinone to just 0.02%, a threshold some Indonesian teas exceed. Although the cause remains unclear, this has become a significant trade barrier, especially for high-end European markets.
Infrastructure and Labor
Another thorn in the industry’s side is infrastructure. Poor logistics—from plantation to processing to retail—means higher costs and reduced efficiency. Combine that with rising minimum wages (tea is labor-intensive, with most leaves still handpicked), and it’s no wonder margins are tight.
In response, the Indonesian Ministry of Agriculture pledged to double funding for tea plantation revitalization in 2014, focusing on West Java. Plans include distributing fertilizers, seeds, and supporting replanting over 3,200 hectares. It’s a solid start—but more long-term strategies are needed.
Export Opportunities Beyond Europe
While the EU is a tough nut to crack, Indonesia still has vast untapped export opportunities in non-EU markets. The US, for instance, saw a 33% increase in tea imports from Indonesia in 2016, amounting to $9 million. Specialty teas—like black and green varieties—are increasingly sought after.
On the flip side, exports to Pakistan dropped by over 60% in the same year, signaling the volatile nature of traditional markets. Diversification is key.
Quality That Deserves Global Recognition
Indonesian teas, especially those from West Java, are rich in catechins—natural antioxidants—and boast unique aroma profiles. This quality has not gone unnoticed. In 2018, Indonesian teas won several awards at the AVPA “Teas of the World” competition in Paris. Brands like Bankitwangi and Harendong Oolong received international acclaim, proving Indonesia’s potential on the world stage.
These accolades stem from a 2018 seminar in Bandung that encouraged producers to seek international certifications—another crucial step in market expansion.
The Way Forward
So, what can be done to unlock Indonesia’s tea export potential?
- Upgrade Farming Practices – Encourage smallholders to switch from seed-based planting to high-yield clones.
- Invest in Processing Facilities – More processed tea means higher margins.
- Expand Branding and Marketing – Bulk tea won’t cut it anymore. Consumers want a story, a brand, a connection.
- Strengthen Infrastructure – From farm to port, smoother logistics mean cost savings and fresher exports.
- Tackle Anthraquinone – Scientific research and cleaner production methods are critical to re-enter the EU.
Conclusion: Brewing a Better Future
Indonesia’s tea industry is at a crossroads. While its global rank has slipped, the country still holds immense potential. With the right strategy, support for smallholders, and focus on quality and branding, Indonesian tea could rise once more—not just as a commodity, but as a global cultural icon.
In a world where tea consumption is expected to grow 3% annually, the time to act is now. For Indonesia, it’s not just about exporting tea—it’s about exporting pride, tradition, and taste in every cup.
