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The prices of tea, a staple beverage of households across the region, is set to rise in the coming months, according to trade sources.
Tea prices at the world's leading commodity centres surged in June, pushing up auction averages across Calcutta, Colombo and Mombasa to record levels - last seen a year ago.
The scarcity of rains, insufficient fertilisers and high oil prices have resulted in dramatic shortages this year.
This has lead to a decrease in the availability of black tea in world markets and an increase in prices, as demand continues to grow.
Tea sales have been relatively immune to the impacts of recession and in fact, tea demand is now beginning to benefit from its association with health and well-being - an increasingly important driver of consumption in many markets today.
"Due to drought in the three largest black tea-producing countries earlier this year, there has been a considerable loss in crop resulting to shortage in supply, said Sanjay Sethi, director, Dubai Tea Trading Centre. "In the first half of 2009, overall crop shortage in India, Sri Lanka and Kenya is estimated to be over 85 million kg, declining total output by 20 per cent compared to the same period last year. This constraint of supply has resulted in much higher tea prices. We believe that demand and prices of tea will remain buoyant in the months to come."
Tea producing countries such as Kenya, Sri Lanka, and India are struggling to produce sufficient crops to meet market demand.
Indian tea production fell to 62,590 tonnes in April, down 22 per cent on the 80,042 tonnes produced in the same month last year. The F O Licht three auction commodity average rose to $2.76 per kg in June, beating the previous record set in the peak month of July 2008.
According to the Tea Board of Kenya, the country's tea production fell to 139,283 tonnes in the first half of 2009, falling 11.5 per cent versus the same period last year.
The board reported that dry conditions in the East of the Rift Valley saw output in that area drop 35 per cent to 50,600 tonnes in the first half of 2009, down from 77,358 tonnes in the same period in 2008.
May 2009 saw dramatic price rises in Calcutta where the average price during this month rose to $2.876 per kg - almost 50 US_cents per kg higher than in the same month last year.
With tea being consumed in almost every home across the region, householders can now be expected to experience first hand, a trend of rising tea prices in their grocery budgets.
