Indian Tea Market: Facts and Trends

India is second largest producer of tea in the world (2010). Indian tea production stood at 966 mn Kgs in 2010, slightly lower than 2009 production of 979 mn Kgs because of unfavorable weather conditions and pest attacks in tea plantations in Assam, major tea producing area in India. India’s production has remained stagnant since 2005 when it reached 945 mn Kgs.

Majority of the production is consumed within the country, in 2010, 193 mn Kgs (20% of the production of 2010) was exported and rest was used domestically. Despite large domestic consumption India stood fourth largest exporter of tea in the world. In 2009, the turnover of tea industry was in over INR 9,000 crore (USD 1.9 bn).

Trends in Indian Tea Market:

  1. Production is stagnant but the per capita domestic consumption is increasing steadily. In 2005, the per capita consumption was 691 gm while in 2008 it increased to 701 gms. Thus domestic market demand is going strong, though gradually.
  2. While large tea growers dominate the market, lately the percentage production by small growers has been on a rise. Their share has increased from 20% in 2003 to 26% in 2008. Organized sector faces from these small producers as their costs are lower.
  3. Packaged tea is gaining grounds as people start favoring it over unpackaged ones. Unpackaged tea , which is generally cheaper is largely sold in rural India.
  4. Green tea is one of the fastest growing categories driven by its health benefits
  5. Small retail stores dominate as the sales channel for tea while super markets are increasing their share (as organized retail increases its penetration).
  6. Intensifying competition due to arrival of new players and launch on various product brands. Most of the large players have launch brands catering to different income categories to address the market.
  7. Pack sizes have increased as companies try to cater to various requirements of consumers, for example larger brands have 2kg, 1kg, 500gm, 250gm, 100gm, 50gm and 25gm packaging.
  8. In many regions brands (such as Wagh Bakri in Gujarat) dominate locally while large brands such as Tata Tea and Brooke Bond ara available throughout India. Local brands also generally have small variety in terms of pack sizes vis-à-vis larger brands.

Key players in Indian Tea market
Significant amount of retail sales of tea is unorganized. In organized sector Tata and Hindustan Uniliver dominate the market. List of key players are:

  1. Tata Global Beverages (market leader)
  2. Hindustan Uniliver Ltd. (market leader)
  3. Duncan’s Industries
  4. Wagh bakri
  5. Goodricke Grp.
  6. Twinings

Key brands in Indian Tea Market
Indian tea market has hundreds of tea brands. Some of the popular ones are:

  1. Tata Tea
  2. Broke Bond
  3. Duncans
  4. Lipton
  5. Wagh Bakri
  6. Goodricke

Opportunities in Indian Tea market
Urbanization and rising income are changing the way Indian consume tea. Some of the opportunities in the segment are:

  1. Flavored tea market is promising, some of the popular flavors include, ginger, cardamom, lemon, tulsi, etc.
  2. Green tea is one of the fastest growing tea category and present opportunities for various brands
  3. Tea bags are a growing category. Tea bags also command higher prices as compared to other categories. Tea bags are also packaged in various flavors such as ginger, lemon, etc.