India is the largest producer and consumer of tea in the world,
besides being
the largest manufacturer and exporter of tea machinery. India
also leads in global R & D in tea industry. Other major
tea producers source equipment and technology from India. The
tea plantations were started in the middle of the 19th century
under British management. The farm ownership is fragmented with
listed companies accounting for about 40% of total tea production.
There are also a large number of small players. 80% of the farms
are of the size less than 8 hectares and contribute only 10%
of the production. The annual per capita consumption in India
is low at 650gm compared to other countries like Pakistan (950gm),
Sri Lanka (1.2kg), UK (2.5kg) and Ireland (3.16kg).
Industry growth
The annual tea production has been around 800mn kg for the last
2 years. For the first 10 months of 2000, the production increased
by 6%. The consumption is currently around 600mn kg. But over
the last one year the consumption growth has slowed down. This,
along with falling exports, has led to surplus supply and falling
prices in the market. Tea plantations in India are concentrated
in the North-East (Upper Assam, West Bengal) and the South (Kerala,
Tamil Nadu). The North-Eastern region with 82% of area accounts
for 76% of total tea production. In the North East, the yield
is lower but quality of tea is superior.
Exports
Russia is the biggest tea export market for India. Tea is also
exported to USA, UK, CIS, Germany, Japan, UAE, Iran and Poland.
But Indian trade with Russia since break up of USSR so far has
been on the debt repayment funds scheme which is going to get
over by 2005. This has made Indian tea 15-20% cheaper than teas
from other countries. So the fundamental question confronting
the industry is exports beyond 2005. Another issue confronting
the industry is that of differential import duty on bulk and
branded tea. Customs duty on bulk tea is 5% while that on packaged
tea is 20%. This differential duty has led to drop in export
of quality packaged teas, on which the margins are lower and
this has led to fall in exports value
Unique Indian Darjeeling Tea
India's Darjeeling Tea is unmatched in terms of its aroma and
quality. However, Darjeeling gardens produce only 12mn kg. The
cost of production is very high as productivity is low. Average
yield in Darjeeling is only 500 kg per hectare as compared to
all India average of 1700 kg. Darjeeling tea fetches a premium
of 70-80% on an average. Most of the Darjeeling gardens are
loss making. Dooars and Nilgiri teas (some varieties) fetch
high prices.
Tea preferences
Consumers in different parts of the country have varied tastes.
While dust tea is very popular in the south, good quality loose
tea is preferred in Gujarat. In Maharashtra, there is good demand
for both packet as well as unbranded tea. The eastern states
of West Bengal and Orissa consume CTC broken. Among the northern
states, CTC fannings is liked in Rajasthan and CTC broken in
others states of the North. Central India is predominantly a
dust market.
Packet tea
Before 1985, packet tea registered a slower growth as compared
to the loose tea segment. The trend changed with introduction
of polyester pouch packaging by Tata Tea. The polypacks took
12% share from the loose tea market and account for almost half
of the branded segment. The polypacks, besides being cost effective,
retain freshness and reduce lead time to reach consumers. Hindustan
Lever Ltd with a market share of 45% is the leading player in
the packet tea business.
For more information on the tea industry, contact:
TEA BOARD INDIA
# 14, B T M Sarani (Brabourne Road),
P O Box 2172, Calcutta - 700 001.
Phone: 2225-1411,
Telex: 2021-4527,
Fax: 033- 2225 1417
Email : teadevex@cal.vsnl.net.in
aninditaray@hotmail.com
tboard@gems.vsnl.net.in
| Source: India Infoline Sector
Reports |
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