Australia’s biggest tea manufacturer has revealed its difficult decision to halt production at its Far North Queensland plantation to transition into a more cost-effective model.
Nerada Tea blamed increased costs of fuel and fertiliser in combination with reduced black tea demand from Australian consumers for the decision.
Produce on the company’s 360-hectare estate on Atherton Tablelands, west of Cairns, will transition into “hibernation” from the end of next month, ABC News reported.
The company’s goal was then to use the land to produce higher value products like aromas and tea extracts.
Company director John Russell said he was devastated to have been pushed into making such a decision.
“All of us are very sad it’s come to this; there’s no doubt about that,” he said.
The 19 staff, including nine permanent workers, at the Malanda factory and plantation were informed of the situation last week.
The brand was already struggling in the wake of a drought five years ago when it also had to tackle the unfortunate fact that fewer people were drinking black tea.
Demand had been dropping about 10 per cent every year, Mr Russell said.
The Covid-19 lockdowns provided slight reprieve for the company as more people reached for the tea bags, but that had changed with the lifting of restrictions.
“It’s hard to get that moment of pause when you’re running around to enjoy a cup of tea,” he said.
The rise in popularity of coffee had also not helped the company’s revival.
“You know, coffee, coffee, coffee is the buzzword … Due to that, and rising costs in manufacturing, we’ve had to make a tough decision to pause, rethink,” Nerada Malanda farm operations manager Tony Poynter said.
The company has not ruled out a potential rescue from investors or the state government, however was not in a position to announce a definite plan to employees.
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Its expected the facility would require significant research and development funding to revive its operations.
“We think we can produce a world-class, high-value product in the future but that will take millions of dollars to do that,” Mr Russell said.
The current stockpile of product would see Nerada Tea continue to appear on Australian supermarket shelves for at least a year, he said.
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