Kolkata: If India ramps up its green tea production, it will be able to boost its exports kitty and tap the US market at a cheaper cost, says a research report by Drip Capital which was exclusively shared with ToI. Only 2% of India’s tea exports comprise green tea and 91% of it is black tea, the remaining being other tea preparations.
“India’s tea exports have declined at a CAGR of -1% in the last decade (2010-2019). While COVID-19 did add strain on the industry, one of the main reasons for this stagnation can be attributed to the rising demand for green tea that India failed to tap into,” said Pushkar Mukewar, co-founder and CEO, Drip Capital.
Globally, in the last decade, the imports of black tea declined at a CAGR of 0.5% and green tea – the youths’ choice – rose at a CAGR of 4.1%. But, over the last decade, green tea exports from India have declined at a CAGR of 2.2%. Green tea dictates a 14% higher market price ($3150 per tonne) than black tea ($2760/tonne), says the report.
Explaining the factors driving China’s tea exports better than India’s, Mukewar said: “In the last decade, tea production in China and India grew at a CAGR of 7% and 3% per annum, respectively. The neighbouring country harvested two times more tea than India in 2019 alone. While China’s total export quantity has only grown by just 2%, its export value grew at a 10% between 2010-2019. China today ships almost 60% of the global tea exports.”
However, Anshuman Kanoria, chairman, Indian Tea Exporters’ Association (ITEA), didn’t quite agree with the report. “The unit price of Chinese tea is very low. There is a little scope to capture substantial market share from cheap origins as India’s cost of production is higher. Overall, it’s a fact that we need to expand our product mix and explore oolongs and white tea along with green tea.”
“The industry should start looking beyond its low pricing advantage and build the brand image. The deeply growing trade wedge between the US and China means that the former is looking to replace some Chinese tea imports with more Indian tea imports,” adds Mukewar. China’s contribution to US tea imports has fallen from 22% in 2016 to 11% in 2020. The US is compensating for this supply shortage by importing more tea from Japan, whose contribution jumped from 9% in 2016 to 17% in 2020.
When the demand for green tea rose, India along with Sri Lanka failed to realize this opportunity. India, at present, does not have enough manufacturing plants that can cater to green tea’s growing demand, says the report.
SOURCE: TIMES OF INDIA