SILIGURI, West Bengal, India
The Confederation of Indian Industry (CII) this week hosted its second annual conference to emphasize the need for unprecedented levels of cooperation in the ongoing effort to revitalize India’s tea industry.
The confederation is a broad-based resource for growth that hosts numerous conferences on industries from agriculture and finance to information technology, manufacturing and mining. The Siliguri gathering was sponsored by the Tea Board of India and the India Tea Association (ITA) along with the Siliguri Jalpaiguri Development Authority (SJDA). Together they seek to boost tea production in a country already consuming more tea than any in the world.
Grower Rajiv Lochan of Bihar, who attended the gathering, reports that as early as 1960 a model was put forth to grow 1.4 billion kilos of tea by the year 2000. India approached that goal several times in the past few years, each time falling short of 1 billion kilos. Current year production is estimated at 950 million kilos, down from the 966.4 million kgs harvested in 2010 and well short of the 2.5 percent annual growth that domestic consumption demands.
The Consultative Committee of Plantations Association (CCCPA) announced Dec. 14 that exports will decline by 4 percent to 185 million kgs. Exports were 193 million kgs in 2010. Production was 847 million kgs through October.
India fell short this year for a multitude of reasons from aging plants to labor shortages, Middle East unrest and changing weather patterns including a dry fall and early chill. Exports were down despite firm prices and enthusiastic consumer demand in Russia and the CIS countries (which import about 90 million kgs) and in North America where exports of black tea through August are ahead of last year, according to the International Tea Committee’s monthly Imports by Country of Origin report. The United States imports about 6,500 metric tons of black and 400 metric tons of green tea from India, according to ITC estimates.
“From the inaugural session onwards, the theme revolved around bringing different branches of the tea industry – big and small growers as well as bought leaf factories – under one roof to discuss their strengths and weakness,” says Lochan.
“Now is the time to replant and revamp the tea industry through modernization and mechanization,” he says.
Siliguri is an example of progress. On Dec. 8 local officials inaugurated the North Bengal Tea Park near the New Jalpaiguri railway station. The massive tea park, the world’s largest in area at 60 acres, will house world-class storage, packing and shipping facilities. An inland container depot (ICD) will provide fast service for the 750 million kilos of tea passing through the strategically located city. Siliguri is the gateway to the north east where 500 million kilos are grown and provides support for Darjeeling which produces 8 million kgs; the Terai and Dooars tea districts of West Bengal as well as non-traditional tea growing areas in Bihar, Bangladesh, Nepal, Sikkim and Bhutan where another 250 million kgs are grown.
Various papers on means of increasing production were presented and research leaders proposed ways to better co-ordinate plantation efforts to grow more tea and tea that is better suited to a market with a renewed interest in health and wellness.
Chicago tea retailer and guide Dan Robertson described how tourism dollars can augment earnings at gardens willing to accommodate quality travelers.
There is much at stake. A report from India’s chambers of cmmerce (ASSOCHAM) predicts sales of $5.5 billion by 2015 from the current $3.7 billion INRs 19,500 crore (a crore equals $189,500).
“India is the world’s largest consumer, second largest producer and fourth largest exporter of tea after China and accounts for nearly 30 per cent of global output and nearly 25 per cent of tea produced worldwide is consumed in India ,” said D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the study.
Overall compound growth 15 percent per year, according to the study.
Weighing against growth plans are conflicting demands from within India and outside. Competitors like Kenya and Vietnam made great strides at the commodity end of the market through mechanization and China now grows black teas for export. Meanwhile Sri Lanka has greatly expanded its value-added industries to better meet consumer needs.
India has yet to embrace iced teas and bottled teas which already account for 5 percent of the non-alcoholic cold beverage segment. While 90 percent of Indian households report drinking tea regularly, there is little product differentiation and a growing interest in coffee by the young and affluent.
Branded tea accounts for 55 percent of the overall market and is growing at 20 percent per year according to ASSOCHAM with unbranded tea segment expanding by 10 percent annually.
Tea manufacturers including Wagh Bakri, Duncans Industries, Dhunseri Tea, Goodricke Group, Golden Tips Tea, Gimar Food & Beverages, Twinings, Jay Shree, Gopal Dhara and McLeod Russel project per capita domestic consumption will rise from an average 733 grams to 1 kg in the next few years. Consumption already is near 900 grams in the western reaches of the country where most of the tea is grown.
Hindustan Unilever is the current market leader in terms of sales value with over 20 percent share, while Tata Tea is the leader in terms of sales volume nearly 20 percent share, according to the ASSOCHAM study.
India’s 1,500 tea gardens now cover 600,000 hectares and employ 3.5 million workers. A mutual appreciation of tea offers groundwork for political support, suggests Lochan.
“What was interesting is the innovative idea of educating the local political setups through their leadership on the various aspects of tea industry so as to involve everybody in insuring the well being of the tea industry,” he says.
Growing economic pressures have compelled workers to consider the Tata Tea Ltd. initiative of worker-management partnerships and that has resulted in growing productivity, says Lochan.
Sources: India Tea Board, ASSOCHAM