Climate Change and Changing Scenario of Rural Livelihood Structure
Changing Scenario of Indian Tea Industry
-
Upload
krishnendu-ray -
Category
Documents
-
view
219 -
download
0
Transcript of Changing Scenario of Indian Tea Industry
-
7/28/2019 Changing Scenario of Indian Tea Industry
1/12
Goodricke Tea
2013
Changing Scenario of IndianTea IndustryWith Special Reference to Goodricke Tea
Goodricke Tea
-
7/28/2019 Changing Scenario of Indian Tea Industry
2/12
2
Abstract
Tea is indigenous to India and is an area where the country assumes a lot of pride. This
can be attributed to the pre eminence of the tea as a dominant foreign exchange earner
and the consequent contribution to the GNP of the country. Tea occupied an important
place in Indias economy for the last several decades. The market for Indian tea is
changing day by day. Indian Tea was observed to lose its numero uno position in the
global tea market. Domestically as well it was losing its position owing to poor quality
and high price. In India the tea industry is facing tough competition from soft drinks and
other beverages like horlicks, bournvita or even coffee brands in that case. Earlier the
tea industry was dominated by the product oriented model of business. But now in
order to meet the growing challenges and competition in the market they adapted the
market oriented model. This represents the model wherein the lines of production are
linked to the market behavior. Here the product is sold on the basis of gratifying the
market demand. Few years back tea industry a market matching approach was followed
but presently both market creation and market matching approach is needed to face the
present challenges of the market.
-
7/28/2019 Changing Scenario of Indian Tea Industry
3/12
3
Contents
1. Introduction 42.
Overview: Indian Tea Scenario
..
5-6
2.1. Decline in the tea prices .. 63. Problems faced by the industry ... 74. The Present Domestic Tea Market of India ..... 8-95. Goodricke Tea: Market Share & Growth Trends .... 10-11
5.1.
Background ... 10
5.2. Peer Comparison 116. Conclusion . 12
-
7/28/2019 Changing Scenario of Indian Tea Industry
4/12
4
1. IntroductionThe tea industry in India is almost 200 years old dating back to eighteenth century when
it was first discovered by Robert Bruce, a British National. Tea was first discovered in the
upper part of Brahmaputra
valley in Assam and
adjoining areas. It was not
until 1838 that Indian Tea
that was grown in Assam
was exported to UK for the
first time for public sale.
Tea in India is primarily grown in the areas of Assam, West Bengal, Tamil Nadu and
Kerala. Apart from this region tea is also grown in small quantities in Karnataka,
Himachal Pradesh, Uttaranchal, Manipur, Arunachal Pradesh, Sikkim and Meghalaya.
Unlike most other tea exporting countries in globally, India has two dual tea bases. The
country produces both CTC and orthodox tea. The tea industry in India is agro-based and
follows labor intensive method for production and its operations. The industry is
renowned to have provided direct employment to almost 1 million people. Through its
forward and backward linkages another 10 million people derive their livelihood from
tea. In the Northeast alone 900,000 persons are employed by tea industry in permanent
rolls. Tea industry also stands as one of the largest employers of women amongst the
organized industrial sector.
-
7/28/2019 Changing Scenario of Indian Tea Industry
5/12
5
2. Overview: Indian Tea ScenarioTea cultivation started in commercial scale in India in 1839. The commercial journey of
Indian Tea Industry took off from Assam
and then it was extended to other parts of
the country between 50s and 60s of the
19th
century. However due to certain
specific soil and climate requirements the
tea cultivation in India was confined to only
certain parts of the country. The major tea
producing states in India include Assam,
West Bengal, Tamil Nadu and Kerala.
Assam and West Bengal together counts
for 75% of the total tea produced in India. India is acclaimed to produce some of the
finest tea in the world. The tea produced in different parts of India has different
characteristics. Assam tea for instance, is famous for their strong, brisk and full bodied
liquor; Nilgiri tea on the other hand is renowned for their delicate flavor, strength and
brightness and Darjeeling Tea is famous for its reach flavor and aroma. It is the distinct
flavor and characteristics of each region set them apart from one another in different
ways.
When we discuss about the tea industry in India it is one of the oldest agro-based and
well organized industries. The industry gives employment to millions of worker and it
also gives temporary engagement to many workers as well. The labor cost incurred by
the Indian tea producing industry is the largest accounting for about 60% of the total
cost of tea production. Apart from employment the plantations are also responsible for
providing shelter and other facilities to the workers.
-
7/28/2019 Changing Scenario of Indian Tea Industry
6/12
6
2.1. Decline in the tea pricesIt was during 1999 to 2006 when the tea industry faced steep decline in their in their
prices. The situation made apparent the vulnerable area of tea industry that needs to be
addressed to provide safeguard against the recurrence of such situations. It was around
the same time when almost 130 gardens were closed, abandoned and suspended from
their operations, although the industry witnessed gradual improvement of the situation
since 2008 onwards. The fluctuating nature of the tea industry in India can be attributed
to its agro-based operations, long gestation period and unstable market prices.
-
7/28/2019 Changing Scenario of Indian Tea Industry
7/12
7
3. Problems faced by the industryIndian Tea industry is a 200 year old industry and since then it has been contributing
significantly to the countrys national income. The tea industry in India faced many
problems in the past few years. The problems faced by tea industry include:
Emergence of new tea manufacturers like Vietnam, Indonesia and Kenya in
international markets. This resulted in the oversupply of tea.
Indian tea has been losing its position in the global tea market given its high price
and poor quality.
Tea is mostly sold through auction but this is one sided operation and brokers
have the full access to control it. This system makes proper price realization
doubtful.
There is the existence of higher percentage of ageing bushes in Indias tea
industry. This poses a major problem to the industry.
The tea industry in India faces from the problems related with higher cost of
production. Almost 80% of the cost of producing tea goes behind fixed expenses
such as fuel, power and labor.
Lack of sufficient modern technology.
Lastly the ignorance of consumers about the market structure also creates
problem for the industry.
Although a lot of problem was faced by the industry, the reports and observation made
in recent years reveal that there has been a steady rise in position of the indust ry in
international market.
-
7/28/2019 Changing Scenario of Indian Tea Industry
8/12
8
4. The Present Domestic Tea Market of IndiaThe tea industry has a very prominent place in the domestic market of India. Even the
poorest household in India will purchase tea for their daily consumption. Tea is not only
the primary beverage worldwide but it is same for India as well. Almost 85% of the total
Indian household buys tea. This makes India one of the largest tea consumers in the
world. Tea industry in India to a large extent drives the economies of the region where
the tea gardens are concentrated. The tea business in India is about 150 years old.
The tea industry in India is an area where the country can take a lot of pride mainly
because of the pre-eminence as a foreign exchange earner and its contribution to the
countrys GNP. India is the second largest tea producing country in the world with
almost 25% of the total world tea production after China and the fourth largest exporter
of tea in the world.
The Indias share in tea export started showing improvements since 2010 onwards.
Keeping in mind the global competition there is need for the country to assess their
-
7/28/2019 Changing Scenario of Indian Tea Industry
9/12
9
competitive position in the global market. The competitive position in the market can be
referred to the cumulative expressions of interactive effects of the variables of tea
production and processing to consumer market.
Based on the research report by the Tea Board of India in 2011 2012, India stands as
worlds largest consumer and 2nd
largest producer and fourth largest exporter of tea
after China. The country accounts for nearly 30% of global tea output and 25% of the tea
produced worldwide are consumed in India.
-
7/28/2019 Changing Scenario of Indian Tea Industry
10/12
10
5. Goodricke Tea: Market Share & Growth Trends5.1. Background
Goodricke Group Ltd. Is a Kolkata based company engaged in the business of tea
cultivation, manufacturing and sales throughout the demography of India. The premium
products offered by the country include Indian Black Tea and Instant tea Powder which
are soluble in water. Goodricke Group Ltd owns 17 tea gardens in India which are
spread across mainly three regions namely Dooars (West Bengal), Darjeeling (West
Bengal) and Assam. The company has a total area of 9,807.7 hectors under cultivation.
Of this about 90% area is under cultivation of mature and young tea forming the balance
10%.
5.2. Peer ComparisonThe domestic tea market of India is complex and it comprises of numerous unorganized
and regional players competing directly with the large and established national players.
The local state level markets are typically dominated by these small players. In case of
organized sector, the company witnesses stiff competition from the players like Tata
Global tea, Hindustan Unilever, McLeod Russel and Jayashree Tea.
-
7/28/2019 Changing Scenario of Indian Tea Industry
11/12
11
The company has a good network of distribution system which allows it to derive good
advantages from its share in the domestic tea market of India.
Goodricke Group Ltd is one of the leading players in the tea market of India. As per the
recent market reports McLeod and Goodricke Group Ltd gained substantial percent in
the BSE FMCG Index. The increase they gained in the share market is driven by the
improved tea prices.
-
7/28/2019 Changing Scenario of Indian Tea Industry
12/12
12
6. ConclusionThe study examined various factors responsible for the present scenario of the Indian
tea Industry. The different factors contributing to the declining share of Indian Tea in
the Global Market have also been discussed. The study was compiled with special
reference to Goodricke Tea. The peer review for Goodricke Tea presented a brief report
on the major players in the Indian tea industry and the relevant market scenario.
In spite of the decline of Indians position in the Global Tea Market from world no. 1
exporter and producer to no.4 and no. 2, there is still time and space for the country to
re-emerge on the global footprint. India is not very far behind its competitors. The
proactive measures taken by our government in the last few years upgraded the
methods and practice followed by the industry registering a steady grow rate in its
output.