A view of the tea estates in Nilgiris district in Tamil Nadu Since it was first introduced to the rolling hills of Assam in the 1830s, tea has come to occupy centre stage in Indian culture—it facilitates mid-day motivation, conversations and every social gathering. Brought from China to India by the British, the beverage has found an important home in its adopted country where, at present, there are over 1,585 tea gardens and a workforce of more than 1.1 million people. The infamous masala chai—Indian-style boiled tea made with milk, sugar and ginger—consumed anywhere in the world is associated only with India. And now, also, the controversial chai tea latte. Yet, India does not have the largest share of the global tea market.
India is the world’s second-largest producer of tea after China. Eighty-nine per cent of the tea produced domestically is consumed (1,145 million kg in FY2021) in the country itself. Tea worth $704.36 million was exported overseas in FY21; Russia, Iran, UAE, the US and China are leading markets for export of Indian tea where flavours like Assam, Darjeeling and Nilgiri—among the finest in the world, recognised for their strong flavours and intense aromas—are popular. Despite this reputation, India has not been able to capitalise on its potential for tea export; it is the fourth-largest exporter (11 per cent of global exports) after Kenya (28 per cent), China (19 per cent), and Sri Lanka (14 per cent). A variety of reasons such as lack of access to capital, inefficient supply chains and non-adaptability to changing trends and technologies can be held responsible. The entry of new-age, consumer-driven and youth-run startups that are keen to build a global Indian brand of quality tea are challenging the stagnancy of the Indian tea market and finding sustainable ways to empower the industry. As Radhika Chopra, founder of No. 3 Clive Road, a Delhi-based all-female run luxury tea brand known for hand-blended teas, says, the goal is to create an “Indian brand, with Indian flavours and Indian stories.”
The coronavirus pandemic has exacerbated the growing popularity of e-commerce and propelled premium brands to embrace online retail, as in the case of No. 3 Clive Road. Chopra shared that the designation of tea as an essential item on Amazon helped sustain sales in the first two lockdowns of 2020 and the trend continued into this year.
Even India’s evolving role at the global stage and its transforming perception during this pandemic is benefitting these new entrants into the Indian tea industry. The role India plays at the global stage has, in part, aided efforts at reorganising the Indian tea industry and the goal of providing quality product to global consumers, according to Mrigank Singh, the co-founder of premium tea start-up Hindcha House. As Hindcha expands Mittal Tea House’s legacy globally, Singh expresses optimism for home-grown Indian brands that can now access overseas markets like Australia and South America where consumers have a higher willingness to pay. Enhanced ease of doing business in India—it took Hindcha 10 days to set up his business online via the Tea Board India, a Ministry of Commerce and Industry venture—is also helping smaller businesses access international markets. Furthermore, there is a growing clarity among consumers about the product they seek. E-commerce allows brands to engage directly with their global audience to understand and fulfil consumer requirements while streamlining distribution by eliminating intermediaries. This also preserves (and indeed enhances) the brand value of Indian tea by preventing marginal value addition elsewhere that changes the ‘country of origin.’ A direct link to consumers has been a reason for the success of Vahdam Teas, a home-grown premium tea brand, set up by Bala Sarda in 2015. Hailing from a family of tea entrepreneurs with 85 years of experience in the industry gave Sarda a deep understanding of the challenges in the supply chain and domestic branding. In his own brand, he has sought to correct these shortcomings. Recognising that consumers are as interested in the values behind the product as they are in the product itself, Vahdam has crafted a unique story to which consumers are attracted. It has paid off; in FY21, the company recorded a revenue of $21.5 million, 95 per cent of which came from global markets like the US and Europe.
Indian tea is also at the centre of indigenous holistic wellness traditions, interest in which has grown tremendously since the Covid-19 pandemic. An uptick in demand for herbal and organic teas has created a shift in consumer purchasing habits. More people are now looking to buy domestically produced products. This, Sarda says, holds potential for Indian tea to expand its reach. Furthermore, a warming climate is exacerbating existing challenges of pests and diseases and creating new ones: lack of dependency on precipitation and temperature levels. These compounding challenges threaten the quality of yields that, in turn, will disrupt the entire supply chain. Investments in research and technology adoption can help tea growers adapt to these changes. Finally, community development in tea growing regions and among tea growers, through education and infrastructure development can improve and ensure the quality of yield. Tea tourism can raise revenue and infuse cash into the industry, allowing estate owners to further invest in product and capacity development. By translating consumer requirements to farmers, brands can create sustainable supply chains that answer to changing market trends and create a market for Indian tea in all corners of the world. The authors are researchers with the Strategic Investment Research Unit of Invest India
Source: Bharat Times
