Assam tea needs to have special recognition
Dheer Shah, MD, Jivraj Tea Company, highlights a common issue that the industry faces in overseas markets – lack of knowledge of Assam tea. He stresses on the need for a focused brand building approach in this regard to establish a premium positioning for the product.
IBT: How did the onset of Covid-19 impact your operations and exports, what strategies did you deploy to grapple with them and how is the international market for tea looking like at present?
Dheer Shah: The advent of COVID-19 has changed the way businesses are being carried out everywhere. The orders that we had were placed prior to the virus at market prices. But due to the sudden imposition of the lockdown, we faced a paucity in the supply of tea at the base level. Consequently, for example, tea priced at Rs 200 per kg prior to the pandemic was suddenly being sold for Rs 300 per kg. But since our orders were placed before this situation, we had to honour our commitments and sell our products at the pre-pandemic prices. This, in turn, impacted the sales of our export shipment and we incurred substantial losses. The pandemic-induced lockdown disrupted our timely procurement of supplies and consequently dented our exports.
Currently, the overseas tea market is booming with immunity-boosting teas in herbal and ayurvedic categories. Black tea is facing competition from countries like Vietnam, since their prices are quite low vis-à-vis Indian tea in international markets. While most tea exporters manage costs by blending in tea from Assam, South India & even Vietnam, it is difficult for us to reduce costs, since we deal in 100% pure premium Assam tea.
IBT: How has the pandemic affected the demand scenario in the domestic market? How have customer preferences changed, in terms of tea brands/varieties, and why?
Dheer Shah: While the demand for tea was quite stable in the domestic market, demand during the lockdown and out-of-home consumption (e.g. at offices, tea kiosks, soirees and restaurants) was almost zero. So, we saw a decline in consumption of certain categories of tea, which were primarily used for out-of-home consumption.
COVID-19 has changed consumer preferences towards more hygienic and branded tea, which is a boon for the industry. While there wasn’t much change vis-à-vis brands that were consumed, green tea variants (like green tea with camomile for sleeping and green tea with mint for refreshment) and other immunity boosting teas saw a rise in consumption.
IBT: According to reports, there has been a significant drop in the consumption of Darjeeling tea in the domestic market. What are the reasons for the same? Has the same trend resonated in the international market too? Why/why not?
Dheer Shah: There has been a significant drop in the consumption of Darjeeling tea in the domestic market as well as the export market. Darjeeling produces only a certain quantity of tea, which is very less as compared to India‘s overall tea production. It is considered as the queen of teas. For a tea lover, there is nothing better than enjoying a good cup of Darjeeling tea. Due to the lockdown and restrictions, there has been a certain drop, but I don’t see a major challenge in reviving demand for Darjeeling tea.
IBT: When is the demand likely to bounce back, in your opinion?
Dheer Shah: This winter season should do justice to Darjeeling tea. Around 60% of Darjeeling tea is sold in India via online channels. E-commerce platforms sell the most Darjeeling tea after domestic trade. But coronavirus hampered the e-commerce sector’s operations too. Lockdown and shutdowns would have led to decrease in Darjeeling tea consumption. Hence, there might have been a drop because at that time, people switched to whatever other brands they could find. Also, owing to the drop in production during that period, there were challenges in exports of Darjeeling tea.
IBT: What new product launches are you planning over the next few months and what changes are you making in your approach to market?
Dheer Shah: A couple of product launches are in the pipeline over the next few months. We are very excited about these launches because we will be one of the few players entering the pyramid tea bag category. Our products will be 100% pure with no added flavours, preservatives, etc. We are launching India’s first detox tea without any salt. These products are being developed and will be launched by early December. It will be a very interesting to see how the market response will be to these products.
We are also developing certain teas which help maintain overall health and also aid women in pregnancy. These shall be available in the market by February next year and as the Samara brand online.
IBT: What strategies are you adopting to make sure that the tea is processed and packaged hygienically?
Dheer Shah: We put in lot of efforts to make sure that our teas are not touched by human hands anywhere during the entire packing process. In fact, this has been a norm since the last 10 to 15 years for us. After blending, none of our teas are touched by hand; they are directly packed into consumer bags and are sold to the consumer.
IBT: What are the major issues that the Indian tea industry faces currently, when it comes to production, supply and exports?
Dheer Shah: A common issue that the industry faces in overseas markets is the lack of knowledge of a consumer towards our premium Assam blend. People there have a mentality that Indian tea is one of the cheapest, which is not true. The Tea Board of India needs to be roped in to promote our tea producing regions. It also needs to create a special recognition for Assam tea. That kind of marketing and brand building towards Assam Tea is very much the need of the hour.
We need to produce more and more quality tea for Indian consumers as well as for the general export markets. Customers should be willing to trust Assam tea as one of the premium teas. This is one of the major challenges that we need to resolve. On another front, we as an industry need promotion of Indian origin tea. Irrespective of the scheme and the figures decided around 4 years back, employee fees have doubled and advertising costs have gone up. If we are selling more it would help people producing tea, like farmers and labourers. At the end of the day they are the people who make a good cup of tea, working in the plantations.
Dheer Shah is the Managing Director of Jivraj Tea, a progressive company dating back to 1900’s and serving the global market with high quality Indian teas.