Tea industry warms up for a turnaround
Emerging markets like Egypt and Iran are once again looking at India and lifting more tea.
By Sutanuka Ghosal, ET Bureau |
KOLKATA: This may be a sheer coincidence. But the 61st year of India���s independence has augured well for one of the country���s oldest industries tea which made its debut in colonial India at the initiative of one Rubert Bruce, an employee of the East India Company, back in 1823.
But the tea business, which started out in 1838 under the patronage of Lord William Bentinck, lost its flavour, post-1998. Prices crashed, production costs shop up and Indian tea lost major export markets to rivals like Sri Lanka, Kenya, Vietnam and China. Suffice to say that the tea industry hit rock bottom in the last decade.
But come 2008, the bitter winds have been changing shift. Tea prices started inching up across all categories ��� CTC, dust, orthodox and Darjeeling. And, by early August, CTCs and dust tea prices shot up by Rs 25 per kg compared to the earlier year. Price of orthodox teas flared up by Rs 40 per kg, with Darjeeling tea seeing a Rs 50 per kg rise.
���Post-1998, tea supplies in India outstripped demand leading to a sharp fall in prices. This happened largely due to proliferation of bought leaf factories. The entry of fast foods and other drinks impacted tea drinking habit of Indians and domestic consumption fell to 1.8% from a level of 2% to 2.5%,��� said Aditya Khaitan, managing director of McLeod Russel India Ltd.
���Over the years, production at bought-leaf factories stagnated. Also young health-conscious Indians have migrated to wellness drinks, where tea is playing a major role,��� said Mr Khaitan, who is also the chairman of Indian Tea Association.
Like Khaitan, Tata Tea managing director Percy Siganporia feels after a gap of 10 years, Indian tea industry is seeing a turnaround.
But the tea business, which started out in 1838 under the patronage of Lord William Bentinck, lost its flavour, post-1998. Prices crashed, production costs shop up and Indian tea lost major export markets to rivals like Sri Lanka, Kenya, Vietnam and China. Suffice to say that the tea industry hit rock bottom in the last decade.
But come 2008, the bitter winds have been changing shift. Tea prices started inching up across all categories ��� CTC, dust, orthodox and Darjeeling. And, by early August, CTCs and dust tea prices shot up by Rs 25 per kg compared to the earlier year. Price of orthodox teas flared up by Rs 40 per kg, with Darjeeling tea seeing a Rs 50 per kg rise.
���Post-1998, tea supplies in India outstripped demand leading to a sharp fall in prices. This happened largely due to proliferation of bought leaf factories. The entry of fast foods and other drinks impacted tea drinking habit of Indians and domestic consumption fell to 1.8% from a level of 2% to 2.5%,��� said Aditya Khaitan, managing director of McLeod Russel India Ltd.
���Over the years, production at bought-leaf factories stagnated. Also young health-conscious Indians have migrated to wellness drinks, where tea is playing a major role,��� said Mr Khaitan, who is also the chairman of Indian Tea Association.
Like Khaitan, Tata Tea managing director Percy Siganporia feels after a gap of 10 years, Indian tea industry is seeing a turnaround.
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���We expect most tea companies will be back to the profit regime,��� he said. On the export front, 2008 has brought cheer to the Indian tea industry. ���Emerging markets like Egypt and Iran are once again looking at India and lifting more teas,��� asserted the chairman of Tea Board, Mr Basudeb Banerjee.Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
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