A sharp decline in export demand primarily from Iran, Russia and the UAE has impacted tea prices at auction centres

 

India’s tea industry has been facing the issues of increasing costs and stagnant selling prices due to a mismatch of supply and demand in the market, observes PK Bhattacharya, Secretary-General, Tea Association of India (TAI). In an interaction with businessline, Bhattacharya says an in-depth study needs to be done to map consumption pattern of tea in domestic market so as to maximise per unit cost realisation. Excerpts:

 

Q

What is your expectation on the full-year tea production for India in 2023?

The all-India production figure is expected to remain the same as last year’s production figure of 1,366 mkg with minor variations.

 

Q

Prices at the auctions remained subdued. What have been the reasons behind this phenomenon?

 

A sharp decline in export demand primarily from Iran, Russia and the UAE has impacted tea prices at auction centres. Introduction of Bharat Auction system from April 2023 in North India auction centres has weighed on the auction prices in the current year.

 

With numerous operational issues such as lack of divisibility, bid increase mechanism, reserve price, base price and overall complexity of the system have led to an inefficient price discovery. The Tea Board later reverted to the “English Auction” in North India from November. A sluggish domestic consumption has also dampened the overall price realisation.

 

Q

Domestic consumption is not growing. What measures should industry players adopt to ensure an increase in India’s per capita tea consumption?

An in-depth study (market analysis) needs to be done to map consumption pattern of tea in domestic market so as to maximise per unit cost realisation. To create awareness among consumers regarding quality and compliance of tea, a strong generic campaign focus on promoting tea as a health and lifestyle drink needs to be launched. The narrative of campaign must be delivered in a language which people of the country understand. The campaign must be anchored by a good marketing company and it must be a long-term campaign. Last mile penetration through digital marketing is also necessary.

 

Q

What is the outlook for 2024?

The tea industry in India has been facing the issues of increasing costs and stagnant selling prices due to mismatch of supply and demand in the market which has kept the farmgate prices low. The industry needs to restrict its production and produce only compliant teas and at the same time try to increase domestic consumption as well as export. If the industry can do this in a phased manner, the outlook for the coming years seems good.