What do current market conditions hold for 2012?
The world is in economic turmoil and talk is all about the Euro and politicians, double dip recessions, the US election year, China slowing down, and more doom and gloom. Says Martin Bergh, Managing Director of Rooibos Ltd: "Yet, people will still eat and drink, and tea remains the second cheapest drink after water. We may not be in the sexy industries where money and bonuses flow thick and fast, but our industry will not suffer severe meltdown. Currency instability is going to cause both us and our clients some discomfort but with the use of hedging we can restrict this to a minimum."
According to Bergh, supply and demand in the Rooibos industry has swung from oversupply to a situation of balance. This has led to farm gate prices increasing to a more sustainable level from prices which were severely depressed. With rising farm gate prices plantings should increase in 2012. Thereafter the crops of 2013 and 2014 and price levels, which are in direct correlation to crop size, will be dependent on the weather.
"The global demand for Rooibos is still growing and the spread of Rooibos to more and more countries is continuing. Hence, we look forward to 2012 as another successful Rooibos year," concludes Bergh.