Tea producer McLeod, others in talks with Alibaba for big China push

Sources say that these bulk tea producing companies are eying both the direct retail platform as well as the online B2B platform of Alibaba

A section of large bulk tea producers from Assam, including the world’s largest tea producer McLeod Russel, is holding talks with e-commerce giant Alibaba to explore the option of selling tea online in China and across the globe.

This follows Amazon India’s move to start roping in small tea growers from Bengal for direct selling in the US, Europe and other markets.

Sources said that these bulk tea producing companies are eying both the direct retail platform as well as the online business-to-business (B2B) platform of Alibaba. “China is majorly a green tea consuming country and hence selling green tea there doesn’t make sense. However, there is a section of millennials in China who are now preferring milk tea – this opens the possibility of exporting Assam black tea there,” Azam Monem, director at McLeod Russel, who is currently negotiating with Alibaba, told Business Standard.

Besides, McLeod Russel, which also produces limited quantity of specialty teas, is also looking at tapping individual consumers across the globe with its own range of such boutique teas via the Alibaba platform. On the other hand, bulk crush tear, curl (CTC) tea can also be listed online on Alibaba for B2B sales. 

India accounts for 30 per cent of the 83 odd B2B suppliers on the Alibaba’s B2B portal, following the ones from mainland China at 62 per cent.

According to the company’s B2B website, products listed on this portal are most popular in North America, South America, and Eastern Europe.

“The ready-to-drink (RTD) beverage category is expanding fast and we can also explore exporting such CTC tea to RTD makers,” an official, currently negotiating with Aliababa for listing, said.

The RTD tea and coffee category is expected to touch $ 116.13 billion by 2024, progressing at a CAGR of close to 5.6 per cent while the global tea market, which was valued at $ 46.39 billion in 2016, is projected to reach $ 67.75 billion by 2023, growing at a CAGR of 5.5 per cent.

Tea company officials suggested that even though black tea has its own stable market, particularly in regions like the Indian sub-continent, Russia and other European markets, the RTD category is outpacing traditional tea in developed countries like the US, UK and Western Europe. In Asia, the trend has started catching up fast.

Apart from tea retail firms like Tata Global Beverage, which has already introduced RTD, even PepsiCo and Coca-Cola have ventured into this space. PepsiCo has already introduced Lipton Iced Tea, Brisk and Pure Leaf, together with Lipton in 1991 and then in 2000 acquired SoBe Teas and Elixirs. In 2008, it started distribution of Tazo Iced Tea, which offers a range of sweetened, lightly sweetened and unsweetened RTD teas. 

Coca-Cola North America offers two premium teas – Gold Peak and Honest Tea and two refreshment teas – Peace Tea and FUZE Tea. Its Singapore division is now introducing the Authentic Teahouse brand in Singapore, which is a RTD tea with no sugar, additives or preservatives. It will start with Ayataka – an authentic Japanese green tea and Dao Hong Pao Oolong (tea variant), which is a full-bodied beverage having the richness and aroma of traditional oolong tea.

“China itself is a huge market but export constraints have been preventing Indian exporters from exploiting this market fully. Penetrating deeper into this market via an online e-commerce platform is a good option and Alibaba not only provides access to the Chinese market but offers a global platform for us,” Monem, who is also the chairman at the Indian Tea Association, said.

During mid-2017, the Tea Board had led a delegation, comprising officials of tea producing companies, to China to explore the option of increasing Indian exports by facilitating listing on the Alibaba portal.

ADDING FLAVOUR
 

• Bulk tea producers keen to list on Alibaba.com for retail as well as wholesale sales
• About 30% of total B2B suppliers on the Alibaba portal are Indians
• Listing may help treble consumer base and increase exports volume by at least 20-30 per cent
• Estimated cost of listing is Rs 0.1 million