Rivals lead tea a dance
The UK tea industry is struggling to remain profitable. Although tea accounts for almost 50% of all beverages consumed in the country, many companies are finding it difficult to make a decent profit because the oversupply of tea has driven down its price. A cup costs a mere twopence, while 120 tea bags sell for only a pound. In addition to the low price of tea, the industry is facing stiff competition from soft drinks makers. To retain existing tea drinkers and attract new ones, tea companies have been advertising to create brand loyalty and have been introducing new products such as instant teas, fruit-flavored teas and low-caffeine teas. The industry has also been emphasizing that tea is a healthy drink and it can prevent many ailments, including cancer and cardiovascular disease. Furthermore, industry members claim that tea is environment-friendly because it is a repeatable crop and needs little fertiliser, pesticide and energy.
Publication Name: Accountancy
Plantation and General Investments has seen a strong rise in its stock price since the beginning of 1997, and has reported a rise in profit for 1st half 1997. The company has warned that the El Nino current could affect profit from its tea business, and there could also be problems from foreign exchange movements and exceptionals. Commodity prices tend to be volatile and there are additional problems related to investing in Africa which could affect the company, despite an improvement in Africa's political environment.
Publication Name: Investors Chronicle
Cointegration and commodity arbitrage
The cointegration concept is applied to define long-term equilibrium relationships of cocoa and coffee prices. The futures and spot prices of the two products are set on the New York Coffee Sugar and Cocoa Exchange and the London Fox. Cocoa and coffee prices exhibited simultaneous movements over a long-term period as the law of one price (LOP) was validated for cocoa prices. However, coffee futures showed a weak LOP support due to coffee product diversity in London and NY markets.
Publication Name: Agribusiness
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