Tea traders rejoice as imports to Iran resume after weeks of hostilities and frozen tea shipments. Photo credit: Tasnim

Iranians consume much more tea than they produce domestically and favor higher-priced orthodox imports, so when shipments suddenly stopped last month due to the Israeli-Iranian War, the situation raised immediate concerns.

Shipments of Indian, Kenyan, and Sri Lankan tea remained at sea or piled up in containers at ports of origin during hostilities and the unpredictable period that followed. Indian traders reported a 10% decline in sales to Iran in June.

Iranian demand for tea averages 60,000-70,000 metric tons annually, accounting for approximately 5% of global consumption. Iran will limit tea imports to 45,000 metric tons in 2025. Iran spends around $40 million annually importing Indian tea, at prices ranging from 300 to 325 rupees per kilo. Last year (2024), Iran imported approximately 35 million kilos of Indian tea, which is roughly one-quarter of the 120-130 million kilos of orthodox tea that India produces every year.

Traders were relieved when limited trade resumed the first week of July. Mohit Agarwal, Director at The Asian Tea Group in Kolkata, a major tea supplier, writes that “Iran is a resilient country, and the Iranians take great pride in their tea drinking culture. The recent 12-day war temporarily impacted the shipments and clearance of teas in Iranian ports, but from the week starting June 28th, we expect normal trade to resume.”

Agarwal writes that “pre-war sanctions remain, but there is hope that the Western world and Iran will reach a settlement for the economic prosperity of Iran while guarding their national honour.”

“There has been no impact on the production of teas in Iran, as they are mainly produced in the north of the country. Iranian teas of late have improved in quality, and there is decent export demand for their teas,” he said.

Grower Zubin Amiri is CEO and founder of Zubin Organic, an Iranian agribusiness that produces tea, as well as other products, including walnuts, oranges, limes, and lemons. 

He explained that tea production is down from previous highs, primarily due to the abandonment of tea estates in the northern provinces of Gilan and Mazandaran, which border the Caspian Sea. “Production is down to 28,000 hectares, which could easily double by cultivating idled tea estates,” writes Amiri, citing a recent government report that 22,000 hectares bear commercial quantities, down from 32,000 hectares in the year 2000.

The Iran Tea Organization (ITO) purchases tea primarily for local distribution. The ITO reports that the tea industry employed 52,000 families on 42,000 hill country plantations in 2025, mainly located in the Alborz Mountain Range. Small growers harvest approximately 135,000 to 145,000 metric tons of raw leaf annually, spanning three seasons, culminating with the winter snowfall. 

According to ITO exports totaled $15 million in the first 10 months of the 2024-25 fiscal year, at a volume of 11,000 metric tons. Russia and India are the top export destinations, accounting for approximately 40% by value. Tea exports reach 25 countries, including Türkiye, Uzbekistan, Azerbaijan, Iraq, Afghanistan, Tajikistan, Turkmenistan, and Georgia. Limited quantities are shipped to Canada, the United States, and Australia. 

Domestic Tea Market

Iranians are experiencing retail price inflation. "Mainly due to the removal of favored exchange rates from USD to IRR for tea imports and other commodities," explains Amiri. High prices led to a 62% decline in import value in the fiscal year 2022-23, with a slight rebound in 2023-24.

Sanctions imposed for decades limit trade, which benefits tea growers seeking to supply a population of 92 million, with per capita consumption of 1.5 kilos per year, ranking fourth globally. Tea was first planted commercially in the late 1800s, reaching a peak of 32,000 hectares in the 1990s. There are currently 180 tea processing factories.

Smuggling is a concern, and a 2023 subsidy scandal involving Debsh Tea cost the country $3.4 billion.

Heightened Red Sea risk 

The redeployment of the US carrier group from the Red Sea to support the bombing of Iran encouraged Yemen-based Houthis, who attacked and recently sank three large ships, killing three sailors. The US is likely to conduct a retaliatory response.

The Houthis have attacked 100 ships since November 2023, forcing tea shipments that generally pass through the Suez Canal to instead travel around the Horn of Africa.

The ceasefire with Israel remains shaky, and civil unrest leading to a possible regime change in Iran is a concern. Ballistic missiles launched by Iran could lead to the closure of shipping lanes through the Straits of Hormuz, which would have profound implications for the global tea supply chain.