Tea Industry in India

INTRODUCTION
INDIAN TEA INDUSTRY
MAJOR PLAYERS IN TEA INDUSTRY
STRATEGIC ANALYSIS OR INDUSTRIAL ANALYSIS
DISTRIBUTION CHANNEL
ANALYSIS OF TEA INDUSTRY
FUTURE SCOPE

1. TEA INDUSTRY IN INDIA

2. DEBOTTAM PAUL CHOUDHURY ISHITA BOSE SAUMYAJIT BANDAPADHYAY JHILIK CHATTERJEE DEBOSMITA MAJUMDAR TEAM MEMBERS

3. INTRODUCTION INDIAN TEA INDUSTRY MAJOR PLAYERS IN TEA INDUSTRY STRATEGIC ANALYSIS OR INDUSTRIAL ANALYSIS DISTRIBUTION CHANNEL ANALYSIS OF TEA INDUSTRY FUTURE SCOPE CONTENTS

4. INDIA IS THE 2 nd LARGEST GROWER AND PRODUCER OF TEA IN THE WORLD. WORLD LEADER IN TERMS OF CONSUMPTION,EXPORT AND PRODUCTION OF TEA. IT ACCOUNTS FOR 31% OF THE GLOBAL PRODUCTION OF TEA. INDIA HAS RETAINED ITS LEADERSHIP FOR THE LAST 150 YEARS. TOTAL TURNOVER IS ROUGHLY RS 10,000 CRORES. TEA AND LAND PRODUCTION HAS INCREASED BY 250% AND 40% RESPECTIVELY. INTRODUCTION

5. TOTAL NET FOREIGN EXCHANGE IS ROUGHLY RS 1847 CRORES PER ANNUM. PROVIDES EMPLOYMENT TO MORE THAN 1.1 MILLION INDIAN WORKERS. DARJEELING,ASSAM AND NILGIRI ARE THE THREE PROMINENT TEA GROWING REGIONS. CTC PRODUCTION WHICH IS CRUSH,TEAR AND CURL AND ORTHODOX PRODUCTION WHICH IS WITHERING,ROLLING,FERMENTATION,DRYING AND STORING ARE THE MAINLY TWO WAYS OF PRODUCING TEA IN INDIA. IDEAL DESTINATION FOR ALL TEA ENTHUSIASTS. LARGEST TEA DRINKING COUNTRY IN THE WORLD. ANNUAL TEA PRODUCTION HAS BEEN AROUND 800 MN . INTRODUCTION

6. ASSAM TEA IS FAMOUS FOR STRONG,BRISK AND FULL BODIED LIQUOR. NILGIRI TEA IS WELL KNOWN FOR DELICATE FLAVOUR,STRENGTH AND BRIGHTNESS. DARJEELING TEA IS FAMOUS FOR AROMA AND IS OFTEN CALLED FINE WINE OF TEAS. INTRODUCTION

7. THE TEA INDUSTRY IN INDIA IS ABOUT 170 YEARS OLD. IN 1823, A TEA PLANT WAS DISCOVERED IN UPPER BHAHMAPUTRA VALLEY. IN 1838, THE FIRST INDIAN TEA FROM ASSAM WAS SENT TO UK FOR PUBLIC SALE. INDIAN TEA INDUSTRY THE INDUSTRY WAS EXTENDED TO OTHER PARTS OF THE COUNTRY BETWEEN 50’S AND 60’S OF THE LAST CENTURY. HOWEVER, OWING TO CERTAIN SPECIFIC SOIL AND CLIMATE REQUIREMENTS, ITS CULTIVATION WAS CONFINED TO ONLY CERTAIN PARTS OF THE COUNTRY. .

8. TYPES OF TEA

9. IT DOESN’T HAVE A DISTINCTIVE GRASSY TASTE LIKE GREEN TEA. THE FLAVOUR IS LIGHT AND SWEET. LESS CAFFEINE . WHITE TEA MORE CANCER FIGHTING ANTI OXIDANTS THAN GREEN TEA. DARJEELING REGION PRODUCES SOME FINE WHITE TEA IN INDIA. PRODUCED MOSTLY IN CHINA AND JAPAN.

10. TASTES LIKE FRESH LEAVES OR GRASSY . LOWER IN CAFFEINE. HIGHER ANTI OXIDANTS PROPERTIES. GREEN TEA

11. TASTE IS SOMEWHERE BETWEEN GREEN AND BLACK TEA. SOME ARE CLOSER TO BLACK TEAS AND SOME ARE CLOSER TO GREEN TEAS. PARTIALLY OXIDIZED DURING THE PROCESSING RESULTING IN MEDIUM CAFFEINE AND ANTI OXIDANTS PROPERTIES. . OOLONG TEA

12. HIGHEST IN CAFFEINE. MOST POPULAR TEA IN THE WORLD. ALSO KNOWN AS C.T.C TEA BECAUSE OF UNDERGOING THREE STAGES CUT,TORN AND CURLED. BLACK TEA

13. STRONG EARTHY FLAVOUR. MODERATE IN TASTE, NOT AS STRONG AS BLACK TEAS. LOTS OF HEALTH BENEFITS LIKE LOWERING THE CHOLESTROL,HELPING IN DIGESTION. PU-ERH TEA

14. ITS EITHER GREEN TEA OR WITE TEA THAT HAS BEEN INFUSED WITH CERTAIN FLOWERS. IT HAS A WONDERFUL AROMA. HIDES THE VERY CHEAP TEA BEHIND A STRONG FLOWERY PRESENCE. SCENTED TEA

15. TATA TEA LIPTON GREEN TEA WAGH BAKRE TEA BROOKE BOND TAJ MAHAL TEA MAJOR PLAYERS IN TEA INDUSTRY TULSI GREEN TEA SOCIETY TEA TETLEY TEA BALAJI TEA GOODRICKE TEA APEEJAY TEA PATAKA TEA MARVEL TEA

16. PRODUCT OF TATA GLOBAL BEVERAGES LIMITED WHICH WAS SET UP IN 1962 AS A JOINT VENTURE OF JAMES FINLAY COMPANY AND TATA SONS. OTHER BRANDS ARE TETLEY, GOOD EARTH AND JEMCA. TATA TEA TATA TEA IS THE BIGGEST SELLING TEA BRAND IN INDIA,TETLEY IN CANADA AND SECOND HIGHEST IN UK AND JEMCA IN CZECH REPUBLIC. WORLD’S SECOND LARGEST MANUFACTURER AND DISTRIBUTOR OF TEA.

17. THE COMPANY WAS NAMED THOMAS J. LIPTON CO. AT 1890 IN NEW JERSEY ,U.S.A . DEMAND FOR GREEN TEA HAS GONE HUGE AND THIS COMPANY PLACE AN IMPORTANT ROLE IN DEMAND OF GREEN TEA IN INDIA. LIPTON GREEN TEA OTHER BRANDS ARE ICED TEA,TEA AND HONEY,BLACK TEA,HERBAL TEA, WHITE AND RED TEA,FLAVOURED BLACK TEA AND ICED TEA MIXES.

18. A HINDUSTAN UNILEVER PRODUCT. HEAVENLY FRESHNESS AND UNIQUE TASTE. OTHER PRODUCTS ARE TAJ MAHAL CLASSIC, GOLD, NILGIRIS, CARDAMON, DARJEELING, EARL GREY, GINGER, MASALA, GREEN TEA. BROOKE BOND TAJ MAHAL TEA

19. STRATEGIC ANALYSIS OR INDUSTRIAL ANALYSIS

20. DISTRIBUTION CHANNEL

21. SWOT ANALYSIS OF TEA INDUSTRY

22. Demand for tea has been growing at some 2% per annum and should accelerate further. Technical & Manpower Skill: Due to a huge population base in India, Technical & Manpower Skill is available in abundant. Good Research Support by tea growers will help industry grow further. O NE-STOP-SHOP FOR HIGH QUALITY SPECIALITY TEA e.g. Darjeeling, Assam, high range nilgiris etc. STRENGTHS

23. DIMINISHING AVAILABILITY OF WORK FORCE PARTICULARLY IN SOUTH INDIA. HIGH COST OF PRODUCTION,HIGH ENERGY COST DUE TO LOW PRODUCTIVITY. POOR INFRASTRUCTURE APPROACH ROADS TO GARDENS,WAREHOUSE. WEAKNESS

24. Export Potential if India can increase its production capacity To make tea more acceptable and fashionable like coffee To come up with new flavours/formulation of the tea, tea houses etc. to popularize the concept of tea in India. Large untapped rural market for branded tea companies like HUL and Tata Tea OPPORTUNITIES

25. LOW COST OF TEAS FROM KENYA,INDONESIA ETC. ROUND THE YEAR PRODUCTION IN COUNTRIES SUCH AS SRI LANKA ,VIETNAM. Cost escalation on account of increase in the cost of production. THREAT

26. PORTER’S FIVE FORCES MODEL THREAT OF NEW ENTRANTS BARGAINING POWER OF BUYERS THREAT OF SUBSTITUTE PRODUCTS OR SERVICES BARGAINING POWER OF SUPPLIERS RELATIVE POWER OF UNIONS, GOVERNMENTS, SPECIAL INTEREST GROUPS, etc.

27. INDUSTRY RIVALRY (HIGH) There are approximately 700 tea companies in India hence there is intense rivalry amongst them. Market is dominated by a large number of unorganized players. Industry growth is slow.   There are low switching costs.

28. LARGE UNTAPPED RURAL MARKET FOR BRANDED TEA SEGMENT IN RURAL INDIA AND INDIAN TEA IN GLOBAL MARKET. ENCOURAGING GOVERNMENT POLICIES LIKE FOOD AND BEVERAGE ACT. Threat of New Entrants (HIGH)

29. Threat of Substitutes (MODERATE) SUBSTITUES – COFEE, COLD DRINK, JUICE E XISTING CUSTOMERS ARE LOYAL S UBSTITUES PRICE MAY BE LOWER. AS THERE ARE SO MANY PLAYERS IN THE INDUSTRY A PRICE WAR IS UNAVOIDABLE. T HE SUBSTITUTE PRODUCT’S QULITY N PERFORMANCE MAY BE BETTER.

30. Bargaining Power of Buyers (HIGH) There is a large numbers of buyers purchasing the product.   The bargaining power of buyers is extremely high as the buyers have many options available.    Not much product differentiation in terms of taste also low switching cost. Buyers purchase a large proportion of the industry’s total output.

31. Bargaining Power of Suppliers (LOW) THERE ARE LARGE NUMBER OF PRODUCERS OF TEA IN INDIA. THERE ARE SUBSTITUTES LIKE, COFEE AVAILABLE IN THE MARKET. SUPPLIER’S PRODUCT CREATS LOW SWITCHING COST.

32. Relative Power of Other Stakeholders A sixth force should be added to Porter’s list to include a variety of stakeholder groups from the task environment. Some of these groups are governments, local communities, creditors, trade associations, special-interest groups, unions, shareholder etc.

33. POLITICAL FACTORS ECONOMICAL FACTORS SOCIAL FACTORS TECHNOLOGICAL FACTORS ENVIRONMENTAL FACTORS LEGAL FACTORS PESTEL ANALYSIS

34. PERMISSION HAS TO BE OBTAINED FROM THE TEA BOARD FOR PLANTING OF TEA ON ANY LAND. TEA INDUSTRY IN INDIA IS HIGHLY REGULATED. UNDER THE TEA ACT, 1953, THE TEA BOARD IS REGULATING THE PRODUCTION AND EXTENT OF CULTIVATION OF TEA. POLITICAL FACTORS

35. IT’S A GOOD TIME FOR INDIAN TEA INDUSTRY BECAUSE THE TOTAL NET FOREIGN EXCHANGE EARNED PER ANNUM IS RS 1847 CRORES, HIGHEST FOREIGN EARNING AGRICULTURAL PRODUCT OF INDIA. ECONOMICAL FACTORS

36. TO REMOVE PUFFINESS FROM EYES, SOAK COTTON PADS IN THE COLD BREWED TEA AND KEEP THE PADS ON YOUR LIDS FOR 10 MINUTES. REFRIGERATED USED TEA BAGS ARE ANOTHER ALTERNATIVE. SOCIAL FACTORS

37. BEING HIGHLY LABOR INTENSIVE INDUSTRY, TECHNOLOGICAL FACTORS IS LEAST AFFECTING THE TEA INDUSTRY. TECHNOLOGICAL FACTORS

38. TEA IS GROWN IN MONO CULTURE WHICH REDUCES BIO DIVERSITY. IN THE ABSENCE OF OTHER PLANTS, INTENSIVE USE OF PESTICIDES AND FERTILIZERS IS NEEDED LEADING TO TRACES FOUND IN PROCESSED TEAS. ENVIRONMENTAL FACTORS

39. REDUCED PRODUCTION BECAUSE TEA IS A POPULAR BEVERAGE IN MAY PRODUCING COUNTRIES AND OPPOSITION TO EXPORT TO OTHER COUNTRIES MAKES THINGS DIFFICULT THEREBY REDUCING THEIR SHARE IN THE EXPORT MARKET. LEGAL FACTORS

40. SEGMENTATION TARGETING POSITIONING DIFFERENTIATION STPD ANALYSIS

41. SEGMENTATION

42. POSITIONING

43. ANALYSIS OF TEA INDUSTRY

44. EXPORT OF TEA FROM INDIA YEAR QUANTITY(MILLION KG) 2010-2011 213.79 2011-2012 214.35 2012-2013 216.23 2013-2014 225.76 2014-2015 199.08 2015-2016 232.92

45. YEAR QUANTITY(MILLION KG) 2010-2011 19.26 2011-2012 19.21 2012-2013 21.09 2013-2014 19.23 2014-2015 21.02 2015-2016 18.43 YEAR WISE IMPORT OF TEA TO INDIA

46. CHINA 36% INDIA 22.60% KENYA 8% SRI LANKA 6.30% VIETNAM 4.00 % TOP FIVE TEA PRODUCING COUNTRIES IN THE WORLD FOR THE YEAR 2016.

47. DUE TO INCREASING CLIMATE RISKS, ONE MIGHT SEE THE INDUSTRY FACING SERIOUS HEADWINDS. BUREAUCRACY,MICRO MANAGEMENT, CORRUPTION AND ARCHAIC LAWS SPELL DOOM FOR THE INDUSTRY. PRODUCING QUALITY TEAS WILL HELP TO INCREASE SALES AND EXPORT BUSINESS WILL RISE. GREEN TEA HERBAL TEA ORGANIC TEA FUTURE SCOPE

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