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  • Published on: 14th September 2019
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LITERATURE REVIEW

Dr.R.Sivanesan in his article “Tea Industry in India – Analysis of Import and Export of Tea” published in International Journal of Business and Management Invention, August 2013 helps to analyse the production and sales of tea in India, to analyse the average selling price of tea in India, to analyse the export of tea from India & to analyse the import of tea into India. The collected data is analysed using Statistical tools like correlation analysis and t-test analysis in order to fulfil the objective of the study. From the findings of the study, it is clear that more than 50% of tea was marketed through Indian auctions and the remaining tea was marketed through the open market. The study also shows a high positive correlation between exports of Tea Bag and Instant Tea. The study concludes that the export of value added tea from India was decreasing every year but the value of tea was increasing every year due to increase in the price of tea. The average domestic consumption and average per capita consumption was increasing in India. The study concludes that Export of Tea from India is significantly increasing. It is due to the effort of the Government of India through the Tea Board. It also explained the different varieties of tea produced and marketed in India and Foreign countries.

Dr.V.N.Asopa in her article “Tea Industry of India – The Cup that Cheers has Tears” published in Indian Institute of Management, Ahmedabad in July 2007 helps us to understand how Indian tea has lost all global markets and how the industry needs to be competitive in production, marketing, logistics and product forms. The article describes the difficulties on the trade front, auctions, transportation, sales, taxation, etc. making the situation much worse for the Indian Tea Industry.

The Board undertook an exercise to develop mid-term strategies for increasing exports during the Tenth Plan Period. In line with a mid-term export strategy for Indian Tea (2002 -2007), the Tea Board in 2002 strategised on 22 markets. The plan was to increase Indian exports of tea to these markets to a total of 280 million kg which was almost 72 Kg incremental. On this contrary, the exports actually declined during this period and there were significant losses in important markets like Arab republic of Egypt, CIS, UK and Poland. Some small size but well-paying markets like Saudi Arabia, Germany, Japan, France, Ireland and Sudan also saw Indian exports declining. There were some increases in quantities exported to the USA, Iran, Syria, Canada, Australia, and Netherlands but together these markets lifted small volumes.

Observations on Global Situation

The situation in the world markets for tea can be characterised by over supplies, a slow growth in demand, and a fierce competition. It is necessary to reduce global supplies by increasing domestic consumption, curtailing production or at least limiting further extension of the area, and developing new markets.

Due to competition and competitiveness, the Indian exports are declining in most of the key markets. Whereas the article suggests a decline in loose tea and packed tea, the demand for tea bags is on increase. India is in CTC teas and in that the competition is with Kenya. Kenyan teas coming from relatively younger bushes have a quality that is better suited for tea bags. Their labour costs are comparatively lower. Therefore, the tea industry in Kenya is more competitive than the Indian industry as is reflected by India's diminishing leadership in key markets.

The article recommends that the firms will have to build and control its supply chain that is cost effective and manageable. PFA standards are basic and need to be revisited given the present concerns for food and safety. The market for value-added teas is already crowded and it is a bit late for India to hope to make a big impact on that. As and when Indian markets opens for unrestricted tea imports, the Indian producers would further suffer. Perhaps, traders would shift from export to import business leaving producers in the lurch and the Government firefighting routinely.

Kakali Hazarika in her article “Changing Market Scenario for Indian Tea” published in International Journal of Trade, Economics and Finance in August 2011 helps us to find the causes of the crisis through which the Indian Tea Industry is going through since the 1990s. This paper highlights only on the problems related to the marketing of tea. Producers which are caretakers of tea do not have any active role in the auction system. Many industry insiders believe that the large buyers have co-operated with the brokers on the auction floor to keep the prices low. In tea industry, marketing part is done by the auction buyers i.e. big tea companies like Hindustan Lever Ltd, Tata tea, Brook bond etc. These big companies have very few gardens of their own or most of them have not. Even they are market leaders of tea. Actual marketing of tea starts after the auction. This process involves blending, packaging, advertising, wholesaling and retailing of tea. In most of the agricultural produces, value addition is done at the downstream; in the higher processing and retailing stages of the supply chain (Das 2009). This is also true with tea. Value is added to tea leaves at each stage of processing. As tea is ready to drink item, the downstream stages such as blending, packaging and ultimate marketing are the most profitable one. And here all the profit margins are collected by the big companies (Baruah 2008). Around 85% of world tea production is sold by a few Multi-National Companies (MNCs) with their enormous marketing skill.

The findings of production survey state that producers are satisfied with auction system regarding it as an effortless smooth process of tea disposal. So they do not want to think beyond it. It is seen that the garden management comprises of some employees only. They are paid for their duties. Hence they are not bound to think about better quality, new technology, market price etc. of tea as these are not included in duties. On the other hand, it is observed that 80% of the gardens are in the same condition since last 10 years in the case of production, infrastructure, labour problems etc., in most of them production is decreasing due to less attention by the management. The rate of replantation is also very low. The profit margin in production is very negligible; so developments of the garden are lagging behind.

The article recommends that a marketing department is essential for tea producers. To survive in the long run, producers must follow product development and marketing. Today, Indian tea producers are satisfied with auction prices, but with the increasing competition, near future only best quality tea will be accepted for auction also. So investment in market creation is becoming essential for them (Das 2009). The government of India with the collaboration of Tea Board can promote private sale of tea in some selected cities. The intention should be to create a direct contact between producers and buyers (Baruah 2008). In order to accelerate the market for tea, incentives should make to include tea in Trade fairs, Expos etc. where people will have all the varieties of tea in the same place.

Das H N, (2008) pointed that due to a higher price, tea producers are facing huge competitions from Sri Lanka, Kenya, Vietnam, Cuba etc., and therefore exports order are gradually falling. Non-Scientific variation of prices causes reducing demand of Indian tea in general and Assam tea in particular.

Jain Shweta (2011) identified some major factors as being responsible for India's poor performance of tea industry are high input costs, the old age of the bushes, unskilled labour, and lack of infrastructure, poor price realization, legal problems, outdated machinery, high fixed and labour cost, inefficient Tea Board, inability to compete with other tea producing nations in terms of price, quality, packaging, etc.

Majumder Basu and others (2011) observed that strategies must be adopted to meet up the challenges in global demand for tea industry in India. They suggested promoting tea as health benefit beverage to the nonconventional areas of tea in the world for an expansion in the consumption. Different types of tea products need to be developed for balancing the supply demand chain for the end user.  

Hazarika M and other (2011) found that Indian tea industry facing several challenges. Nearly 50 percent of tea bushes in the plantations are more than 50 years old. This factor leads to a decline in productivity.

Huge Potential in India's Yet Uncharted Tea Market by Euromonitor Research November 21st, 2014 states that In India, like other emerging Asia markets where tea consumption is high, there is a lot of focus on the value opportunity from the transition from unpacked (unbranded) tea to packaged tea products. Between 2008 and 2013, tea increased by 118% in retail value, reaching US$1.9 billion. Yet, retail volume growth has been less impressive, increasing by 20% in the same period. According to industry sources, unpackaged tea still accounts for at least 50% of the overall Indian tea market, indicating a significant opportunity for tea manufacturers.

The primary driver of the prevailing popularity of unpackaged tea is the price. Unpackaged tea is often priced much lower than its branded equivalent and thus more appealing to lower-income consumers, particularly those that reside in rural India.  Attracting this important demographic through lower price points achieved through small packaging or lower quality tea will be key for manufacturers seeking to increase their penetration in far from exhausted Indian tea market.

Substantial opportunity in unpackaged tea market:

• The low rate of per capita consumption stems from the fact that Euromonitor's retail tea volume figures do not capture sales of unpackaged and unbranded teas that are sold in high volumes through open-air markets and small grocers.

• Estimates derived from statistics on total per capita tea consumption from the Indian Tea Board combined with Euromonitor data to subtract tea consumed outside the home, suggest that unbranded tea products may account for as much as 56% of the at-home tea market in India. This indicates an opportunity for somewhere between US$ 2 and 2.5 billion in yet untapped tea sales.

• Unpackaged tea is particularly popular in rural areas of India, which accounts for 68% of India's 1.2 billion population according to Euromonitor data.

• Tea players must continue to expand their value-added tea offerings to meet the demand for premium products from higher-income, predominantly urban consumers. Value added products such as convenience boosting formats like tea bags, as well as non-traditional tea types like green tea, are growing in popularity in India due to its association with health and wellness.

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