THIS ARTICLE IS POWERED BY
Globally, India is the second-largest producer of tea. According to IBEF, The Northern part of India is the biggest producer at about 83% of the country’s annual tea production in 2021-22 with the majority of the production coming from Assam followed by West Bengal. The southern part of India produces about 17% of the country’s total production with the major producing states being Tamil Nadu, Kerala, and Karnataka, said the report.
In May 2022, India’s tea production stood at 127.11 million kgs, and it was at 91.77 million kg in April 2022. From January-September 2022, India’s tea production stood at 984.67 million kg. The expected tea production in February 2023 stood at 16.22 million kgs. Exports of tea from India stood at US$ 818 million in FY23.
Despite being one of the largest producers, the market suffers from a shortage of labour, a rise in cost and overheads, and a lack of consistency in quality. Every three months, the quality of each batch of tea leaves differs because of the change in the climate, labour to name a few. This leads to an inconsistency when procuring tea leaves.
“You can find the difference in quality from the same tea estate. While natural reasons are present, the major issue is that labourers in the tea industry are daily labourers. The labourers get paid for every kilogram of tea leaves plucked. At times, these labourers lack the right knowledge when it comes to plucking,” said Anto Michael, Proprietor, of Leafy Consumer Products.
When it comes to plucking, there is a general norm followed. For instance, when it comes to black tea, only the first two leaves and a bud should be plucked. The industry also faces a shortage of labourers and more machinery has been adopted in the tea leaf plucking process. The players in the industry agree that when leaves are plucked using a machine, the quality of tea further falls.
“We are one of the largest exports of tea in the world. Yet, we have issues with consistency in the quality of tea produced. Apart from labour and weather, the usual harvesting practices have also changed to cater to the demand in the market,” said Premsagar Pandiaraj, Proprietor, of Pandian Group.
Lack of education
The players in the industry stress how important it is for those working in the tea market to be educated. This, they say, should start from cultivation to blending.
“As a blender, It is extremely crucial for me to ensure I deliver the best quality product to my buyers. To keep my promise, I hire taste testers before buying tea during the auction. More importantly, the end consumers do not know what quality has been packed. They buy from us blenders trusting us to give them the best,” shared Anto.
This Anto says it is the first and the most essential part of education to be given to blenders. Getting into the tea business has a shallow entry barrier but retaining oneself is a challenge, especially for blenders. Anto’s clients are across the country and also supplies to Singapore. The next most important part of education plays a direct role in the health of the consumer.
“Poor quality tea is sold more in comparison to good quality tea. Invariably this affects our health. It is not possible to identify whether the quality is good from seeing. As a member of this industry, I am working on how to improve the standards and hopefully, the change will come in for people to adopt,” said Darshit Pareshbhai Mehta, Founder of Wellway Tea.
Wellway Tea from A One Tea Depot offers a vast catalog of premium herbal teas to serve every consumer’s desires. They procure their tea from Northern India.
Tea prices depend on the demand and supply so when there is excess crop, price falls and lower production leads to a rise in prices.
“Our cost and overheads are rising and we do not have the selling price to match it. The industry is well equipped to handle the supply and demand of large crops. But due to issues with quality and labour, we are faced with not being able to match our selling price to the cost. We manufacturers are also at a loss as we do not meet our customers,” shared Premsagar Pandiaraj.
Pandian Group is a family business started in 1960. The company started with tea and then moved on to manufacture tea machinery. Premsagar along with Samuel Soundararaj and other family members heads the company. The company owns its tea estate in Kotagiri in the Nilgiris. Premsagae added that due to rising costs, they are unable to retain their labourers causing a further shortage in staff.
Tea Association of India, last month, recommended implementing an hourly wage for garden workers as per the Minimum Wage Act in Assam. According to news reports, the daily wages in Assam for tea garden workers are Rs 232 in the Brahmaputra valley and Rs 210 in the Barak valley.
Not able to withstand the rising cost, estates are slowly getting converted to resorts for tea tourism. According to news reports, close to 40 percent of Darjeeling’s tea estates were put up for sale in 2022. These shutdowns are further creating price wars in the market. Tea has been sold at the same price for over 3 decades. The pandemic helped increase the price for the market but it was then brought down.
“When you compare the cost of production against the selling price, the sale price is not very attractive. Over the decades, production has increased, and small farmers have entered the game with support from the Government. But our selling price has not changed,” Udaykumar, CEO of Avataa Tea.
Avatar tea was started five years ago, but Udaykumar and his family have been in the tea business for over three generations. They have their tea plantation in Coonoor, Nilgiris. Udaykumar shares that employee benefits and other costs have increased by double in the last three decades, but the selling price of tea has not changed over the years.
Future of the Industry
“The beverage industry will always exist, likewise the demand for tea will always remain. We see changes coming amongst beverage drinkers and tea consumption is on the rise. These days the consumers want to go beyond the regular milk tea and opt for more herbal teas, flavoured teas,” said Darshit.
To sustain, players agree that they would have to go beyond the regular milk tea and create a niche for themselves in the market. For as the milk tea market is heavily dominated by legacy players.
India is one of the largest consumers of tea as well as the largest exporters. Players say almost 80 percent of the tea manufactured is sold in the country while only the remaining is exported. But in reality, the per capita drinking is lower, says Udaykumar. Avatar Tea was started as Udaykumar felt that they would have to come out with their brand and play the market to sustain the company.
“We play in the market of herbal teas and flavoured teas. We have come out with a lot of luxury teas such as dessert teas, honey lemon tea, and more. Our focus customers are the youngsters and attract more people to drink tea,” said Udaykumar.
Avataa tea promotes tea gifting for weddings, and corporate gifting as well as a way to attract more tea drinkers.