Many Vietnamese businesses enter the tea export market with a mistaken assumption: that there is a single “tea market” in the world, and that any good product will sell. In reality, the global tea market is a collection of many separate segments, each with its own market leader, price level, and requirements. A batch of tea that meets the standards for one segment may be completely meaningless for another. Vietnam ranks 5th in the world in terms of production volume, but the average export price in 2025 will only be around $1,700 per ton, equivalent to 60-65% of the world average, largely because we are concentrating our products in the lowest segments. This article outlines the segmentation map of the global tea market and clearly shows where Vietnamese tea stands on that map.
1. Why should we view the tea market by segments?
Global tea production is concentrated in five countries: China, India, Kenya, Sri Lanka, and Vietnam. But production volume doesn’t determine price. Kenya sells a lot of black tea at low prices; Japan sells far less but earns many times more per kilogram. The difference lies in which market segment each country chooses to target.
For Vietnamese businesses, market segmentation has practical significance: it reveals who the real competitors are, whether the target customers are blending plants or retail brands, and what investments are needed to move up to the next price point. The three most important segmentation axes are product type, value tier, and intended use. The fourth axis, distribution channel, determines how the product reaches the end consumer.
2. CTC Black Tea – the backbone of global production.
CTC stands for the cut-tear-roll process, which produces small tea leaves that are quick to extract, resulting in a strong brew that pairs well with milk and sugar. This is the largest segment by volume in the global tea trade, serving huge consumer markets such as Pakistan, Egypt, Iran, Morocco, and many African countries.
Kenya leads this segment thanks to its climate allowing year-round harvesting, high yields, and competitive costs. India also produces a large quantity of CTC (Citrus maxima), but much of it is consumed domestically. The segment is characterized by large-volume trading, auctions on exchanges, prices fluctuating with seasonality and transportation costs, and thin profit margins. Vietnam participates but lacks a decisive advantage, as the game here is purely about scale and cost.
3. Orthodox black tea – a segment that holds its value better.
Orthodox black tea is processed using traditional methods, preserving the shape of the leaves, resulting in a more complex aroma and a more refined taste than CTC. This segment is dominated by Darjeeling and Assam teas from India, Ceylon tea from Sri Lanka, and specialty black teas from China. Buyers here are interested in the growing region, harvest season, and sensory profile, not just the strength of the tea.
The price difference between orthodox and CTC can be significant for the same volume. Sri Lanka is a good example: the country built a common brand, “Ceylon Tea,” with a lion logo, clearly defined labeling conditions, and thus sells black tea at a much higher price. Vietnam has the natural conditions to produce high-quality orthodox black tea, but the majority of its production still ends up as unbranded raw material.
4. Green tea – the Asian playing field and the clearest opportunity for Vietnamese tea.
Green tea is a segment where China dominates in terms of volume, while Japan dominates in terms of value per unit. The consumer market spans from North Africa, where green tea gunpowder is a staple, to Russia, Eastern Europe, North America, and Western Europe, where green tea is associated with the image of a healthy beverage.
This is the segment where Vietnam is most prominent. Vietnamese green tea has its own unique character: a yellowish-green color, a rice-like aroma, and a slightly bitter taste that quickly turns sweet – different from Japanese green tea with its umami emphasis and Chinese green tea with its roasted aroma. The problem is that this unique character is rarely told commercially. Most exported green tea still comes in large bags, allowing importers to blend and label it with their own names. The shift from being a raw material to a branded product is the most noticeable value leap in this segment.
5. Oolong tea, white tea, and specialty teas – the pinnacle of value in the industry.
This is a small segment in terms of volume but the highest in value per kilogram. Taiwan leads the high-mountain oolong tea market with a rigorous tea competition and ranking system. China leads white tea, Pu-erh tea, and specialty teas associated with specific mountain regions. Japan controls the premium matcha and sencha segments, where prices can be dozens of times higher than regular tea.
Vietnam possesses two truly unique assets in this segment: the Lam Dong oolong tea region with its well-adapted varieties such as Kim Tuyen, Thuy Ngoc, and Tu Quy; and the centuries-old Shan Tuyet tea plantations in Ha Giang, Yen Bai, and Son La, which few countries possess. The target of developing 34,500 hectares of specialty tea by 2030 shows that the direction has been determined. What remains is traceability documentation, uniformity between batches, and the ability to tell the story in the language of the buyers.
6. Herbal teas and functional teas – the fastest-growing segment.
Technically, herbal teas don’t contain Camellia sinensis leaves, but the international market categorizes them as part of the tea industry, and this is one of the fastest-growing sectors. This is driven by health-conscious demand, caffeine-free products, and the wellness beverage craze in North America and Western Europe.
The appeal of this segment for Vietnamese businesses lies in its lower barriers to entry: no need to own large tea plantations, only a source of clean herbal ingredients, a stable formula, and complete documentation. Vietnam has readily available artichoke, chrysanthemum, lotus leaf, ginger, lemongrass, Centella asiatica, cinnamon, and star anise – ingredients with clear local histories. The risk lies in the fact that this segment is subject to intense scrutiny regarding residue levels, heavy metals, and the consistency of active ingredients, making it impossible to operate using a mass-produced, market-oriented approach.
7. First level of value: bulk industrial goods
Viewed along the value axis, the bottom of the pyramid is industrial bulk: tea packaged in large bags of 20–50 kg, sold to blending factories or importers, without labels or brands, traded on a volume-based contract basis. Buyers only ask three things: price, specifications, and the ability to deliver on time.
This is where most of Vietnam’s tea is located. In 2025, Vietnam exported 136,952 tons of tea, earning approximately $238 million, equivalent to an average of around $1,700 per ton, while the world average was around $2,600. This difference of nearly $900 per ton isn’t due to inferior Vietnamese tea, but rather its position in the value chain. At this level, businesses lack the power to set prices, cannot build a brand, and are always replaced when cheaper sources become available.
8. Second and third tiers of value: branded packaged tea and specialty tea.
The second tier is branded packaged tea: tea bags, tin boxes, and zip-lock bags sold retail in supermarkets and stores. The added value comes from packaging, branding, distribution systems, and marketing costs. Businesses wishing to enter this tier must accept long-term investment or choose the option of contract manufacturing under a client’s brand, which is safer but still doesn’t give them ownership of the brand.
The third tier consists of premium specialty teas, sold through specialized tea shops, niche e-commerce channels, and tea connoisseurs. Here, buyers pay for the origin, age of the tea plant, the processing artisan, and the uniqueness of each batch. The volume is small, but the profit margin is high, and there is less pressure to lower prices. With ancient Shan Tuyet tea and high-grade Oolong tea, this is a segment of Vietnamese tea with real potential if quality standards can be met.
9. Segmentation by intended use
The third axis is the ultimate goal of the product, and it determines all technical standards. The ready-to-drink group requires tea leaves with an attractive appearance, balanced flavor, and consistent sensory profile across batches. The group of ingredients for milk tea, fruit tea, and bottled beverages prioritizes strength, quick extraction, stable color when mixed with milk, and stable pricing – appearance is almost irrelevant.
The third group consists of extracted ingredients, used in instant tea powder, tea concentrate, and as raw materials for the functional food and cosmetic industries. Here, buyers are more interested in catechin and EGCG content, moisture content, and residue profiles than in flavor. These three groups have three different sets of standards, and a common mistake is offering a single tea sample to all three types of customers.
10. Segmentation by channel and location of Vietnamese tea on the map
The wholesale channel for raw materials offers the easiest entry point but the lowest prices. The retail channel for packaged goods requires branding and a distribution system in the country of origin. The HORECA channel – hotels, restaurants, beverage chains – requires consistent supply, standardized specifications, and complete food safety documentation. The bottled tea and industrial beverage channel purchases in large quantities with long-term contracts but imposes very tight restrictions on price and residue levels.
Putting it all on a map, the current position of Vietnamese tea is quite clear: strong in volume in the low-priced raw material segment, but with a weak presence in the high-paying segments. For businesses considering exporting, the sensible approach is not to try to sell more at the old price point, but to choose a specific segment that matches their capabilities, and then invest in what that segment demands: certification, traceability, consistency, and a compelling product story.