The world is so awash with tea that Britons are paying far less for their favourite pick-me-up than 30 years ago.

Global overproduction, supermarket price wars and a weak dollar mean that we can now slake our thirst for less than a penny a cup. In real terms the price of a brew is a quarter of what it was in 1977, industry research published yesterday has revealed.

Back in the days when Jim Callaghan was Prime Minister and the first Star Warsfilm was breaking box office records, the average gross weekly wage of £68.70 would have bought 6,870 tea bags at a penny each. Today’s average weekly wage of £447 would buy about 45,000 tea bags which, despite three decades of inflation, remain at much the same price.

The figures are good news for the world’s second-biggest per capita tea-drinking nation – only the Irish drink more – but bad news for the 36 tea-growing countries, which last year produced 3.5 million tonnes, of which 160,000 tonnes were earmarked for Britain.

Industry sources said yesterday that about 2 per cent too much tea was being produced, driving down wholesale auction prices and allowing Tesco and Sainsbury to sell 80 of their own-label bags for as little as 29p. In 1977 Lyons’s Silver Label cost 67p for 72 bags; today’s premium brand equivalent, PG Tips Pyramid, costs about £3.86 for 240 bags, or about 1.6p per bag.

Tea is grown in some of the poorest countries in the world and is often a primary source of income; for Uganda, for example, it is the third-largest export earner. For many growers and pickers it is their only income.

Tim Clifton, a tea consultant, said: “In real terms, tea prices continue to slide, and with the estimates of continuing growth in production, it is likely that this depressing trend will continue. Continuing low prices mean that planned investment in the infrastructure of smallholder-owned businesses has to be postponed or cancelled, limiting growth. This impacts on the individual smallholder farmers and puts more pressure on their day-to-day existence.”

British tea importers argue that many countries, led by Bangladesh and Vietnam, are planting and growing far more tea bushes than the world needs, under pressure from poor local farmers desperate to make a living.

William Gorman, chairman of the UK Tea Council, said: “There is too much being grown in some countries, and producers need to balance supply with demand. Supermarkets are being incredibly competitive when it comes to the price of tea, but only in the same way they do with other products like beer, wine or milk.”

Cafedirect, Britain’s largest ethical tea and coffee wholesaler, dealing only in fair trade products, said: “We are the only major brand to guarantee a minimum price for its tea, and this year announced an increase of 8 per cent.”

Some in the industry believe that Britain is not paying enough for the 165 million cups it drinks every day, and that a price of 3p a cup would benefit farmers without hurting consumers. Martin Isark, author of The Supermarket Own Brand Guide, said: “The tea industry, the brands and the promotional bodies require a good shake-up. For the past 30 years they have failed miserably in the promotion of an excellent product. Tea prices have plummeted, and most shoppers are unwilling to trade up. The Australian wine industry is an excellent example of how to promote your product to the British public.”

After years in the doldrums, British tea consumption is rising again, with upmarket specialist brands leading the revival. But for most of us, it appears, the cheap stuff will do just fine.

— British coffee drinkers are braced for a surge in the price of their caffeine kick, after Starbucks said it would increase prices by about 3 per cent in the US (Suzy Jagger writes).

While the price rise, which applies to all its coffee and some tea drinks from the end of this month, will be levied on American customers, the last time the world’s biggest coffee shop chain raised prices, the increase was also passed on to coffee drinkers in the UK.

Starbucks said it was raising prices because of the surging cost of the raw materials it uses, such as coffee beans and milk, and fuel.

The price of coffee is at a nine-year high, inflated by fears that a drought in Indonesia and Vietnam will cut supply. Predictions of colder than normal temperatures in Brazil, the world’s biggest coffee producer, also raised concerns that crops may be damaged.

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