Consumers of tea in India are increasingly not getting to taste high quality premium tea varieties as most of them are exported and only a small part is supplied in domestic markets.
This is happening even as the domestic tea industry is facing the onslaught from more and more coffee chains which are aggressively capturing a larger pie of the quality beverages market in India.
Commenting on this phenomenon, Piyush Desai, Chairman & MD of Wagh Bakri Tea Group, said, "Due to the shortage of high quality premium tea supply in India, branded tea marketing companies like ours are forced to buy premium tea from Kenya and Sri Lanka at a very high 100% import duty.
"Such a scenario makes it very difficult for us to aggressively increase sales of our premium tea brands and take on the increasing competition from domestic and foreign coffee chains in the domestic market. The India tea market can grow by at least 5% if consumer preferences for quality tea are met and import duty is lowered."
Another major trend amongst the middle and upper income level consumers in India in the past few years has been the increasing attraction for 'organic' products.
"Considering the benefits for organic and green tea, there has been a surge in the demand for these types of tea varieties over the last few years. But, we are unable to meet this growing demand as supply of organic tea is very limited in India. Out of more than 5,000 tea producers in India, organic tea is produced by around 50 of them only.
"We at Wagh Bakri launched organic tea brands about three years back, but we are completely at the mercy of just 10 tea producers for supply of organic tea varieties for our use," said Desai.
Global consumption of tea is around 3,800 million kgs annually. China is the largest tea producer at 1700 million kgs, followed by India with 1100 million kgs, Kenya 370 million kgs, Sri Lanka 325 million kgs, Indonesia 55 million kgs, followed by others like Malawi and Pakistan.
The Indian tea industry is having thousands of tea gardens spread across various states of India. In West Bengal and Assam there are around 8,500 tea estates, while in the southern states of Kerala, Karnataka and Tamil Nadu there are another 5,500 tea estates.
India's total annual tea production is estimated at 1100 million kgs out of which 75%, approximately 850 to 900 million kgs, is produced by the big tea gardens while about 250 million kgs tea is produced by small tea growers with land area ranging from 2 to 20 hectares.
Desai said his priority is to increase domestic consumption of tea.
"There will be severe competition in the international tea market. On the other hand the domestic market sales and marketing by competing beverage coffee is rapidly creating challenge to the consumption of tea as many coffee outlets have been opened by Barista, Cafe' Coffee Day and others.
"The branded tea players will have to aggressively taken on these challenges and their success will hinge on the supply of high quality premium tea as well as organic tea," he said.