Frenzy around Darjeeling tea first flush starts dampening

After a preliminary rise in prices to nearly $45 on average for the year's first harvest, prices started shedding 10-15% in mid-April

After an initial boost to Darjeeling tea prices, which rose by over 10 per cent in the international market just after the variety staged a comeback after a year, prices have stopped dropping by 10-15 per cent in the recent past.

After a preliminary rise in prices to nearly $45 on average for the first flush, or the year’s first harvest, prices started to fall by 10-15 per cent in mid-April.

Kaushik Basu, secretary general of the Darjeeling Tea Association (DTA) told Business Standard that he learnt that prices in private sales, which make up nearly 80 per cent of total Darjeeling sales, have fallen by 10-15 per cent.

Binod Gurung of the Goodricke Group has an explanation for this. He said, “Private sales will come down from the feverish excitement of early flush teas, so this is natural.”

Sources in the industry suggest that while the average price hovered around Rs 3,000-3,500 a kg early March, it fell to Rs 1,500-2,000 by early April, and by late April, touched Rs 900-1,000 a kg.

Some exporters also explained that bulk purchases by international packeteers and blenders has stagnated even after the world’s most prized tea returned to the shelves of international tea sellers and boutiques.

“There has been an increased uptake from boutique tea buyers, which led to prices increasing initially. As boutique tea sales fell, the average prices also fell”, a tea estate owner said.

Sugato Dutt, director at Subodh Brothers, a Darjeeling tea exporter, added, “However, bulk buyers and blenders from Europe and Japan are waiting even as they keep a constant watch on prices. It seems that they may buy once prices hover around $20-25 a kg.”

Although the Darjeeling tea industry had expected the interest in the international market to be enormous as soon as this tea was made available, the response has fallen short of expectations.

While Gurung said the demand this time to be “a little more” in comparison to the first flush of 2017, Basu said its comparable to the enquiries and sales posted in the last year.

This month, Andrew Yule, a state-run producer which owns the Mim garden in the Darjeeling hills, sold five kg of premium tea to Teabox, an online tea retail start-up, for Rs 15,750 a kg. Similarly, another small batch of boutique tea from the Namring Tea Estate in Darjeeling has fetched Rs 12,500 a kg in March, just after plucking commenced in the garden after the regular periodical shutdown.

Nevertheless, the record set by luxury tea sales last year, is more impressive. Makaibari Tea Estates was able to craft five kg luxury tea from its Kurseong plantation which sold for Rs 19,365 a kg ($302) in a private sale, which is its best price realisation from the first flush till day, while the Goodricke Group was able to sell 20 kg of white tip luxury tea from its Badamtam plantation at a price of Rs. 12,900 a kg. Namring Tea Estate, owned by the Poddar Group was also able to increase its price realisation from luxury tea at Rs 11,000 a kg. Other luxury variants like Glenburn Exotic had fetched better prices at Rs 10,000 a kilo for a 24 kg lot while Rohini Tea Estate, Darjeeling’s youngest garden, fetched nearly Rs 5,500 a kg for a 48 kg lot it sold in a private sale.

Last year, after the Gorkhaland agitation for a separate statehood spiralled into a 104-day bandh, the Darjeeling tea industry crumbled losing over 70 per cent of its production and Rs 3.5 billion.

Due to its long absence from the lucrative international market, producers feared that such a prolonged absence might result in bulk tea purchasers shifting to other tea variants like Nepalese, Ceylonese, Taiwanese and other teas – the closest substitute to Darjeeling tea.

Dutt stated that a large section of these bulk tea buyers have already procured ample quantities from Sri Lanka, Taiwan and others and are waiting for this stock to clear off before purchasing Darjeeling tea.