India’s tea industry has been facing rising costs and stagnant selling prices due to market demand-supply imbalance, points out Tea Association of India (TAI) General Secretary PK Bhattacharya. Interacting with the business sector, Bhattacharya says that a thorough study needs to be done to map the consumption pattern of tea in the domestic market so that single-price realization can be maximized. Excerpts
What do you expect from year-round tea production in India in 2023?
India’s overall production figure remains at the level of last year’s production of 1366 kg with minor changes.
Auction prices remained moderate, What were the reasons for this phenomenon?
A sharp drop in export demand, mainly from Iran, Russia, and the United Arab Emirates, affected tea prices in auction centers. The introduction of the Bharat auction system in April 2023 in the auction centers of North India has affected the auction prices for the current year. Numerous operational problems such as lack of separability, bid escalation mechanism, floor price, base price, and overall complexity of the system resulted in ineffective price discovery. The Tea Board later returned to the “English Auction” held in North India in November. Slow domestic consumption also hampered overall price realization. Domestic consumption is not growing.
What steps should industry players take to ensure growth in per capita consumption of tea in India?
In order to map the consumption pattern of tea in the domestic market, a comprehensive study (market analysis) must be conducted to maximize the realization of unit costs. A strong public campaign focused on promoting tea as a health and lifestyle drink should be launched to increase consumer awareness of tea quality and compliance. The campaign story must be presented in a language understandable to the people of the country. The campaign must be anchored by a good marketing company and must be a long-term campaign. Going the last mile through digital marketing is also important.
What are the prospects for 2024?
India’s tea industry has been facing rising costs and selling prices due to a supply-demand mismatch in the market, which has kept farm prices low. The industry should limit its production and produce only tea varieties that meet the requirements and at the same time try to increase domestic consumption and export. If the industry can do this in stages, the outlook for the next few years is good.
