"India produces over 860 mkgs of tea… it has sustainable and steady exportable volume of tea. I think that volume will progressively undergo very significant changes in its value composition. The quantum of bulk tea exports will surely change."

Mr. Kumar said the country's exports comprise not only Indian tea but also a wide variety of the brew that are imported for re-export purposes. "India has a vast storehouse of managerial skills in sourcing and blending teas from all over the world. I think a new momentum is being imparted to the Indian tea scene in terms of innovations in packaging formats. For example, the Indian market for tea bags is increasing dramatically and it is fostering its own process of driving value-addition in many parts of India. These changes imply that one should not look at India in the context of the old image… The earlier the importing countries take cognisance of the changes that have taken place in the Indian economy, specially in the field of tea, the greater will be the chance of establishing a competitive advantage."

Mr. Kumar pointed out that the Indian tea industry turns quality-conscious when prices are falling and tend to forget that immediately as soon as a U-turn begins. "This time around the prices are not going to dramatically change, at least in the short term. Therefore the message the industry is learning is that it has to focus on quality and that must be central to the new endeavour in Indian tea… It is my assessment that this process of consolidation on the quality front will settle in very strongly and we will have a base of teas that are imminently exportable across the world."

Mr. Kumar observed that the dominance of Soviet buying pushed prices in India absolutely out of line with the global trends. Now, the price levels are unlikely to show those sharp spurts that were their characteristics in the past. "During the last 12 months-or-so, Indian tea prices at all the major auctions centres are entirely competitive with equal teas from different origins. So on the broad price front, Indian teas are going to be globally competitive."

Mr. Kumar said the plantation model in which the component of social costs is very large is no longer valid. The question now is of sustainability for which attacking the cost price is required, he added.

He also pointed out that dominant Soviet buying had tilted the production pattern largely towards CTC. "The imbalance will be corrected as soon as the producers find Orthodox teas to be more remunerative," he hoped.

Mrs. Anindiata Ray, Deputy Director (Tea Promotion), Tea Board of India, took over the dais and spoke on the marketing initiatives, facilitation and promotion activities initiated by her organisation. She informed that while tea production in India is growing at a CAGR of 1.8 per cent over the period 1995-2000, consumption growth over the same period was nominal at 1.2 per cent, resulting in a surplus which continues to put pressure on prices. Further, export volumes have also stagnated in the past two years — fallen at a CAGR of -1 per cent since 1998.

She pointed out that tea consumption is not expected to revive in the medium term because penetration levels of tea

are already high at 77 per cent and also because of competition from other beverages, specially the cola force. That leaves the industry to look for new export destinations and strengthen its position in the existing ones, she added.

While looking for business beyond the country's shores, Mrs. Ray asked the industry to take a careful look at the dynamics of the international markets.


* World supply in 2001- 3088 mkgs, demand- 2917 mkgs

* World supply — increasing at compound growth rate of 3.01 per cent (1995-2001)

* World demand — increasing at 2.52 per cent for the same period

* Assessed in dollar terms, figures since 1998 till Nov 2002 show a downward pressure on all auction prices worldwide

* WTO obligations towards a less protected economy

* Need to develop and nurture markets – whether domestic or export

* Need to redefine roles & strategies vis-a-vis all markets

* Need for long term commitment towards export markets

Mrs. Ray said the Tea Export Initiative: 2002-07, named 'Vijay', targets an export volume of 270 mkgs/year by 2006-07. In that connection, she also mentioned that in the Tea Board's new international marketing map, UAE is being viewed as the second-largest market for the Indian brew.

Talking about the inward-looking changes that have taken place, she mentioned that industry-led task forces have been set up for back-end issues such as Orthodox conversion, quality improvement and cost reduction. She also informed about the Crash Scheme for the upgradation of tea factories for manufacturing of Orthodox and non-RC CTC teas for addition, modification, renovation, up-gradation or replacement of machinery or execute electrical works.

Mrs. Ray also informed that the World Gold's Standard logo has been launched to ensure quality homogeneity of Indian exports. With so many forward-looking steps taken, the industry is riding firm on the growth saddle now, she said.
The presentation ended with the Q/A session.