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Tea industry – Trends & market analysis by 2022; demand upsurge for quality tea
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Thursday, 26 November, 2020, 08 : 00 AM [IST]
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Rudra Chatterjee
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Tea is the most widely accepted beverage in India and the world. Fuelled by rising health-consciousness among people of all age groups and growing disposable income among consumers, the tea industry is all set to see an incremental increase in revenue over the next few years. The three top tea growing nations in the world, China, India and Kenya combined have a production rate of over 4.5 million tonne of tea per annum to meet an ever-increasing global demand.
With the onset of Covid-19, the estate working community has become more conscious about maintaining better standards of personal health and hygiene which will lead to a stronger and healthier workforce in the time to come. There have also been extensive awareness activities at responsible tea estates which have brought about a change in their mind-set.
The younger generation of people who previously migrated to larger cities now are choosing not to wander too far from home due to lesser employment opportunities being available because of the pandemic.This make for a formidable workforce which can also contribute to the production of quality tea.
There is an upsurge in the demand for quality teas which includes green tea, herbal teas as well as orthodox teas in India, which is gradually catching up with global tea consumption trends. By 2022, we expect to see an enhanced acceptance of green tea and orthodox teas from Darjeeling, Assam and Nilgiris which will be driven by the need to be healthy. There is and will be an even greater shift from the recreational syrupy milk tea which is made from ctc tea to tea which in its purest form, still retains its medicinal benefits.
With almost complete dependence on e-retailers during the lockdown period for consumption of tea at home more than offsetting the decline in out-of-home consumption. This trend is growing stronger by the day as several leading and relatively newer and smaller brands are vying for consumers’ attention online. Shopping online also allows one to become aware of several brands which would otherwise go unnoticed in brick and mortar retail and also educates the consumer about the depth and width that tea has to offer.
Tea manufacturers and bulk tea companies are bound to see a substantial increase in profitability from 2021 which will spill over into 2022 on account of an increase in domestic demand. While the increase in tea prices have been noticeable in both crush tear curl (CTC) and orthodox tea (ODX), CTC teas have enjoyed a larger price increase which is around 68 per cent per kg on a cumulative year-on-year basis during the period April to September 2019.
Small Tea Growers contribute to 50 per cent of annual tea production of India. With the improvement in prices of bought leaf, these growers too would be more conscious supplying quality leaf.Tea manufacturing companies are optimisticthat exports will increase, despite a decline of 18 per cent in 2020 due to the pandemic.Higher domestic consumption and increased exports will bring about an equilibrium in demand and supply.
Larger packaged tea brands are bound to dominate the market in the next few years as regional tea brands may find it difficult to maintain consistent levels of supply. Higher tea prices will make it increasingly difficult for smaller and local brands to procure quality tea and these prices are likely to sustain for some. The increase in packaged tea brands sale in 2020cannot be attributed to their marketing and promotional activities but rather they’ve recaptured market share which was previously lost to regional picketers.
To sum this all up, the tea industry in India is upbeat that by 2022, drivers such as a demand for quality teas, a strong domestic marketand improved exports will usher in better times for tea producers.
(The author is Managing Director, Luxmi Group, Kolkata).
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