The Cup is Half Full for Indian Tea

20Nov07

Tea Cup

The Champagne of Tea. This catchy moniker has long been used to describe Darjeeling’s cachet in the tea world. However, it is becoming abundantly clear that a lot more than an attractive slogan is required if Indian tea is to remain viable in what has become an ultra-competitive global tea industry.

Tea in India has its share of tough problems — over supply, declining domestic consumption, labor disputes, and subsequently one of the highest production costs of any tea producing country. Despite being one of the worlds largest producers of tea, India is now seeing its exports eclipsed by those of Kenya, Sri Lanka and China.

But the outlook is not necessarily so dire. Three recent developments are cause for renewed optimism.

1. GI Status
Geographical Indication status is a program launched by the World Trade Organization (WTO) to provide legal protection for the Darjeeling brand. We blogged earlier about the problem as it affects Darjeeling. Last year, The Tea Board of India finally won the battle to obtain GI status for Darjeeling tea. Similar efforts are underway for the protection of Assam and Nilgiri teas.

2. A Renewed Focus on Increasing Exports
While India’s tea exports are expected to decline in 2007, a concerted effort to boost sales can help buck that trend in the future. Many growers are increasing production of more desirable teas (longer leaf orthodox vs. CTC), converting existing estates to organic production, and selling directly to buyers abroad.

3. Multi Pronged Innovation
India may be at the forefront of supplying technology services across the globe, but it’s implementation domestically has stayed far behind. While technology may not solve all the problems of the industry, its effective use can certainly mitigate them. As Anand Mandapaka puts it, investment in new technologies like WiMax at the field level has the potential to give India a serious competitive edge. However, innovation must happen beyond technology. On the marketing front, efforts are underway to increase domestic tea consumption. As a recent Time magazine story described, innovators like Sanjay Bansal and Rishi Saria are redefining what it means to produce and market tea. Similarly, tea estate ownership structures are also changing – giving some hope for improvement in the lives of thousands of workers. As Samir Roy says, “the only long-term, sustainable solution is for estates to give workers a stake in the earnings.”

Since the collapse of the Soviet Union (and the subsequent collapse in India’s tea exports), Indian tea has never quite managed to right the ship. The outlook, however, seems bright. Some of these recent initiatives, if executed properly, give cause for cheer. The cup, as they say, is most definitely half full.

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