CONTENTS
1. BREWING A BRIGHT FUTURE
2. FOR A TEATOTAL WORLD
3. COMPANY PROFILE
4. ADDING A NEW FLAVOUR TO TEA
5. THE BRACING CUPPA
6. BALANCED CONSUMPTION
7. QUALITY LIQUORED PRICE DIFFERENTIAL
8. CTC TEAS ENJOY BETTER DEMAND AT CALCUTTA SALE
9. INTERNATIONAL CONVENTION TEAS OFF IN KOCHI TODAY
BREWING A BRIGHT FUTURE
September 1999 will go down a month
of reckoning for the India Tea Industry. Over 350 delegates from all
over the world will assemble in Kochi to script a new future for the
Indian tea industry. And .as the organizers see it, it will help the
Indian tea growers brew a bright future in the next Millennium .the
timing of the seminar cannot be more appropriate than September. After
suffering nearly a decade a long eclipse the Indian Tea has finally
come out of the woods. Gone are the days of woes piled over bay the
disintegration of the soviet Union the major consumer of Indian Tea
in the impact of global over production sending prices on a tail spin
or the competition for cocoa and other health drinks .as an Industry
insider put it, the industry has once again proved the old saying infallible:
A fall in the pit is again in the wit. And the billion-dollar industry
added a few wits to its knowledge by learning from its fast mistakes.
Indeed a prelude from success in the market place. Whit remarkable resilience,
the Indian tea recouped it vitality by learning from the mistakes and
taking corrective steps to overcome challenges, both old and new. It
also initiated long-term measures to surmount the stifling influence
of short era for the Indian tea industry. "Delegates from 12 nation
including Russia and Pakistan will be attending the convention. This
is the first time that such a large number of foreign delegates are
attending a tea conference", an office bearer of the convention
said.
Russia the major importer of tea
from India, will be re presented by the maximum number of delegates
followed by other former soviet block nation, member of European Union
and the United States of America. Delegates from several nations of
the Asia-Pacific rim including Pakistan will also attend orations, discussions,
strategic sessions and free flow of feedback from the participants.
"Theoretically speaking it will provide the system work through
its feedback loop", planter's association office bearer says. According
to the organizers. Over 350 delegates from around the world will gather
at Kochi on September 6 and 7 to usher in new when the old allies started
to sell tea bought from India under the rupeerouble agreement in the
hard currency zones, under cutting Indians whit their own product. However,
the Russian nightmare is apparently over and the country is back for
fair game whit the Indian tea industry. "We have managed to put
an end to the foul flay by some element. Whit the help of both to government
we have ironed out the differences and now hope for a smooth, good and
enduring relationship", a trader who burnt his finger in the Russian
tangle said. The Indian tea industry has also realized that pinning
its fortune so close to a single market is fatal, if not suicidal. It
learnt the lesson of market and slowly spread its wings to other markets.
It also felt the need for technological up gradation, innovation and
marketing strategies to keep going in the increasingly competitive international
market. "Competition, let it be in farms or firms, is the shibboleth
in the industry now ", an official of a tea major said. It is in
the light of these developments that the international tea convention
was conceived. The themes of the convention range from the future of
Indian tea in various global markets, productivity improvement, product
diversification, developments in internal market, technological change
and product innovation. Other topics to be covered in the convention
are the Indian tea scenario, tea and its health related aspects.
The market with will get specific attention include traditional markets
like Russia. Equal emphasis is given to the upcoming global market like
CIS, USS and UK. A special session will be dedicated for the future
of Indian tea in the Middle East, where tea is common drink and where
a sizeable Indian expatriate population lives. The novelty of the convention
is that the industry will chart its new millennium growth path based
on the feedback received from the buying nations. "This is for
the first time that a such a method is attempted". Claimed a member
of the organizing committee. According to him, the crux of the convention
is to get a holistic view of the demand-supply scenario." A marketing
strategy entirely based on feedback from different flayers can only
take the Indian industry to the next millennium", he asserted.
Last, but not the least, the short Indian tea will get a special attention
in the seminar. Though, so far the industry focusing on brand building
based on a common platform, market segmentation by origin and source
will be a novel concept of the convention". He added. As an observer
opined". May the tea party last long for the Indian tea industry?
Return
to Table of Contents
FOR A TEATOTAL WORLD
Indian tea industry is in the throes
of a change. Production has seen a rapid rise in the last half a decade.
However, there are some disquieting trends as far as consumption is
concerned. On the export frond the challenge before the industry is
to discover new markets and to retain and expand existing markets. On
the domestic market, the industry has to cope with changing consumption
patterns as a result of the economic and cultural changes brought about
by the new economic policies being implemented in the country in the
last one decade.
The tea industry in the country
has two different identities, namely, the North Indian tea industry
and the South Indian tea industry. Industry spokesmen are of the view
that the two distinctly different identities are the product of the
different factors that influence production, marketing and profitability
of the industry in these two centers. The industry is in two-agro climatic
zone in these two regions. The soil is different, the rainfall is different
and the general agro-climatic conditions are different between North
and South India. The production cycle itself is 9months in the North
while it is 12 months here. This will have a great impact not only on
the production but also on quality.
The production of tea in the country
which stood at 744 million kilograms in 1994 increased to 811 million
kilo grams by 1997.In the next year, that is, 1998,it registered a quantum
in crease to touch an all-time high of 868.2 million kilograms. Industry
sources point out that much of this increase has come about because
of the increased attention ting paid to tea production as a result to
the target of Rs 1000 million kilo grams fixed by the government of
India to be achieved by year 2000.
Despite accounting poor nearly 25
per can of the total production of tea, the south Indian tea is not
very well known mainly because of the superior quality of the north
Indian tea. The superior quality of the Darjeeling tea, the larger share
in area and production, more industry-friendly state policies etc are
factors which helped north Indian tea industry to establish itself as
a more stable and stronger force in the tea industry scenario in the
country.
One reason for the relatively poorer
exposure that south Indian tea industry got was probably because of
its more or less total dependence on a few world markets. For a long
time, the S.Indian tea industry was dependent on the rupee trade area
like the erstwhile Soviet Union and Poland. Says an industry spokesman
"since we got a higher price from the rupee trade area a kind of
complacency set in and as a result we led a cocooned existence for nearly
20 to 25 years".
But once then break up of soviet
republic finally happened the south Indian tea industry was jolted out
of its complacency. Exports declined for a few years and the auction
prices fell sharply. During the years from 1994 to 1996 exports fell
to as low as 151,164 and 162 million kilo grams respectively from a
level of 210 million kilo grams in 1990.Industry spokesmen point out
that during these three years the Cochin Auction price Pell to Rs 34.39,Rs41.86
and Rs 44.42 per kilo grams respectively. Coupled with the increase
in cost of production the south India tea industry experienced pressure
from both sides. The S.Indian tea industry passed through a period of
crisis but its fortunes revived once again with the inclusion of tea
in the list of commodities to be exported to Russian under the debt
repayment agreement between the two countries.
Despite accounting for just 20 percent
of total production, exports have a major role in the fetching a better
price for the tea industry. A statement issued by the Association of
planters of Kerala ( APK ) points out that "consequent to the higher
exports of 1997 placed at 203 million kilo grams (share of south Indian
placed at Cochin auctions increased to Rs 61.57 per kilo grams ".
The corresponding price for 1998 increased to Rs 73.39 per kilograms.
The statement says that the reversal of fortunes in these years helped
the tea industry to wipe out the losses of the preceding thee years.
But tea industry spokesmen argue
that the high level of wages in S. Indian is a factor that affects profitability.
The average wage in south India in tea estates is Rs 65 per day while
in the North it is Rs 35 per day, industry spokesmen representatives
fear. This trended would be furthered aggravated because of the higher
carry forward stocks this year. Moreover, Russian imports have showed
a decline in the recent years and there is an emerging threat of free
imports of tea into the country from Sri Lanka as a result of the in
the Indo - Sri Lanka free trade agreement. All these are factors that
can affect the fortunes of the industry in the coming years.
The only positive aspect influencing
the industry' s fortunes is that for the average consumer, tea is still
the most affordable drink that is available today. Moreover, tea is
a natural drink which has no calories in it and which has a positive
impact on the health of the consumer, according to tea industry spokesmen.
This will also be the crux of the
campaign on tea being planned by the industry at a global level."
We are not planning any brand promotion ", said a spokesman . on
the other hand, the campaign that is being planned by the industry is
in the nature of a generic promotion. In places like India ,Pakistan
and Bangladesh the consumption of tea is increasing. In other laces,
especially in developed markets ,the competition from aerated drinks
and the other ready-to-consume beverages has had a negative impact on
tea consumption. Trough the consumption data shows a similar fall in
India last year, it is yet to be confirmed as a trend
But it is in the context of this
changing consumption patterns that the tea industry has to promote its
consumer base. The changing cultural habits and the new economic regime
has laded to change in preferences and taste. In that context the generic
promotion of tea especially as a healthy drink will be useful both at
the domestic and international level industry representatives argues
On the other hand, the tea industry
saint . moreover ,the laborer welfare measures adopted by the south
Indian tea industry also makes it a zone of high cost .' we are probably
paying the highest wage in the whole world, that is ,as tar as tea industry
is concerned' said a senior official of a leading tea company in the
south ..Again , despite the higher agate is low in the
south Indian tea industry
Industry spokesmen argue that under
such a situation the impact of the government policies like taxation
will have differential impact on the fortune of the two segments of
the industry. The south Indian tea is also similar to the Sri Lankan
tea and the Indonesian tea. As a result, the competition that is faces
in the international market is also severe.
The higher production is likely
to bring down prices in 1999, industry. For one, the industry quickly
realized that putting all eggs in one basket wouldn't do any help. Worse,
it would only ensure slow teats in the long run. So it was time to diversify,
both to new products and markets. There were several other lessons,
albeit bitter, the industry learnt from the bad times. Topping the learning
curve was the realization about value addition, packaging in marketing.
As a grower humorously put it : "The storm in the tea cap is over.
Now we will sail along with the wind". The international tea convention
is a major step towards this goal, ensuring prosperity or at least accent
survival in the next millennium. the convention will see a slew of seminars
delib the convention. Russia presence
With its omnibus of delegates is conspicuous on many counts. The tea
industry had savored nicked fortunes due to the vagaries of the Russian
market. In the good old days of erstwhile soviet Union, Indian tea was
in for good bargains not only in the motherland of communism but in
the entire red fort of East Europe However ,the glee turned to gloom
when the once omnipotent communist world crumbled .like many other Indian
industries ,tea industry was hit hard bay the episode. one fine morning
,the industry realized that the once eternal source of demand had suddenly
dried up and there were no other markets that could ensure an instant
tea party for the industry
The events took a turn for the worse
has to take into account the changing consumption habits ,especially
in the leading export markets .the new thinking in the industry is that
industry will have to learn to recognize the needs of the buyer and
produce for him .it is in this context that the tea convention ,where
the buyer and the seller will have a useful interaction ,assumes significance
,point out industry spokesmen .such efforts will go a long way to broaden
the client-base for Indian tea ,industry representatives feel.
Return
to Table of Contents
COMPANY PROFILE
The Right Blend
There has been no looking back for al Gayathri, witch-started operation
in 1993 from Cochin primarily as an exporter of tea and other commodities.
In a short span of 7 years, the company has established a name for itself
in the discerning international market as for its stringent quality
control, in line with the international standards.
Being located at Cochin, the fort
city has its advantages of having immediate shipping agreements, computerized
and consignment tracking systems. Specialists in the industry experts
in their own aright, make sure that the tea you get is of the aright
blend and taste.
Al-Gayathri began operations in
1993 from Cochin, the tea capital of south India. Engaged mainly in
the export of tea and other commodities. Al-Gayathri has made its presence
felt discerning markets, in a short span of time.
The promoters of the company have
long standing experience and expertise that encompasses practically
every aspect of tea.
Al-Gayathri boasts of a fully automated
processing plant that as facilities for packing hi quality the bags
(up to 200 per minute) blending and packeting of teas, adhering to international
standards. The plant is equipped with state of the art perfecta tea
bag packing machine to ensure highest quality the bags. It has a loading/discharge
platform that can handle big containers (up to 40 feet).
The flavour of success
Started in 1948 by VG Saraf, today Saraf trading corporation stretches
halfway around the globe. With representatives at tea auction centers
in India, Sri Lanka, Indonesia and Kenya, Saraf trading corporation
is able to ensure quality and selectivity of the teas in which it trades.
The liaison offices in Moscow and Singapore enhance their global reach.
Saraf trading corporation uses state
of the art machinery for blending and packaging its teas. It was the
first to export teas from 100 % export oriented units. It's been also
the first to have in house container handling, with storage and handling
facilities of over 40.000 sq.ft. Each at Cochin, Coimbatore and Coonoor,
the three auction centers for south Indian tea. With a potential to
manufacture consumer packs up to 50 mt of tea a day, and with constant
up gradation and value addition of its products, Saraf teas has built
a steadily growing clientele of discerning and satisfied buyers all
over the world.
Saraf teas are exported to the CIS
republics, Japan, United Kingdom, United States of America and many
other countries. The corporation brings in more than USS 20 million
through tea exports every year. Saraf also specializes in offering private
label packaging for a number of brands around the world.
The product range from Saraf teas
includes India and international teas in special blends. In loose consumers
tea packs, tea bags and bulk tea segments. But their specialty is the
exclusive range of tea bags with flavored the blends like strawberry,
orange, lemon, mango, peach, blackcurrant and earl grey.
Youthful Dynamism
A young and dynamic company managed by a team of professionals, paramount
tea marketing put ltd is one amongst the four licensed tea auction companies
operating in all auction centers in India, with offices in Cochin, Coimbatore,
Coonoor, Calcutta, Siligury and Guwahati.
They have amongst their clients,
most of the major planting companies and the major services that they
offer are tasting and valuation of teas, auctioning and marketing of
teas to obtain the best possible prices, and have a strong technical
team to advise on manufacturing process. Paramount academy of technology
does analysis and experiments in areas relating to plantation crops.
The grand's centurion
A century old company having nine estates at Vandiperial/Peermade of
Idukki district is popularly known as RBT ltd or Ram Bahadur Thakur
ltd.
The company produces one of the
best orthodox teas from south India and annual production is 6 million
kgs approximately. The company also produces 40.000 kgs of cardamom,
pepper and coffee. The estates are in the close proximity of reserved
sanctuary of Thekkady and the elevation is 4000 ft approximately.
Immaculate tradition
J.Thomas & Co. Pvt. Ltd, are the largest tea brokers in the worlds
since 1861. They have emerged as the largest coffee auctioneers in India
in a short span. They are also currently amongst of natural rubber for
major auto tire manufacturers in India.
Besides the three major commodities,
J.Thomas & Co. Are registered share brokers in the Calcutta stock
exchange, apart from owning a consultancy division and financial services
for their tea clients.
J.Thomas is a totally executive
and staff owned private limited company, thoroughly professional, which
enjoys immaculate credentials in the industry.
A model to follow
Harrison Malayalam ltd, a part of the RPG group of industries and popularly
known as HML has a glorious history dating back almost to the middle
of 19th century. The birth of HML is concurrent to the birth of the
organized plantations in south India. Even though the pioneers from
the UK stated the company. It soon becomes an integral part of the life
in Kerala.
Harrison Malayalam ltd, with 13
tea estates covering over 6000 hectares of tea is the second largest
producer of tea in south India and manufactures same of the finest orthodox
and CTC teas for the export and domestic markets. Their most popular
brands are mountain mist, Harrison gold and Surya. A premium Assam tea
called Spencer, has been launched in Tamil Nadu. Harrison is a major
exporter of high quality teas to CIS, UK, New Zealand, Germany, Netherlands,
Japan, Libya, and UAE. Etc.
With over 9000 hectares under cultivations,
HML is also the largest producer of rubber in India. It has also has
other diversified business like Engineering and plant Tissue culture.
Apart from being one of the largest
employers in Kerala, its high standards of business ethics and values
and unflinching commitment to the corners of the environment, makes
a model corporate citizen of India.
A. Heritage Of Quality
A.Tosh & Sons (India) Limited is one of the oldest (established
1897) and largest tea exporters in India.
Incorporated well over a century
ago, A.Tosh & Sons is proud to be associated with some of the biggest
& most prestigious tea companies the word over. By being able to
completely understand the various needs of the buyer, the company has
been very successful in maintaining excellent long-term relationships
with clients in abroad. A modern professional's managed company, A.Tosh
& Sons, today is completely geared up to face the challenges of
a rapidly growing global market.
A Tosh & Sons, has vast amounts
of warehousing facilities, with a packing plant where tea is hygienically
packed and containers stuffed within the factory premises.
The company's offices at port cities
over see timely movement of cargo and best vessel availability. Cargo
at sea is regularly monitored by the computerized consignment tracking
system.
Tosh's various offices abroad help
them to know the customer better and gives them first hand knowledge
of the buyers requirement, which in turn helps the company to give unmatched
quality and service.
Revolution brewing in Russia
This time it's an Indian company called Indu that's brewing a new revolution
in Russia, CIS and the Middle East. And it's brewing specially in the
tea markets of these countries.
Since 1995, Indu as a 100% export
company succeeded in penetrating into the Russian market with pure Indian
brands of tea. Badshah and Sultan become a revolution in their own strength
in this market. This made way for 11 more other brands from Indu to
follow.
Than, Indu as an export company
widened its range of products from tea to instant coffee than to tobacco
and pepper. But, everything Indian to the core. To be specific, the
great produce of India. The revolution is gaining momentum is these
countries. And the citizens of these countries are discovering the great
Indian flavors brought to them by Indu.
Global leadership
Tata Tetley ltd is a joint venture company with equal participation
from Tata tea ltd and the Tetley group ltd, UK
Tata Tetley has dedicated operations
for 100% export as well as domestic sales and manufactures tea bags
(black and flavoured) and packet teas (black and flavoured) for both
Tetley international and Tata tea under their respective brands. Our
products are presently exported to Poland, Middle East and Russia. The
products include 'drawstring' tea bag, which is a unique product developed
by the Tetley group.
Another name for quality
Haileyburia tea estates in the central travancore area of Kerala, is
the producer of the Chinnar brand of tea. Established in 1923, and with
knowledge and experience passed down from four generations of planters,
Chinnar tea has almost become a synonym for quality tea in south India
its system companies in Assam produce some of the finest teas in the
world, appreciated in the discerning markets of UK and Germany, the
groups specialty is green tea and recently one of its companies has
been certifier to produce bio-organic teas. Apart from tea the Haileyburia
groups has also diversified interests in coffee, pepper and various
other spices.
Indian teas for foreign cheers
With a passion for the subtle nuances that set apart the best teas-a
passion grounded in long years of experience and research, Jayalakshmi
Exports has been dealing in Indian teas with great care and connoisseurship.
Priding of the best of infrastructure for the selection, procurement
and processing of choice India teas for the global markets, Jayalakshmi
has acquired a distinguished reputation for bear an executing order
for its discerning international clientele. In Russia and other CLS
countries, Jayalakshmi is among the most important suppliers of Indian
teas. Jayalakshmi has worked hard to achieve its enviably becoming the
widely popular and tea round the world.
Jayalakshmi also has a long established
presence in the main tea auction centers at Cochin, Coimbatore and Coonoor
and are considered authorities on South Indian Teas of the Nilgiris-the
"blue mountains" of the Western Ghats hill ranges.
Pioneers in Progress
Forbes, Ewart & Figgis (P) Ltd. Pioneered tea auctions in South
India setting up operations in Cochin in July, 1947. They continue today
as the premier tea brokers with full-fledged offices at Cochin, Coimbatore
and Coonoor and handle in excess of 25% of the tea offered foe auction
sales in South India. Their clientele includes large Corporate Plantation
Companies, medium sized tea estates as also smaller proprietary holdings.
This reputed Company has a highly respected name for efficient functioning
with a high degree of transparency necessary in a public auction system.
They operate with a team of trained and highly experienced tea tasters
and auctioneers to service every aspect of the producers' equipments
for effective auction sales. They also have the necessary qualified
personnel to extend technical advisory services on manufacture and field
practices to the clients as and when required These professional services
are backed up with sophisticated computerized system for all aspects
of accounting and statistical analysis
Leading From the front .
The Bombay Burmah trading corporation (BBTC), India 's oldest public
limited company, was incorporated in the year 1863 and has interests
in plantations (tea, coffee, pepper, rubber and horticulture and industry(building
products, electronics and health-care) in India, Indonesia, Malaysia,
Singapore and Tanzania.
In south India, it has 1863 hectares
of area under tea cultivation at Mudis in Anamallais, (Coimbatore district
), 804 hectares of tea at Singampatti (Tirunelvely district) and 155
hectare of tea at Dunsandle estate (Nilgiris district). In addition
it has 927 hectares of coffee plantations at elk hill(Coorg district).
BBTC is a world leader in organic
tea production and its entire production of premium 'Oothu' and manimuttar
organic black and green tea is exported to Germany, Denmark, the Netherlands,
Japan, Switzerland, and UK & USA.
Making waves
The Aban group and plantation and marketing division comprises three
companies, rattan plantation ltd and Aban marketing and exports (P)
ltd . Tyford and rattan have two tea estates in the central travancore
plantation on area producing around 1.5 million kg of tea per annum.
Aban marketing sells tea in packets under the brand name Aban tea, which
is becoming very popular in the state of Kerala.
Strength through standardization
valleys group of companies, exporters tea from the early 50s, captured
the domestic market with their very popular brand of packaged tea Assam
apple valley standardization is the motto of the organization, reflected
not only in the quality of its teas but also in its technology and systems,
developer over a decade and a half of R&D.
The success of the company's products,
particularly Assam Apple Valley owes itself to an efficient and scientific
marketing system supported by a team of young and dynamic professional
and extensive advertising that promotes strong branding.
A strong and widespread network of stockiest and distributors adds muscle
to the company's marketing efforts.
Their product range includes pure
Indian teas from Assam and south India, available in leaf as well as
dust forms.
The company's specialties are flavored
teas like cardamom tea, ginger tea and spices tea.
Carving a Niche
Matheson Bosanquet (MB) group is seven decade old, having started operations
in 1930. the group has strong presence in plantation and advisory services,
exports and trading of tea, coffee and spices, shipping and port related
services, travel and explosives and accessories.
MB estates in Nilgiris produce very
high quality orthodox and CTC teas. They have full-fledged tea offices
at Coonoor, Coimbatore and the port city of Cochin go out. The group
has expert tea tasters and valuers. Mechanized blending is undertaken
hygienic condition in their own blending unit. MB is in position to
export over 5 million kgs of tea has earned a niche in the markets of
Japan, UK, Europe and Russia and CLS countries for over half a century
MB has full pledged shipping Division
in Cochin, which can handle all formalities for storage, handling and
shipments. MB has huge warehouses at Coonoor and Cochin and export cargo
is stuffed into containers in their warehouses . thus MB is in position
to over complete package for export of Orthodox and CTC teas for any
destination in the world with quality standards ranging from average
to the very best
Lasting Success
Under the able leadership of Mr. Hariram Garg - a stalwart of 40 years
standing in the tea industry, Asian ta and exports ltd has established
itself as one of the premier tea exporters in the country. In addition
a board of directors comprising eminent personalities in the tea industry
brings management excellence to a company known for its dynamist and
insight into the pinker aspects of the company has been is professionalism
that such collective experience and expertise have contributed
The group owns same of the finest
tea gardens in North India producing superior quality tea. The company
major brand Indian prince is becoming highly popular in markets abroad.
With state-of -the-art processing and production techniques in their
well designed factories, the company has registered rapid growth in
both tea production and export, in the last few years. Hardly surprising
for a company which is committed to quality and costumers satisfaction.
Return
to Table of Contents
ADDING A NEW FLAVOUR TO TEA
Ever since the first consignment
of 488 lbs of Indian tea
reached the shores of United Kingdom in 1838,
India's Tea Industry has experienced great challenges
And changes in the International arena.
International trade specialists
have suggested that the Indian tea industry my have to adopt a new (alternate)
market classification system to tackle the changing global scenario
in terms of economic reliability, relation of beverages to life styles
and the growing sentiment of environment and ecology. The alternative
tea market classification system propagated by Dr. A. Damodaran, professor
of economics and trade, Indian Institute of Plantation Management, Bangalore
has a nine fold classification which includes markets, agro-chemical
markets, primary champagne markets, lass liquid markets and impressionable
markets.
Dr Damodaran's paper 'Global market
for tea: Towards a new framework of classification' reproduced in the
Planters Chronicle has said a programmed based on this classification
system cooled perhaps form the basis for our presence in the international
scene in the 21st century. According to him the traditional system of
tea market classification is good enough to identify different export
outlets of tea disappearance but cannot be helpful in bringing out changes
in the global tea market. Traditionally global markets for Indian tea
have been viewed in terms of differences in produce and or in terms
of differences in tea processing and manufacturing systems (orthodox
and CTC ).
The global pressures on in Indian
tea can be viewed as those arising from the need to keep our supremacy
in the produce identify market and the need to push up value addition
for non-produce identity teas, argues Dr Damodaran. Further, he pointed
the specialty tea segment is also witnessing rapid changes. Quoting
specific cases he said there are indications that Germany and Netherlands
may move away from single origin focus to flavoured single origin exquisite
blends or organic tea. Likewise, he pointed Japan is moving towards
green tea and the US is heading for healthy decaffeinated teas. Thus
he argues segmentation of the specialty tea markets on these lines calls
for a relook at our flagship champagne tea markets. Further Dr Damodaran
has suggested new strategies to tackle the fragmentation threat. In
the non-champagne tea segment he pointed appearance and flavor market
are India's strengths. However, he pointed there is a need to push these
teas into the new impressionable markets, which are open to new sources
following structural changes in tea marketing systems. According to
him South Africa and Syria are the most impressionable markets. Further
he opines Pakistan is another impressionable market and is prepared
to look for non-Kenyan varieties including Assam and Nilgiris.
More importantly he indicated the
non champagne type Indian tea must think of not only conventional value
addition techniques such as packaging but also of projecting their ecological,
nutraceutical properties besides catering to the convenience market
which demand tea bags and ready to drink tea.
The prevalent and incipient trends
noticed for Indian tea in the global market indicate that the global
tea market is changing in their approach to tea as a beverage. These
changes need to influence our perceptions if we have to regain our foremost
position in the international market. He also feels Indians should target
value added tea in high unit value realizing markets such as UK/Saudi
Arabia, west Europe and the US. However, he reminds that market entry
barriers could be formidable in these markets. Market entry barriers
are reflected by inadequate shelf space for our tea brands in these
market and high trade margins can deter seeking shelf space for our
tea brands in these market and high trade margins can deter seeking
self space in these market as these margins can wipe out our profits
in some of the high value realization markets. Mr. Damodaran explains
the quirks and problems that could be encountered by a new entrant in
the high value realizing Saudi market .
* Sri Lanka is dominant player
* Local Rabca tea top packet tea with more than 50 percent market share.
* In tea bag segment Lipton yellow Label has 90 percent share and command
10 -12 per cent higher price
* Foodstuff companies are main importers
* Supermarkets -retailer margins are high
* Customs and lab clearance is must for imports
* Beuchmark set by rabea and Lipton
* Best hope to get into Saudi market is to initially get in as blends
and then launch a brand with an ethnic name Internal-trading structures
of tea import market.
* Having own brands and desire to have Indian tea as blends i.e. desire
only exports from India of loose tea.
* Having wholesaler or retail chain or distribution arrangements. Would
like our tea for utilizing capacity of shelf or to break into established
brands. May or may not want packing to be done in India.
* Wanting to introduce their own brands and would like to source Indian
tea.
New Tea Market Classification System
Produce Identity Markets
Champagne markets Saudi Arabia,
Germany, Netherlands and Japan
Agro chemical markets USA and Europe
Ecology markets Europe particularly Germany
Non-Produce Identity Markets
Appearance Pakistan, Poland, Egypt
and Iran
Bio Chemical USA and Japan
Cuppage East Europe and Russia
Illiquid Iran and Russia
Ecology Europe particularly Germany
Impressionable South Africa, Syria and Pakistan
Combination Convergence
1. Appearance + Cuppage + Impressionable
2. Appearance + Illiquid + Ecology
3. Appearance + Impressionable
4. Champagne + Agro Chemical allergic + Ecology
5. Champagne + Bio Chemical + Ecology
Return
to Table of Contents
THE BRACING CUPPA
A nice cup of tea in the morning
is quite welcome. It refreshes the mind. It in violates the body. It
is palatable on all occasions as the cheapest beverage in the world,
for both the rich and poor. It never intoxicates. The latest finding
is that it has a medicinal effect in controlling cholesterol and heart
ailments.
Tea growing in India was started
in the 19th century and it has undergone several changes over the decades
from initial planting packaging and now tea plantation is recognized
as one of the foremost agro industries of the country. India is the
largest tea producer and consumer in world now. However as things stand
today, it looks India may not be able to cater for event its own domestic
needs at the present ratio of tea production and the growing consumption
in the years ahead.
With this in view, the tea planting community strives to increase production
from the available land, which is limited for one of extension facilities.
Now the worldwide trend is to increase production buy innovative methods,
with accent on quality. While applying latest technology with regard
to cultivation, manurial, pruning practices, stress is given to planting
higher yielding clonal plants to help increase production/productivity.
Increasing of leaf harvest in is
only half the job as the leaf is to be manufactured through matching
machinery capacity in the factory to turn out quality teas for the consumers,
who are only concerned with the quality and cuppage, the producer in
the harvest of leaf applies. Mechanical plucking is being introduced
in several areas with a view to meet the shortage of labor in times
to come and ever increasing wages. However, only affluent producers
are able to plough back the huge many required for field and factory
mechanization. It is felt that South India lags behind in factory aggradations
compared to North Ease owing to less earnings and less funds to fought
back.
With the liberalization of economy,
it looks, finance may not pose a problem now, but the industry is shy
of investing the required quantum of huge amount in the absence of an
assured fair return, particularly in field of uprooting the old bushes
and replanting with high yielding material. Only if loans are made available
on long-term basis at lower rates of interest and/or subsidy/incentive
ranted to the industry, can the desired level of progress be attained.
On the manufacturing side more of CTC teas are being made to satisfy
the market need in view of its higher cuppage. However, orthodox tea
manufacturers cannot be given
up altogether as a segment of the population drink orthodox teas only.
With the passing of time, packing
technology has undergone a sea change. Faced with the shortage of plywood,
the industry switched on to jute Hessian bag packing. This trend is
likely to continue. Multiple wallpaper packing has not yet been commercially
adopted so far because of the high costs involved.
On the marketing side, the trend
appears favourable. The global output up to the first half of the calendar
year was trailing behind by about 100 m kg, to which India's share was
55 m kg. The shortage is most likely to continue as it could not be
made up because of adverse weather conditions. The carry forward of
last year has already exhausted and the pipeline stock is almost dry.
Russia has not so far bought its quota but may lift its requirements
any time. As such the market it is felt, is poised for reasonable improvement
in the near future.
The industry is in a comfortable
position with the auction system, as it gets prompt payment, but in
private sales/exports the finance is blocked for a considerable period.
Certain device is to be evolved for getting immediate payment. No doubt,
it will be a paying proposition to have overseas market promotion. South
Indian teas have the potential to finding a market in American, Canada
and Latin American countries where they have preference for ready to
drink tea. South Indian teas are best suited for this purpose as they
produce bright and light liquoring teas.
However, reverting to the domestic
demand, with the green revolution and advancing industrialization and
the ever-increasing population in India, the per capita consumption
will go up. Our production may not catch up even with the growing internal
demand and hence there will hardly be any tea left for export within
a span of 5/10 years. Perhaps in that event, we may have to import teas
prom SAARC countries for our own consumption and for exports after blending
with our teas.
There are several types of branded
teas which seem to be costlier compared to loose teas and with a sizeable
section being below the poverty line, the latter type may remain attractive
for quite sometime to come.
Return
to Table of Contents
BALANCED CONSUMPTION
THE south Indian tea industry has been largely depending on exports
( more specifically Russian market ) for its very survival. The price
level of south herm tea has been closely linked to Russian of-take.
Another feature of southern tea industry. Has been its liking to increase
production at the cost of quality. In the recent past. A perceptible
change is being with nesses and quality has become the buzzword the
price differential between quality and ordinary teas have widened and
are expected to winder further and stay at such levels. P S Ponnapa
chief executive (tea), Kothari industrial corporation Ltd, spoke to
the economic times on some issues pertaining to south Indian tea
Should the southern tea industry
be outward oriented and make teas for the export market?
South Indian tea industry should produce teas both for the exports and
internal consumption. South Indian produced 201 million kgs of tea in
1998, out of which nearly 100 million kgs of tea were exported- a major
portion to Russia and CIS countries. The production mix was important
for the south Indian tea industry since it had to cater to the huge
domestic demand for CTC tea. Output of Orthodox tea during 1998 in south
Indian was at the same level of 1997. If the domestic market were more
profitable, naturally would concentrate on internal market and reduce
exports. If Pepsi and Coca cola look the Indian market for tea consumption?
However, south Indian tea industry would do well to maintain an optimum
level of production - mix, taking into account the world market trend
the growing internal demand. It the global competition getting tough,
would it be better for the southern tea producer to winder their product
fort folio and scout for new markets rather than persist with Russian
market? Yes, with the global competition getting though, south Indian
producers should widen their product portfolio and scout for newer markets
like Japan, UAE, USA, Iran, Germany, UK, Iraq, Poland and Tunisia. In
a bid to highlight the emerging trends and in tea market around the
world, the tea board India along with united planters association of
southern India (UPASI) and tea trade association of Cochin, Coonoor
and Coimbatore are join tail organizing a two-day international tea
convention at the Cochin. The convention will enable the international
delegates to understand the current status of south Indian tea, see
the fantastic range of teas that are available prom south India, interact
in major tea buyers in the region, meet the officials from the commerce
ministry of India and the tea board.
Does the southern tea producers
have in-built flexibility to change the product portfolio or new investment
are required to achiev this objective?
In South India, pariaus types of tea are manufactured in the southern
region starting from the orthodox tea to CTC tea, green tea, organic
tea and instant tea. Most tea factories hare have dual manufacturing
facilities and the production process can be dovetailed to market requirement
by shifting from CTC to orthodox and vice versa. Similar flexibility
is also available in grade mix and leaf dust mix. The production is
round the year and therefore, assured of uninterrupted supplies. However,
most corporate factories have been modernizing their tea factories but
others will have to invest large sums of money to achieve the above
objectives.
Is there a need for southern producers
to concentrate on manufacturing quality teas? There is an immediate
need for South Indian tea producers to concentrate on manufacturing
quality teas, which was evident during the first six months of 1999,
when the market had crashed. There was a wide variation in prices between
quality teas and poorer teas-the difference in price being as high as
Rs. 15/-toRs. 20/- per kg. Even on earlier occasions, immediately after
the boom period, South Indian tea had witnessed such a trend.
How competitive is the Southern
tea industry when compared to northern industry and our foreign competitors?
You are aware that in the year 1998, Indian production was the highest
South Indian share was 201 m. kg and North India, because of the climatic
conditions etc, there is an inherent quality in North Indian tea whereas
the same quality is somewhat absent in South Indian teas, except Nilgiri
High grown. Therefore, North Indian Tea has an edge over South Indian
tea. Percentage of specialty tea and tea bags are higher in North India.
When compared to Sri Lanka, the south Indian teas compare well, but
the only big difference in Sri Lankan tea is that they have been very
aggressive in their internal consumption is negligible and they have
captured some of the good markets. South Indian teas are superior to
Bangladesh and Indonesian teas. However, with excise Duty imposition
and allowing tea imports, the Indian Tea Plantation Industry is like
to receive a severe set back in the near future. From the statistics,
as released by DGCI & S, it is revealed that as much as 7.75 m.kg
of tea as come to India during April to December 1998.
There is a growing feeling that
the southern planters could develop the domestic market. Do you think
this strategy would auger well for the southern industry in the long
run?
The per capita consumption of tea in our country is only about 650 gms
per head, which is the lowest when compared to some of the other tea
consuming countries. In that context, if Southern Planters could develop
the domestic market, increased demand could by created-which would be
an advantage particularly when the market goes down as witnessed during
the first half of 1999. last year, the domestic consumption was estimated
at around 640 m. kg. If this happens and exports do not fall, then domestic
markets could witness a flare up towards the close of the year. However,
the strategy of South Indian producers should be to maintain a proper
balance between exports and domestic consumption.
Return
to Table of Contents
QUALITY LIQUORED PRICE DIFFERENTIAL
The southern tea industry, which
had nursed great hopes during the first quarter of 1999, appears to
be liquoring a soggy brew and the immediate to medium term prospects
look bleak. More importantly southern gardens are in the danger of being
evaluated on the quality parameter and this is bound to change the tea
industry scenario for good in the long run. The average selling price
of southern tae at the auction centers, it appears, may not be able
to cover the cost of production.
Initial estimates of tight supply
position, following bad weather conditions, appear to be going awry
and the southern production is expected to be more or less maintained
the year comes to an and. While in July1999, southern production was
higher by 3.21 million kgs at 14.88 million kgs as against 11.67 million
kgs harvested during July 1998. Industry sources said the gains made
in the production front during July 1999 (a higher crop of 3.21 million
kgs ) in all probability could be wiped out during August 1999. The
southern tea crop for the January - July 1999 period stood lower at
108.44 million kgs as against 114.78 million kgs harvested the corresponding
previous period.
Notwithstanding lower crop worldwide,
the tea prices at the southern auction centers have remained depressed.
The sluggish price situation has also led to withdrawal at the southern
auction centers. The medium and poor quality teas suffered the most
and it is only the good liquoring sorts that have bucked the overall
trend. This clearly indicates that the market is increasingly showing
preference for good liquoring teas.
The price differential (between
good and other teas), which was very narrow earlier, is showing signs
of widening. It has already reached the range of Rs 20 to RS 30 per
kg and as the year progresses it is feared that this gap would further
widen. The planters, brokers and buyers all agree that price differential
is becoming a significant factor.
While select southern gardens have
been highly quality conscious and resources in maintaining the same,
most content in producing for the masses. It is these estates, which
are no struggling to keep pace with the developments and also facing
the consequences for having neglected the quality.
While the manufacturers of quality
tea no doubt incur additional expenses, the premium, which these teas
enjoy, acts as a cushion in maintaining the profitability. On the other
hand the manufacturer of medium and poor liquoring teas are exposed
to the vagaries of the market, dictated purely by the demand-supply
gap. In the scenario of cautious and select buying, the medium and poor
liquoring sorts are hammered to such levels, which often makes it difficult
for them to cover their cost of production.
With Russia absorbing substantial
quantity, the southern producers were assured of a market and thus increasing
output was the only concern and quality was neglected. Only when the
Russian buying slowed down, the quality factor raised its head and in
the process awoke the southern planters from their deep slumbers. The
financial crisis faced by Russian, which in turn has reduced their purchasing
power has to some extent slowed down imports of tea into that country.
More than the financial crisis,
the differential duty levied by the Russian government on packet and
bulk teas has affected Indian export efforts. The industry feats that
if this is allowed to continue Indian tea would lose to competition
from Indonesia and Bangladesh it may be noted that the Russian government
has imposed higher import duty of 20 per cent on packet teas, while
the bulk teas attract five per cent.
Tea exports to Russia during the
first quarter of 1999 stood at 15 million kgs as against 16 million
kgs the previous corresponding period. Further, it is learnt shipments
during April 1999 dropped to 2.70 million kgs as against 4.50 million
kgs exported in April 1998. Following poor Russian buying, the prices
have tumbled. Also the producers are finding it's difficult to divert
their output to other markets due to quality constraints.
In addition to this problem, the
producers are saddled with new excise duty of Rs two per kg of tea produced.
With the wage negotiation process
still not complete, the producers are keeping their cards close to their
chest as steep increase in wages could only add to their cost. Already
with selling price not meeting the production cost, the majority of
the southern tea producers only wish their brew did not spoil their
bottom line.
Return
to Table of Contents
CTC TEAS ENJOY BETTER DEMAND
AT CALCUTTA SALE
Better demand prevailed for CTC
teas with improved price levels for some varieties at the Calcutta auction
sale last week. Some overseas and internal markets operated with strength.
Good dooars offerings were absorbed
at firm Assam sold at firm to dealer rates. Fannings followed a dealer
trends and catchers were irregularly dearer.
The major blender was active along
with other packeters while Gujarat and Maharastra picked up the liquoring
lines with good support from other internal segments. The buyers for
the UK and the continent supported liquoring smaller brokens and fannings
while the CIS remained selective for bolder brokens.
Good dooars broken sold between
Rs 76 and Rs 86, good Assam brokens between Rs 90 and Rs 102 and south
India brokens Rs 60 and Rs 70 per kg. The offering consisted of 46.912
chests. Whit opening of 5.214 chest Darjeeling teas saw a good demand,
the best whole leaf grades being supported by exporters and the remainder
easing in value. Brokens and fannings sold at irregular rates with support
mainly from some exported and local traders. In the orthodox tea sale
liquoring whole leaf and brokens were well absorbed at irregularly dearer
rates while the cleaner sorts remained firm to dearer and stalker varieties
about steady. Fannings were also firm to dearer. The buyers for western
Asia and the continent lent good support with better enquiry from the
CIS the cheaper sorts being sought after by the local traders.
Good whole leaf sold between Rs
100 and Rs 135, good brokens between Rs 95 and Rs 115 and good fannings
between Rs 90 and Rs 97 per kg. The offerings consisted of 6.342 chests.
Dust teas (17.315 chest) were in good demand the liquoring descriptions
selling at firm to dearer rates. The mediums were dearer and the secondary
sold well. The major blender was fairly active along with other packeters,
Gujarat and maharastra preferring the liquoring teas and pekoe dusts.
UK buyers picked up the larger dusts. Good Assam dust sold between Rs
90 and Rs 102 and good dooars between Rs 70 and Rs 80 per kg. Siligury:
CTC teas enjoyed an improved demand. Clean and well-made teas were dearer
by Rs 2 to Rs 3 per kg. The remainder was firm and the browner sorts
sometimes tended easier. Cleaner secondary were dearer and the fibrous
varieties irregularly lower. The major blender operated with strength
with good support from other packeters, western India preferring the
liquoring teas.
Return
to Table of Contents
INTERNATIONAL CONVENTION 'TEAS'
OFF IN KOCHI TODAY
Whether you call it consolidation
or a last- ditch attempt to the time its status in the world market,
the south Indian tea industry stands to benefit from to the two-day
international tea convention which begins at Cochin on Monday September
6.
Though popularizing southern tea
globally is the main objective, the timing of the international convention
assumes importance as free trade in the commodity may take place in
the not-too-distant future. The international tea convention at Cochin
is the second attempt to showcase southern tea for the international
community. The first was the south India tea convention held at Coonoor
in March 1998 at a time when there was a slump in south Indian tea exports.
The last decade has seen a dramatic spurt in the southern tea exports,
as reflected in the tea boards statistic. South Indian exports as a
percentage of production substantially improved from 24.69 % in 1987
to 54.61% during 1998. This clearly indicates that southern tea industry
has been dependent on exports for survival.
This outward-oriented strategy has
also proved a bane for the southern tea growers. The problem has been
compounded further as the southern tea industry has been extensively
dependent on a single market. Only during difficult times were there
attempts (more precisely talks) to broad base the market (overseas).
When things improved, the focus was back on the " captive market"
of Russia! Finally a concerned attempt is being made to brew a new strategy
and the Cochin international tea convention is being hailed as the launch
pad for safe landing into the next millennium. Broad basing the market
is top of the agenda while product-diversification (specialty teas like
organic and green tea) has been touted as fresh initiatives to maximize
returns.
The keynote address is to be delivered
by commerce secretary P Prabhu. Tata tea managing director S M Kidwai
will be making a presentation on the Indian tea scenario. That will
be followed by a presentation on tea research in South India by Upasi
tea research institute director N Muraleedharan. The last presentation
(" Management Research for Competitive Advantage of Indian tea
Industry") is by Dr Subhas Sharma, Director, Indian institute Plantation
Management. The afternoon cession of the first day is expected to be
dominated by issues pertaining to packaging and specialist tea Buying
-The Harrods Way, are the to presentations that could be expected to
liquor fresh brew in the minds of participants.
That will be followed by a presentation, "current scenario of Russian
Tea Trade" by the general director of the grand Trade House, Moscow.
The Russian connection will continue
on the second day with a presentation, "The Tea Market in Russia
in the next Millennium. "These will bi followed with a presentation
on the US
Tea market and its relation to South India tea. After a short tea break,
the delegates will be given an opportunity to test their taste buds
(tea tasting session)
The last technical session has been
ear marked for presentation on specific markets, the Middle East, European
and CIS. The delegates will then be taken through a presentation on
the domestic market.
Kerjasama
Tri B. Santoso dan suhendar.8m.com
Copyright (c) 2001
