Tea exports declined 20 per cent in the first half of the current financial year, due to lower availability and high prices.
Data compiled by the Tea Board of India showed export in the first half provisionally estimated at 81.85 million kg as compared to 102.6 mn kg in the corresponding period last year. The realisation, however, was higher, resulting in export value declining marginally to Rs 1,508 crore in the first half, compared to Rs 1,560 crore in the same period last year. The export unit price worked out to Rs 184.2 a kg during H1, substantially higher than the Rs 1,524 a kg in the first half of last year. India is the fourth largest exporter of the brew globally, after Kenya, China and Sri Lanka.
India’s tea production rose marginally to 690.3 mn kg in the first half ending September this year, from 688 mn kg in the corresponding period last year. But production for the entire year is set to remain lower by an estimated 25 mn kg this year, due to erratic weather in the major producing states, analysts say.
Crop shortages traditionally impact prices towards the end of the calendar year. Hence, tea prices are likely to go up due to a shortage of crops both here and abroad. During the September quarter, the erratic monsoon behaviour caused a lot of crop damage. The global shortfall this year is estimated at 43 kg as compared to last year, due to lower production estimates from Kenya, Sri Lanka and India, an analyst said.
An Icra Management Consulting Services Ltd (IMaCS ) report forecast India’s tea exports to decline to 180 million kg for 2012 from 193 million kg in the previous year, due to high prices. The benchmark price of the CTC variety has gone up to Rs 149 a kg from Rs 124.50 a kg, year on year. Dust tea prices have risen to Rs 152.6 a kg from Rs 123.6 a kg in the corresponding period of the previous year. These prices are set to rise further.
Beverage market
The global ready to drink (RTD) market, including tea and coffee, in terms of revenue is expected to reach $125 billion by 2017 as against $69 bn in 2011, an anticipated annual growth of 10.9 per cent between 2012 and 2017.
With the immense potential, Sentinel Exhibitions is organising the World Tea & Coffee Expo 2013 here between February 15 and 17, 2013, with at least 100 exhibitors from eight countries expected, to highlight the role of hot beverages globally. “The tea and coffee sectors provide employment to several million workers worldwide, both in plantation as well as in indirect and allied activities. Rising consumer awareness about the health hazards of carbonated drinks is leading to a shift towards RTD tea and coffee. Another major driver is a surge in the health conscious population who prefer the antioxidant property of RTD tea or the instant energy of coffee,” said Priti Kapadia, director, Sentinel.
Companies in the past decade have positioned the RTD tea and coffee market as recreational products, which have attracted the younger population. Advancements in technology and production efficiencies are likely to lead to lower labour costs. Further, the focus on high-protein, low-sugar diets is stimulating the demand for green tea, ground coffee and artificial sweeteners, which have shown strong signs of promise over three years.
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Per capita consumption of tea in India was 711 grammes in 2011, considerably lower than other tea drinking nations such as Ireland with three kg and more than two kg each in Britain, Turkey and Iraq, and more than a kg in Sri Lanka and Pakistan.
Domestic coffee consumption has been continuously growing, at an annual average rate of six per cent, largely due to a thriving upscale café culture. Coffee outlets, which have a lot of appeal for the new generation, are set to increase multi-fold in the next three years. The entry of global players such Starbucks and Dunkin’ Donuts in India would herald a strong growth trend. India exports a little over two-thirds of its coffee output, growing it primarily in the southern part.