Tea Industry Overview of 2026 First Quarter

During the first quarter of 2026, Sri Lanka’s tea industry recorded declines across Production, Export volumes, and National Tea Sale Average Price compared to the same period in 2025. Total tea production dropped by 2.55 million kilograms, falling from 62.16 million kilograms in 2025 to 59.61 million kilograms in 2026. Total exports also declined by 2.85 million kilograms, decreasing from 63.21 million kilograms to 60.36 million kilograms. Meanwhile, the national sale average at the Colombo Tea Auction dropped by Rs. 26.07 per kilogram, from Rs. 1,179.32 in 2025 to Rs. 1,153.25 in 2026.

In terms of export destinations, Iraq continued to be the largest importer of Ceylon Tea during 1Q 2026. Turkey demonstrated a significant increase in demand, with imports nearly doubling compared to the previous year. Conversely, markets such as Russia, the United Arab Emirates, Libya, and Iran registered noticeable declines. FOB prices, when measured in Sri Lankan Rupees, showed year-onyear improvement across all three months of the quarter, largely reflecting the currency depreciation. However, FOB values in USD terms remained under slight pressure throughout the period.

Tea production

The total tea production for the period January to March 2026 recorded a decline when compared with the corresponding period in 2025, reflecting a reduction across all elevations. Total tea production decreased by 2.55 million kilograms, falling to 59.62 million kilograms in 2026 from 62.16 million kilograms in 2025. High Grown teas recorded a marginal decrease of 0.40 million kilograms, totaling 13.48 million kilograms in 1Q 2026 compared to 13.89 million kilograms in 1Q 2025. Medium Grown teas experienced a more notable reduction, declining by 0.96 million kilograms to 10.16 million kilograms from 11.13 million kilograms recorded in the previous year. Low Grown teas, which continue to account for the largest share with 60.33 percent of national production, also recorded the most significant decline. Production fell by 1.18 million kilograms, decreasing to 35.97 million kilograms in 2026 from 37.15 million kilograms in 2025. 

The overall decline in production across all three elevations indicates a challenging start to 2026 for the Sri Lankan tea industry, with the most significant impact observed in the Low and Medium Grown categories. 

CTC Tea Production

The comparison of CTC Tea Production for the period January to March 2026 against the corresponding period in 2025 reflects a strong overall improvement across all elevations, with a total increase of approximately 1.23 million kilograms. 

High Grown CTC production recorded a moderate rise of about 0.18 million kilograms, increasing from 1.17 million kilograms in 2025 to approximately 1.36 million kilograms in 2026. While positive, this growth remains relatively modest compared to the other elevations. 

Medium Grown CTC teas showed the most significant improvement during the quarter, with production increasing by approximately 0.61 million kilograms, rising from around 2.03 million kilograms in 2025 to about 2.64 million kilograms in 2026. This category contributed the largest share to the overall gain. Low Grown CTC production also demonstrated a notable increase of roughly 0.43 million kilograms, moving from approximately 2.18 million kilograms in 2025 to about 2.61 million kilograms in 2026, further strengthening the overall growth trend. In summary, total CTC Tea Production increased from approximately 5.38 million kilograms in 2025 to 6.61 million kilograms in 2026, indicating broad-based growth across all elevations.

Medium Grown led the expansion, followed by Low Grown, while High Grown recorded a comparatively smaller but steady increase.

Sales averages

The comparison of Sri Lanka Tea Sale Averages (Elevation Wise) for the period January to March 2026 against the corresponding period in 2025 indicates a mixed performance in Rupee terms, while US Dollar values declined across all elevations. 

In the High Grown category, the average price in Sri Lanka Rupees increased from Rs. 1,118.77 in 2025 to Rs. 1,151.02 in 2026, reflecting a gain of approximately Rs. 32.25. However, in US Dollar terms, the average declined slightly from US$ 3.78 to US$ 3.71, indicating the impact of currency depreciation despite the improvement in local prices. 

The Medium Grown segment recorded a noticeable decline in both currencies. The Rupee average dropped by approximately Rs. 55.10, falling from Rs. 1,040.44 in 2025 to Rs. 985.34 in 2026. 

Similarly, the US Dollar value decreased from US$ 3.51 to US$ 3.18, highlighting weaker market performance for this elevation. In the Low Grown category, which typically commands the highest share, the Rupee average declined by around Rs. 40.84, decreasing from Rs. 1,239.35 in 2025 to Rs. 1,198.51 in 2026. 

The US Dollar average also fell from US$ 4.18 to US$ 3.86, reflecting a consistent downward trend in international value. Overall, the national average price decreased in both currencies. 

In Rupee terms, it declined by approximately Rs. 26.07, from Rs. 1,179.32 in 2025 to Rs. 1,153.25 in 2026. Meanwhile, the US Dollar average dropped from US$ 3.98 to US$ 3.72. In summary, although High Grown teas showed some resilience with a gain in Rupee value, all elevations experienced declines in US Dollar terms, and both Medium and Low Grown categories recorded decreases in Rupee values as well.

Tea exports

Sri Lanka’s tea exports for January to March 2026 declined in volume to 60.36 million kg, compared to 63.21 million kg in the corresponding period of 2025. Despite the reduction in quantity, export earnings remained broadly stable at Rs. 109.09 billion, slightly below Rs. 109.90 billion recorded in 2025. The average FOB price improved to Rs. 1,807.27 per kg in 2026 from Rs. 1,738.80 per kg in the previous year. Segment-wise, tea in bulk recorded a decline in both quantity and value, although FOB prices increased. 

Tea in packets showed a marginal reduction in volume, while value and FOB prices recorded a slight improvement. Tea in bags remained relatively stable in quantity, with improved value and higher FOB prices. In contrast, instant tea and green tea both recorded growth in quantity, value, and FOB prices, reflecting continued strength in value-added exports. Overall, the decline in export volumes was offset by improved pricing, particularly in value-added categories, resulting in relatively stable export earnings in 1Q 2026.