Promotional
And Marketing Exercises
Though India's current overseas spends on promotional
activities at Rs 6.8 crore is higher than Kenya and Sri
Lanka's present levels, the industry still needs to devise
an overall promotion scheme and also market-specific strategies.
It has been felt that to create a strong brand image of
the Indian brew, our country needs to promote a single logo
for all varieties of tea, which will stand for country of
origin, quality and other specific attributes that need
to be defined. Sustained campaigns must also be organised
to educate the consumer about the quality of Indian tea.
Value Addition
Consumers worldwide
are moving up the value chain from loose to packaged and
RTD tea, thus providing increased opportunities for higher
realisations and margins. The opportunities for value addition
lie in blending, packing and the instant tea segment, where
India has significant capability.
Creating Niche Segments
India has established
a high brand equity in most premium niche segments, except
flavoured tea where China and Sri Lanka enjoy an advantage.
Nevertheless, our country must strengthen its competitive
advantage to increase value of its exports. In the medium
term, India's domain of competition should be mainly black
tea. At present, India has minimal equity in green tea -
and building this equity may not be feasible in the immediate
term. The resources should rather be utilised in leveraging
India's existing equity in black tea and consolidating shares
in that segment.
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DEMAND
FULFILLMENT
Correction Of
Product Mix
Five of India's
top seven export markets prefer Orthodox tea. And, of the
large world CTC markets, only UK is easily accessible to
Indian exports. India is surely in a disadvantageous position
on the product mix front.
Since Orthodox markets provide a better opportunity for
diversification and higher value realisation, India needs
to alter its product mix to produce more Orthodox. It must
target doubling of Orthodox production to 160 mkgs by 2006.
Reduction Of Landed
Cost - The Labour Cost issue
India
is the only tea producing country, where, in many cases,
costs far exceed auction realisations. In comparison, Kenya,
Sri Lanka and Malawi are favoured with a more stable price
structure.
Though in South India costs are about 18 per cent lower
than in North, it earns the least realisations among the
five tea producing regions. Further, auction prices are
falling consistently in South India. This needs to be corrected
immediately through benchmarking of costs with those in
countries like Kenya.
In India, labour and overheads are the largest cost components
so much so that in both the south and north zones the two
together comprise 70-75 per cent of the cost of production.
India incurs more than double the costs of Kenya on most
heads. This, because of a large labour pool (despite seasonality),
low productivity (yield/worker is 748 kg versus 1,026 kg
in Kenya), 50:50 split between direct wages and overheads
(70:30 in Kenya) and lack of wage-productivity link.
Regarding field inputs, our country suffers from some natural
disadvantages - pesticides, soil infertility and low focus
on R&D - clonals and replanting.
On the estate overheads and tax front, Indian producers
again are uncomfortably placed because of disproportionately
high administrative expenditure and also because of higher
burden of cess and taxes.
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Service
Levels 
