India’s tea industry expects better second quarter as retail demand increases

India’s tea industry is expecting a better second quarter as retail demand has been picking up across the country with relaxation of Covid-driven restrictions in most states. The improvement is not only in domestic demand. Orders from the US, UK and other countries are also increasing.

Indian tea prices have also corrected over the last month by 25-30 per cent, and supplies have also improved thanks to good rains in the tea plantations after the dry spell from March to May.

Earlier during the second wave, getting to tea at the distributor level was a challenge. That problem has diminished a lot, easing the supply line at the retail level. The tea production has also increased, prompting a price correction in July. However, prices are now stable.

Tea production, which had suffered due to a long dry spell, recovered in June and July. Figures released by the Tea Board show that June tea production stood at 168.84 million kg, 12.15 per cent higher than the 2019 pre-pandemic production level. In the January-June 2021 period, India produced 443.85 million kg of tea.

The Tea Board export figures from January to May CY21 show that it decreased by 6.83 million kg to 71.07 million kg, although the realization of the unit price increased by 19.65 rupees per kg compared to the period of the previous year.

Tea consumption outside home has not yet fully recovered, as restaurants and cafes in some states are still not open. However, it is gradually picking up.   The second quarter all round is better than the first quarter. But if the price drop continues due to an increase in tea production coupled with rising wages, then fiscal ‘22 will not be a good year for the industry as a whole. Most companies can expect a substantial drop in profit margin. 

Shampa Bahadur has been a business journalist for more than two decades. She has written for Business India, PTI Media TransAsia and India Infrastructure Publication Ltd among others. She has also written coffee table books. She can be reached at shampa@indoasiancommodities.in

Leave a Reply

Your email address will not be published. Required fields are marked *