Indian tea exporters tackle West Asia market loss, gain ground in Iraq

'Aggressive promotion' helps companies to regain business share in nation

Indian tea companies have made major inroads in Iraq, cushioning the impact of drop they suffered in some West Asian major markets.

Exports to Iraq between January and October 2023 stood at 28.86 million kg (mkg) compared to 12.06 mkg in the same period the previous calendar year, according to data from state-run Tea Board of India.

Demand from Russia, United Arab Emirates (UAE) and Iran, which are major importers of Indian tea, has declined. Exports to Russia in January-October 2023 stood at 24.43 mkg compared to 32.83 mkg in the same period in 2022. UAE was at 28.51 mkg, compared to 33.01 mkg. Exports to Iran was a major disappointment at 4.35 mkg, compared to 19.52 mkg.

Overall Indian tea exports in January-October 2023 stood at 182.69 mkg, a slight dip compared to 185.75 mkg in the previous year.

Exports to Turkey was at 5.91 mkg of Indian tea in January-October 2023 compared to 1.64 mkg in the same period the previous calendar year, clocking in major gains apart from Iraq.

“We are trying to aggressively promote Indian tea and gain back the market that we had lost,” said Saurav Pahari, deputy chairman of the Tea Board.

Sri Lanka factor

Himanshu Shah, chairman of M K Shah Exports, said Iraq was predominantly an Indian tea market some 30 years ago. “They used to buy a huge quantity of orthodox tea from India.” His company is one of the largest producers and exporters of orthodox tea in India.

Shah said that as Indian tea companies increased their business dependence on Russia, Sri Lanka captured the Iraq market. “Now, a reverse is happening as Sri Lanka is yet to go back to its normal crop level after the economic crisis.”

Sri Lanka accounts for about 50 per cent of the global trade for orthodox tea, which has a large market in West Asia, but its production has declined gradually from a peak of 340 mkg in 2013. Production in January-December 2023 totaled 256.04 mkg, an increase of 4.20 mkg from 251.84 mkg in January-December 2022, according to information available on Tea Exporters Association Sri Lanka’s website. In 2021, production was 299.49 mkg.

Iraq was the top importer of Sri Lankan tea in 2023 but its offtake was 24 per cent lower year-on-year.

Anshuman Kanoria, chairman of Indian Tea Exporters Association, said Indian exporters have taken financial risks to develop new markets and offset the loss of volume in Iran. “They have participated in trade fairs in Iraq and regained a large part of the market, while making inroads into other West Asian markets.”

“Our exporters have also overcome the high import duty barrier in Turkey to carve out a larger market share,” he said.

Price differential

Industry experts said pricing was a major factor for India making gains in Iraq and Turkey. Indian exporters have taken a fair amount of share of Sri Lankan teas, said Mohit Agarwal, director, Asian Tea Company. “At the moment, our teas are cheaper than Sri Lankan tea. Lower production in Sri Lanka is also a factor for increased demand of the Indian teas.”

Indian orthodox prices in 2023 have been extremely low and this has hit a hard blow to the Indian tea industry, especially in Assam. However, the silver lining is that new markets in Iraq and Turkey have been discovered which we should capitalise on,” said Atul Asthana, chairman of Indian Tea Association and managing director at Goodricke Group

Asthana said price realisation in Iraq and Turkey is not as remunerative as in the Iran market. “The Iran market buys high-end tippy teas and does not mind paying good prices for them.”

Efforts are on by the stakeholders of the industry to mount missions in these countries once the region stabilises politically, he added.