The Rs 15000 crore Indian tea industry has been steadily growing at 40-50 per cent, and as customers are becoming more discerning, tea companies are catering to their demands by introducing various flavours adding a twist to their tea preferences By Kahini Chakraborty
Ahe Quintessential ‘chai pe charcha’ is one agenda that still continues to be an eagerly awaited session by Indians. First thought of as the drink of the royals, tea has indeed become the favourite of the common man as India leads the world in tea drinking. According to history, tea drinking culture in India which dates back to as old as 750 BC has its share of many milestones. Darjeeling, Assam and Nilgiri are the most famous Indian teas across the world, followed by Kangra and Munnar. At the macroeconomic level, as lifestyle preferences are changing rapidly among consumers, the demand for premium products in the market has increased. On retail shelves, the traditional kadak chai, masala chai and value pack CTC are making room for green and flavoured teas. While on the consumption side, the tea drinking culture has seen minor changes, both in the home and institutional spaces. At home, the trend is towards increased use of tea bags and out of home, savouring the brew in tea lounges and swanky kiosks is getting trendy. Market leaders like Tata Global Beverages, Wagh Bakri, Hindustan Unilever have seen the demand and are either introducing new varients or operating tea lounges.
“The tea sector in India is a traditional zone where the production and marketing is dependent on the auction system prevalent in different cities of India,” says Rishit Patel, director, Variety Foods, adding that recently, the marketing of tea has taken to the tea lounges/ tea kiosks and though the market is nascent, it is expected to grow exponentially in the coming years. According to the Tea Board of India, and as per an ORG India study report, the consumption of tea in India in 2012-13 was approximately 890 million kg. The total export of tea from India from January to December 2013 was 211.86 million kg which brought in revenue of Rs 4211.49 crore. “India is the largest producer of black tea as well as the largest consumer of tea in the world. Currently, India produces 23 per cent of total world production and consumes about 21 per cent of total world consumption of tea – nearly 80 per cent of the tea produced is consumed within India. Over the last 20 years, India’s world ranking as an exporter has come down from number one to number four, in the face of stiff competition from Sri Lanka, Kenya and China,” says Ragesh Keisham, chairman and managing director, The SuiGeneris.
Tea, which has been traditionally paired with biscuits is also seeing some novel pairings – masala tea with bun maska, Chamomile tea with muffins, green tea with salads, Darjeeling tea with egg varieties/ creamy desserts.
India could see a trend of more tea lounges opening up in the future. Ahmedabad-based Variety Food Products Distribution is planning to open 50 tea lounges by December 2015, with an aim to fill in the void of organised tea lounges and establish a major market share. Presently VarieTea lounges are present in Ahmedabad, Surat and Baroda. For their expansion, the company is looking at Maharashtra, Goa, Rajasthan and Madhya Pradesh. Rishit Patel, director, Variety Food says, “The capital investment proposed for the tea lounges is Rs 55 crore and Rs 20 crore for setting up logistics, warehousing and back up support infrastructure. On an average the tea lounges would have 80-85 covers. The lounges will be principally owned in order to maintain consistency and quality. Franchising option will of course be considered, if they meet the criteria.” He opines, “There is definitely a trend for more number of tea lounges in the future, as India is traditionally a tea drinking nation. The growth is expected to be exponential. With newer varieties of teas entering the market, the consumer is now spoilt for choice. Tea is a beverage catering to all age groups and income groups.”
Elaborating on the current market size of the tea industry in India and the expected growth rate, Patel opined, “The current market size of branded tea is nearly Rs 9500 crore. The expected growth rate for this sector is about five per cent. However, the lounge market, as per the consumer requirement 5,000 cafes/ lounges are required to fulfill the current Indian market trend. There are currently 1500 cafes / lounges operating which are national/ regional, out of which 1250 cafes/ lounges opened within a period of last five years.”
After opening their flagship outlet of Tea Trails in Thane’s Viviana mall and the second in Bandra BKC, entrepreneurs Uday Mathur and Kavita Mathur are scouting for more locations in Mumbai for expanding the brand. Tea Trails, a venture of Zone8 Tea World, will soon open at Malad Hypercity and Bandra. Uday Mathur, proprietor, Tea Trails informed, “We are upbeat with the response from customers so far and are looking at establishing 15 outlets in Mumbai itself in the next six months and then will look at other locations across the country. We could open outlets in Bengaluru, Pune, Delhi by next year. We will be expanding our reach in a controlled manner and intend to have different formats in Mumbai and then perfect ourselves before entering other markets. Currently we offer 50 varieties of teas in our menu along with food, pairing it with different tea varieties. This we think differentiates us from the other tea lounges in the market.” The capital investment done to launch Tea Trails in Mumbai has been approximately Rs two crore. “Going forward we are looking at establishing 500 outlets in India. We will also look at adopting the franchising model for our expansion. With our focus being on providing unique tea experiences, we will be continuously adding new offerings on our menu. Our target audience is customers in the age group of 25-35 years. As today’s consumers are open to experimenting tea, we see a huge scope for providing special blends to the market. Going further, we also plan to venture into retailing teas by next month,” he added.
When asked about the current tea market growth in India and estimated growth, he opines, “The tea production in India grew by seven per cent last year. The market for tea lounges, the space in which Tea Trails operates is nascent. If the coffee cafe growth seen in the last few years is to be the benchmark, the market is expected to double from the current levels by 2017 and reach a value of Rs 2,000 crore.”
For Twinings, India is one of the top five growth markets. The company that has about 35 per cent market share in the premium and super premium teabag category in the country is looking at increasing its business in India five-fold in the next five years. India is the third largest tea sourcing country for Twinings, after China and Kenya. The company is a big buyer of Darjeeling and Assam teas and is increasingly buying tea from the Nilgiris. Twinings is part of Associated British Foods. The range of teas in the India market include Earl Grey, Lemon, English Breakfast, Darjeeling, Green Tea, etc. “On the global scale at the moment if we measure the success through the annual growth rate then India will appear in the top five. If we assess the overall volume of business done here then it is not in the top five, yet. But our business is certainly growing here and India will move up the rankings very fast. We have introduced a good starting range of teas in India and we need to add to that,” mentions Stephen Twining, scion and the 10th generation descendent of the Twinings tea family.
Twining also believes that tea is the world’s biggest drink after water but it is undervalued. “It deserves high prices. We don’t apologise for our prices as we spend more money buying great tea,” he states adding that the company constantly looks at teas from around the world and what flavours people want. Twinings never uses any artificial flavours. “Tea is such a natural gift from nature. There are more natural flavours becoming available which means we have the opportunity to create more flavoured teas.”
If something is familiar even though it is new, then half the battle is already won. That could be seen as the reason behind why the new leaf has captured our attention faster than the coffee bean. “Different flavours of tea have been in use in different parts of the world. With the urban Indian travelling worldwide more, appreciation of different flavours of tea has developed and Indians are experimenting with exotic varieties like chamomile, white tea, flowering tea, organic tea etc,” opines Patel. The preferred flavours among Tetley’s green tea range include: honey-lemon, aloe vera and regular green. Typhoo offers flavours like orange, moroccan mint, jasmine, lemongrass while Lipton offers jasmine, lemon, honey etc. Boutique blenders like Neetu Sarin of Tea Of Life use real fruits and flowers in their blends. Several brands and blenders have gone a step further, taking tea out of the equation, to offer herbal blends that you brew just like tea. Tea patriots have remained loyal to the beverage despite the emergence of cafes and coffee bars over the last decade. “India could see a trend of more tea lounges opening up in the future as India is traditionally a tea drinking nation. The growth is expected to be exponential. With newer varieties of teas entering the market, the consumer is now spoilt for choice. Tea is a beverage catering to all age and income groups,” affirms Patel. Seeing this potential in the market, his company, Variety Food Products Distribution is planning to open 50 tea lounges by December 2015, with an aim to fill the void of organised tea lounges and establish a major market share.