New tea marketing trends disrupt auction centre operations

The business of tea is undergoing a major change, with retail and online sales getting traction as packaging and branding become an integral part of it. People have started preferring packaged tea over loose tea post Covid, with a notion that packaged tea is a safer drink. This is enabling packaged tea to increase its market share, with it estimated to have reached around Rs 23,000-24,000 crore, capturing more than half of the Indian tea market, with around 1 billion kg tea consumption overall, according to market observers.

India produces around 1.3 billion kg and so far, bulk tea sales have been dominating the market. The bulk tea business is witnessing a falling trend this year, with around 38-39% of Assam tea of CTC and dust categories remaining unsold in the Kolkata, Siliguri, and Guwahati auction centres between April 1 and June 5 this year.

Although this is alarming, tea remaining in the pipeline is nothing new. Last year the quantum of unsold tea leaf was 28% and unsold tea increased 11%-12% in CTC and dust categories between April 1and June 5 this year, according to a Tea Board official. But Bidyananda Barkakoty, adviser, North Eastern Tea Association ( NETA), said this might have caused a demand- supply mismatch.

North India auction centres of Assam bought-leaf factories have so far got an average price of Rs 165.51 a kg during the current year for the CTC and dust categories, from the average total areas of tea grown. It was `188.50 a kg during the corresponding period ( April 1 to June 5) last year. Price realisation has been low despite increase in cost of production, with prices of coal and natural gas escalating by 120%. This has made the bulk tea market very volatile, a NETA member, who did not wish to be named, said.

Uncertain weather conditions seem to have contributed to quality compromise of tea production to some extent, but the brew quality this year so far has remained the same as that of last year. “Last year, Assam received scanty rainfall but this year there were heavy rains. This would certainly affect the quality of tea produced,” the member said.

On the other hand, the Darjeeling market has witnessed some face-lift in the estate-specific single-origin segment, for revival of tourism this year after a gap of two years. Madhav Sarda, managing director, Golden Tips, while speaking to FE, said tea boutiques were helping in the promotion of orthodox single-estate origin tea. The concept of opening tea cafes and bars has been imbibed by tea brands in a big way, with specialised mocktails and snacks being offered with premium tea. New infusions and varieties of teas augmented with healthy herbs and spices like turmeric, ashawagandha and tulsi are becoming popular and working as immunity boosters.

Discerning e-commerce customers, seeking innovation and diversity in products, were being offered premium teas added with immunity boosters. This has been able to catch up with the younger generation, Sarda said, adding tea was at present being promoted as a drink in the wellness segment and foreign buyers were getting attracted to such a drink.