grp9-tea

8/7/2019 grp9-tea

http://slidepdf.com/reader/full/grp9-tea 1/29

BY :ANJALI (202)

ANKITA(203)

ANKUR(204)

ANSHUL(205)

ANURADHA(206)

NIKITA(233)

TIMOTHEE

TEA

1

8/7/2019 grp9-tea


2

AGENDA

Tea Producing Nations

World Tea Production

World export import Data

Indian Tea Industry

Types of TeaManufacturing Process

Characterstics of Tea Industry

SWOT Analysis

Auctions

Present Scenario

Climatic Conditions

India Vs Top Producers

Trade Policy

Area of Concern

Recommendations

8/7/2019 grp9-tea


3

TEA PRODUCING NATIONS

8/7/2019 grp9-tea


World tea production(2009)

CHINA

29%

INDIA26%

KENYA

7%

SRI LANKA9%

OTHERS

29%

: 3.5 n Kg

4

8/7/2019 grp9-tea


World Export/Import data(exp 2010)

IMPORTS : 1 15 Bn K

5

8/7/2019 grp9-tea


India Tea Industry

� Industry is 172 years old.

� World tea market is dominated by India-2nd

largest producer and the largest consumer of tea

� nnual turnover of about $2 billion� ea is being cultivated in the high ranges of

orthern and outhern India.

�

he best quality ea are and rthodox ssamea respectively.

� he consumption is above 600 Million kgs per

year.6

8/7/2019 grp9-tea


7

tea is produced in 14 tates in India, five of them ssam and West

Bengal in orth India, and amil adu, Kerala and Karnataka in outh

India account for over 98 of Indias tea production.

8/7/2019 grp9-tea


India Tea Industry(cotd..)

� The Tea Board of India states that it has 1,692

registered tea manufacturers, 2,200 tea

exporters, 5,848 tea buyers and nine official

tea auction centers.

� Indias demand for tea is growing at 3.5%

annually, to face a 45 million kg tea shortfall to

meet domestic demand.

8

8/7/2019 grp9-tea


TYPES OF TEA

9

8/7/2019 grp9-tea


10

8/7/2019 grp9-tea


8/7/2019 grp9-tea


Steps of Manual Auction

� Despatch of lot-wise tea.

� Garden invoice.

� Arrival & Weighment Report.

�

Cataloging� Inspection of tea

� Preparation of small packs of trade sample and despatch to eligible buyers.

� Tasting of tea

� Valuation exercise

� Bidding through public outcry system.

� Selection of highest bidder

12

8/7/2019 grp9-tea


Present scenario

� Domestic demand accounts for over 86% of the countrys tea output and since tea imports are permitted only for re-export, Indias share

of the global tea trade is on the lower side.� Tea prices, after reaching a peak in 1998,

went into a steady decline thereafter, with average domestic prices dwindling from

around Rs.76.43 per kg in 1998 to a low of around Rs. 58.05 per kg in 2005

13

8/7/2019 grp9-tea


14

Although global tea prices also declined 1999 onwards, driven

primarily by oversupply, the decline in average prices was

sharper and of a longer duration for Indian teas vis-à-vis the teas from Kenya and Sri Lanka , Indias two main rivals in the

exports market.

8/7/2019 grp9-tea


15

According to ICRAs estimates , while the average growth in production

during the period 2003-08 was just 2.0% or so, domestic consumption

would have increased annually at around 3.5% during the same period.

The steady increase in domestic demand, range-bound export volumes

and low growth in production absorbed the pipeline stock over the

years and left virtually no carry-forward stock at the end of the

2008 season.

8/7/2019 grp9-tea


CHARACTERISTICS OF TEA INDUSTRY

� Productivity and Q uality

The art of plucking, fine tuned requires two fresh leaves and a bud to be plucked manually

� Labour Intensity

Very labour Intensity , with labour cost fixed and thus lower production will lead to higher unit cost of production

� Long Gestation

Tea bushes mature for commercial exploration in 5-7 years and remain productive for 50-60 yrs

16

8/7/2019 grp9-tea


� Commodity Nature

Prices fluctuate widely with demand supply

imbalances

� Organized Industry

Labor laws exist , dominant mode of trade is

through auctions

� Domestic Competition

About 1000 tea brands in India with 90%

represented by regional brands

17

8/7/2019 grp9-tea


SWOT ANALYSIS

� STRENGTH

Demand growing at some 2% pa

Technical and manpower skill

Good research support by tea growers� WEAKNESSES

Labor Intensive : 2nd generation reluctant

o effective cost management system adopted

Supply from more efficient players like Kenya, China

Declining export of india over years

18

8/7/2019 grp9-tea


� OPPORTUNITIES

Export Potential if India can increase production

capacity To make tea more acceptable and fashionable like

coffee

Large untapped rural market for branded

companies� THREATS

Global competition

Low cost in some countries like China,Sri Lanka

Import of tea

Cost escalation due to increase in cost of production

19

8/7/2019 grp9-tea


8/7/2019 grp9-tea


INDIA Vs OTHER TOP TEA PRODUCING

COUNTRIES

� During 1951-60, India was producing around 40 percent of world production, declined to 26 per cent in 2008.

� The declining trend can be observed in case of Sri Lanka as well. Only China and Kenya are able to increase their share in world production considerably.

� The share of China and Kenya during 1951-60 was13.59 per cent and 2.67 per cent respectively, increased to 31 per cent and 9 per cent in 2008

21

8/7/2019 grp9-tea


INDIAs TRADE POLICY 2009-14

� The existing minimum value addition under advance authorization scheme for export of tea is 100%. It has been reduced from existing

100% to 50%. � DTA sale limit of instant tea by EOU units

increased from 30% to 50%.

� Export of tea has been included under VKG

UY scheme benefits.

22

8/7/2019 grp9-tea


AREAS OF CONCERN

a)Decline in demand for Indian tea in the global

market:

Traditional markets of Indian tea like USSR and

UK have drastically reduced the import of tea

from India

23

8/7/2019 grp9-tea


(b) Def ects in auction system:

A report for the ILO notes that the large tea companies are benefiting from fall in auction

prices and rise in retail prices for tea.

The longer transaction time and higher

transaction cost

(c)Poor Price realizations

Competition between producing countries for

a share of the world market

24

8/7/2019 grp9-tea


� Demand for tea is rising very slowly (1.5-2 per

cent)

� Dominance of auction system as a day to day

intermediary between producers and buyers

� Tea is a perishable product. Its quality and

flavour deteriorates very quickly

� There is a major shift in the consumption and

thereby composition of demand for tea in the

developed (importing) countries which has

had unfavorable effect on aggregate export

earnings from tea

25

8/7/2019 grp9-tea


(d) Def ective market structure:

While tea is ready to drink item, the downstream

stages such as blending, packing and ultimate marketing are the most profitable one . This part of the value chain is controlled by a handful multinational tea packers and brokers.

(e) Increase in cost of production:� Productivity in terms of volume per hectare

� Labour cost accounts for around 60% of the unit cost of production and approximately 55to75 percent of that labour cost is on plucking

� Inflationary pressures are now pushing up these fixed costs further

� Social cost(5-8%)

26

8/7/2019 grp9-tea


RECOMMENDATIONS FOR

IMPROVEMENT

� Unlike its key competitors, India does not have any powerful brand to support its promotion drive in the international market .To win back

the confidence of lost foreign markets, Indian tea producers have to identify the need to revitalize the image of Indian tea in that international market.

� There is an urgent need for reducing the unit cost of production

27

8/7/2019 grp9-tea


� International brands like Liptons, Brooke Bond of HUL and Tetley tea of Tata Tea; and Wagh

Bakri Chai etc are the market leaders and have great power in price determination in both domestic and international market .This needs to be stopped and proper investigation is needed to curb the wrong practices in the tea market by introducing new laws to regulate the price movements.

�Despite being the largest producer and consumer of tea, the Indian plantation sector lacks appropriate mapping of production and consumption levels.

28

8/7/2019 grp9-tea


29

grp9-tea

Documents