 "tea")
A debate is brewing on what is leading to stagnating tea exports.
The Tea Board, a statutory body under the Union Ministry of Commerce, believes that producers need to reimagine exports and move from bulk to the branded packaged format. But producers feel it’s not their cup of tea.
The discourse comes at a time when export volumes are impacted by geopolitical issues and average domestic prices are also down from last year.
Anshuman Kanoria, chairman, Indian Tea Exporters Association (ITEA), said India would be fortunate to touch 200 million kg exports this year. “We are not going anywhere near last year’s figure.”
Last year (January-December), exports stood at 226.98 million kg.
Tea exports, however, have been stagnant over decades, hovering around the 200-250 million kg mark.
A BDO India-Bengal Chamber of Commerce and Industry report showed while tea exports comprised about 60 per cent of the total tea production in the country in 1960, the export share plummeted to 15 per cent in 2021. Production increased during the period from 321 million kg to 1,343 million kg.
To step up exports, Indian producers need to move to branded packaged format, said Tea Board deputy chairman, Saurav Pahari.
“We are sending undifferentiated tea as opposed to branded tea. Our teas are being blended with teas from other nations. And, the blend is branded and sold as premium tea. It’s the Indian producers who are losing out.”
“If the producers don’t evolve and continue doing what they have been doing for the last 50 years, they will perish. It’s high time the industry wakes up and reimagines exports,” he added.
About 87 per cent of India’s tea exports are in bulk format. But producers cite issues in going the branded way, the primary being the cost of promotion.
CK Dhanuka, chairman, Dhunseri Tea & Industries, said branded tea and bulk tea are completely different businesses.
He added, “The cost of establishing a brand is at least Rs 25 crore. In 2019, I sold my brands ‘Lalghora’ and ‘Kalaghora’ to Tata Global Beverages because I failed to grow them.”
Vikram Singh Gulia, managing director (MD), Amalgamated Plantations Private Ltd (APPL), said value-added tea or packaged tea would have to be seriously taken up for India to increase exports. He added, “But it requires deep pockets.”
“The government will have to incentivise packet players to launch a brand, which ensures quality standards like Ceylon Tea,” he said.
“Sri Lanka supported and promoted the Ceylon brand through credit facilities and international promotion decades ago in a major way. That’s why they are not looking back today,” Gulia pointed out.
About 60 per cent of Sri Lanka exports are in value-added forms such as packet tea, tea bags and instant teas.
Himanshu Shah, chairman, M K Shah Exports, said, “If you study China or the Sri Lanka model, value addition is the job of specialised people or merchant exporters just like production and branding.”
The major exporting countries in the world are: China, Kenya, Sri Lanka and India.
But India is mostly driven by domestic consumption, accounting for more than 83 per cent of production.
Shah suggested that a small but separate nodal agency be engaged specially for tea promotion.
He also called for incentivising value-added exports with schemes like the cash compensatory support. Shah added, “Many years ago, packet tea exports earned such support. This can help compete with Sri Lankan packet tea exporters.”
Atul Asthana, MD and chief executive officer (CEO), Goodricke Group, points out that his company is one of the few producers to also have a packaged format. He added, “But for stepping up value-added teas in the export market, we need to do promotion. And for that, government help is required. A sustained campaign for 2-3 years is required.”
Pahari, however, points out that even when the Tea Board used to run a generic promotion, it hardly improved overall tea exports.
He said, “Startups, which are selling in value-added format, could be the front-end for established players. They are making tea trendy again.”
“It could be a win-win for everyone if the producers engage with the startups. They need a reliable supply source and are willing to work with small tea gardens and estates. It would ensure that the tea is safe and complies with maximum residue level (MRL) standards anywhere in the world,” he added.
“We have lost the plot in terms of quality and compliance. And, that is impacting exports,” Kanoria pointed out.
The major problem with exports this year was Iran, one of the top buyers of Indian tea, which wasn’t registering contracts initially.
“Registration of contracts has started but the allocation of foreign exchange is insufficient,” Kanoria said.
But India cannot base its exports on any one country, he pointed out.
“In the 1970s, we were over-reliant on Russia. And then, the Soviet Union broke up and exports took a beating.”
The top destinations for Indian tea — Russia, the UAE, and Iran — account for about 46 per cent of its total exports.
“We need to diversify into new markets and India has no generic promotion funding at all right now for any of its tea markets,” Kanoria said.
