A Comprehensive Project report on tea industry

TABLE OF CONTENT
CHAPTER SR NO. PARTICULARS PAGE NO.
* Preface I
* Acknowledgement II
* Executive Summary III
1 Introduction about Tea Industry
1.1 About Tea Industry 1
1.2 History of Tea Timeline 3
1.3 Types of Tea 11
1.4 Tea used for different purpose 13
2 Research Methodology
2.1 Objective of the study of product market analysis 14
2.2 Information needs 14
2.3 Research design 14
2.4 Data collection method 14
2.5 Analysis plan 14
2.6 Limitations 15
3 Study of World Market
3.1 Global scenario of tea industry 16
3.2 Characteristics of tea industry 20
3.3 List of corporates and countries 21
3.4 Tea consumption in the world 23
4 Study of Indian Market
4.1 History of tea industry in India 26
4.2 Indian scenario of tea industry 27
4.3 Tea production in India 29
5 Product Profile

5.1 Product profile 32
5.2 Quality of ‘made tea’ or ‘tea; 33
5.3 Tea tasting 35
5.4 Orthodox tea 36
5.5 CTC Tea 36
5.6 Green Tea 37
5.7 Marketing 38
5.7.1 Primary marketing 38
5.7.2 Secondary marketing 39
6 Demand Determination of Tea Industry
6.1 Value added variants of tea 40
6.2 Health and wellness 40
6.3 Emerging consumer demand 40
7 Players in industry
7.1 Top ten companies in the world 41
7.2 Top ten companies in India 42
8 Distribution channel in industry 45
9 Key Issues and Trends
9.1
Fluctuations in the production due to climate
changes
46
9.2 Slower pace of re-plantation 46
9.3 High cost of production and low productivity 46
9.4 Increasing competition in global tea market 46
9.5 Coffee affecting as a strong substitute of tea 47
10 PESTEL Analysis
10.1 Political factor 49
10.2 Economical factor 53

10.3 Socio-cultural factor 56
10.4 Technological factor 58
10.5 Environmental factor 58
10.6 Legal factor 59
11 Porter’s Five Force Model
11.1
Intensity of rivalry among competitors in an
industry
60
11.2 Threat of new entrants 61
11.3 Threat of substitutes of product 63
11.4 Bargaining power of suppliers 63
11.5 Bargaining power of buyers 64
12 Other Portfolio Model
12.1 BCG Matrix 67
12.2 Strategic Group Mapping 69
12.3 Driving forces 71
12.4 Key success factor 72
12.5 Value chain analysis 73
13 Opportunity & Threat Analysis 76
14 Conclusion 77
15 Bibliography 78

INDEX OF TABLE
Table No. Title Page No.
1 World tea production and share of countries 16
2 India’s share in world export 17
3 World production 18
4 World export 19
5 World demand and supply of tea 19
6 World auction price of tea sold 20
7 Orthodox tea 36
8 CTC tea 36
9 Green tea 37
10 Factors favorable for tea industry 53
11 Overall conclusion of economic factor 56
12 Socio cultural factor 58
13 Switching cost of buyer 61
14 Customer loyalty 62
15 Switching cost of supplier 63
16 Substitute of raw material 64
17 Buyers are loyal 65
18 Conclusion loyal buyers 65

INDEX OF CHART
Chart No. Title Page No.
1 Tea consumption in the world 23
2 Slower pace of rip and plantation 24
3 Tea production in India 29
4 Distribution channel 45
5 GDP growth rate 54
6 Per Capita income 54
7 Unemployment rate 55
8 Inflation rate 55
9 Age distribution 56
10 Five Force model 60
11 Conclusion of loyal buyers 65
12 BCG matrix 68
13 Strategic group mapping 70
14 Value chain analysis 73

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S.V. INSTITUTE OF MANAGEMENT, KADI 1
1. Introduction about Tea Industry
Shorn of all beautiful myths and legends, we get the first authentic references to tea
and tea drinking in China in the fourth century A.D. The first person to drink tea was
a man named, Shen Nung, who one day took his wife and children mountain
climbing. During the climb Shien Non Shei became quite thirsty and while he was
feeling thirsty a leaf drifted onto his foot. He picked this leaf up and twisted the leaf
with his fingers. The juice of the leaf went on to his fingers and he tasted the juice
with his tongue. The taste of the juice was quite bitter, so Shien Non Shei felt that
this leaf could have medicinal properties and could help quench thirst, when brewed.
Thus, according to legend he was the first individual to drink tea.
The first written reference of tea made and consumed appeared in 350 A.D. Kuo P’o’
updated an old Chinese dictionary to include the description of tea as “a beverage
made from boiled leaves.” Tea during this time was made of leaves boiled in water
with ginger, orange or other produce added to it. Although tea was mostly consumed
for medicinal purposes to treat digestive and nervous conditions, people living in the
interior part of China pressed tea into brick “currency” to barter with other tribes.
From 350 to 600 A.D., the demand for tea dramatically increased and outstripped the
supply of wild tea trees. Farmers began to grow tea plants in the Szechwan district,
but soon tea cultivation had spread throughout China.
In the western world tea was brought first to the notice of the Europeans in the mid of
the 16th century by Ramusio, the famous Venetian writer on travels and voyages.
The first public sale of tea in England was conducted by one Thomas Garway in
1657.
To describe the history of tea cultivation in India around 1774 Warren Hastings sent a
selection of China seeds to George Bogle, the then British emissary in Bhutan for
planting the same in Bhutan. But nothing seemed to have come out of this
experiment. In 1776, Sir Joseph Banks, the great English Botanist, was asked to
prepare a series of notes and it was recommended by him to undertake the cultivation
of tea in India. In 1780, Robert Kyd experimented with tea cultivation in India with
seeds, the consignment of which was stated to have arrived from China. A few
decades later it was Robrt Bruce in 1823 discovered tea plants growing wild in Upper
Brahmaputra valley. In May 1838 the first Indian tea from Assam was sent to
England for public sale.
In India, there are three distinctly different tea growing regions. These regions are
geographically separated, thereby producing three entirely different teas both in style
and in taste/flavour. The three regions are: Darjeeling (North-Eastern India), Assam
(far North-East India) and Nilgiri (South India).

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Darjeeling
Nestling in the foothills of the snow-covered Himalayan range, Darjeeling grows this
exclusive tea at altitudes ranging from 600 to 2,000 meters. The cool and moist
climate, the soil, the rainfall and the sloping terrain all combine to give Darjeeling its
unique "Muscatel" flavor and exquisite bouquet. The combination of natural factors
that gives Darjeeling tea its unique distinction is not found anywhere else in the
world, hence this finest and most delicately flavoured of all teas has over the years
acquired such reputation as "Champagne enjoys amongst wine"
Assam
The land of the Tiger and the one-horned Rhino. The land through which the mighty
river, the Brahmaputra, winds its majestic course. Assam - rich in nature's bounty and
a rainfall ranging from 100 to 150 inches per year - a bounty that ensures a very
special place for the teas grown here. These teas are referred to simply as "Assam"
and offer rich, full-bodied, bright tea liquor. For those who favour a bright, strong
cup of tea, Assam is "your cup of tea." Assam is the single largest contiguous tea
growing area in the world.
Nilgiri
The Blue Mountains or the Nilgiris are situated in South India. They are a
picturesque range of undulating hilly landscapes where tea is grown at elevations
ranging from 1,000 meters to 2,500 meters. Rainfall varies from 60 inches to 90
inches annually. These conditions flavour the fine, elegant flavour and brisk liquor of
Nilgiri teas. The combination of fragrance and briskness makes Nilgiri a truly unique
tea, the like of which can be found nowhere else in the world. If you like a fragrant
tea with good body and superlative flavour, Nilgiri should be the one for you.
Apart from the above three distinct tea growing regions tea is also grown in Kerala,
Karnataka, Himachal Pradesh, Uttaranchal, Sikkim, Orissa, Bihar, Arunachal
Pradesh, Tripura, Manipur, Nagaland, Mizoram & Meghalaya and in the adjacent
plain areas of Dooars and Terai of West Bengal.
The global tea industry is largely dominated by India - the largest producer and
consumer of tea. India is followed by China, Sri Lanka, Kenya and Indonesia in the
production hierarchy of countries.
The tea industry is peculiar: the soil characteristics, the climate and the rainfall
determine the character of the tea and its taste. Tea affects the taste buds; therefore, it
is difficult to replace a particular variety with a substitute. This explains why certain

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types are flavoured by certain countries: for example, the CIS countries favour Indian
and Sri Lankan teas. UK and Pakistan favour Kenyan teas.
India accounts for 30 per cent of world's production. While Sri Lanka, Kenya and
Indonesia are the other leading producers; their combined production is lower than
that of India. What makes India an interesting object of study is that its size is no
millstone around its neck; its production growth between 1996 and 1998 at 5.63 per
cent was way ahead of the increase in world production of one per cent only.
The dried and prepared leaves of a shrub, Camellia sinensis, from which a somewhat
bitter, aromatic beverage is prepared by infusion in hot water.
A History of Tea Timeline
2737 B.C.
• The second emperor of China, Shen Nung, discovers tea when tea leaves blow into
his cup of hot water or so the story goes.
350 A.D.
• A Chinese dictionary cites tea for the first time as Erh Ya.
400-600
• Demand for tea as a medicinal beverage rises in China and cultivation processes are
developed. Many tea drinkers add onion, ginger, spices, or orange to their teas.
400
• Now called Kuang Ya in the Chinese dictionary, tea and its detailed infusion and
preparation steps are defined.
479
• Turkish traders bargain for tea on the border of Mongolia.
593
• Buddhism and tea journey from China to Japan. Japanese priests studying in China
carried tea seeds and leaves back.
618-907 T'ang Dynasty
• Tea becomes a popular drink in China for both its flavor and medicinal qualities.
648-749
• Japanese monk Gyoki plants the first tea bushes in 49 Buddhist temple gardens.
• Tea in Japan is rare and expensive, enjoyed mostly by high priests and the
aristocracy.
725
• The Chinese give tea give its own character ch’a.

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729
• The Japanese emperor serves powdered tea (named hiki-cha from the Chinese
character) to Buddhist priests.
780
First tea tax imposed in China.
Chinese poet-scholar Lu Yu writes the first book of tea titled Ch’a Ching (The Classic
of Tea) in timely alignment with the Taoist beliefs. The book covers detailed ancient
Chinese tea cultivation and preparation techniques.
805
Buddhism and tea devotion spreads further.
The Japanese Buddhist saint and priest Saicho and monk Kobo Daishi bring tea seeds
and cultivation and manufacturing tips back from China and plant gardens in the
Japanese temples.
960-1280 Sung Dynasty
• Chinese tea drinking is on the rise, as are elegant teahouses and teacups carefully
crafted from porcelain and pottery.
• Drinking powdered and frothed tea or tea scented with flowers is widespread in
China while earlier flavourings fall by the wayside.
• Zen Buddhism catches on in Japan via China and along come tea-drinking temple
rituals.
1101-1125
• Chinese Emperor Hui Tsung becomes tea obsessed and writes about the best tea-
whisking methods and holds tea-tasting tournaments in the court. While “tea minded,”
so the story goes, he doesn’t notice the Mongol takeover of his empire.
• Teahouses in garden settings pop up around China.
1191
• Japanese Buddhist abbot Eisai, who introduced Zen Buddhism to Japan, brings tea
seeds from China and plants them around his Kyoto temple.
1206-1368 Yuan Dynasty
• During the Mongol takeover of China, tea becomes a commonplace beverage buy
never regains its high social status.
1211
• Japanese Buddhist abbot Eisai writes the first Japanese tea book Kitcha-Yojoki
(Book of Tea Sanitation).
1280
• Mongolia takes over of China and since the Emperor of Mongol isn’t a “tea guy,”
tea drinking dies down in the courts and among the aristocracy. The masses continue
to indulge.

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1368-1644 Ming Dynasty
• At the fall of the Mongol take over, all teas — green, black, and oolong — is easily
found in China.
• The process of steeping whole tea leaves in cups or teapots becomes popular.
1422-1502
• The Japanese tea ceremony emerges onto the scene. First created by a Zen priest
named Murata Shuko, the ceremony is called Cha-no-yu, literally meaning "hot water
tea" and celebrates the mundane aspects of everyday life.
• Tea’s status elevates to an art form and almost a religion.
1484
• Japan's shogun Yoshimasa encourages tea ceremonies, painting, and drama.
1589
• Europeans learn about tea when a Venetian author credits the lengthy lives of Asians
to their tea drinking.
1597
• Tea is mentioned for the first time in an English translation of Dutch navigator Jan
Hugo van Linschooten's travels, in which he refers to tea as Cha.
End of 1500s
• Japanese tea master Sen-no Rikyu opens the first independent teahouse and evolves
the tea ceremony into its current simple and aesthetic ritual. During this ceremony,
one takes a garden path into a portico, enters upon hearing the host’s gong, washes in
a special room, and then enters a small tearoom that holds a painting or flower
arrangement to gaze upon. The tea master uses special utensils to whisk the intense
powdered tea. Tea drinkers enjoy the art or flowers and then smell and slurp from a
shared tea bowl.
1610
• The Dutch bring back green tea from Japan (although some argue it was from
China).
• Dutch East India Company market tea as an exotic medicinal drink, but it’s so
expensive only the aristocracy can afford the tea and its serving pieces.
1618
• Chinese ambassadors present the Russian Czar Alexis with many chests of tea,
which are refused as useless.
1635
•Tea catches on in the Dutch court.
1637
• Wealthy Dutch merchants’ wives serve tea at parties.
1650-1700

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• Tea parties become quite trendy among women across the social classes. Husbands
cry family ruin, and religious reformers call for a ban.
1650
• The Dutch introduce several teas and tea traditions to New Amsterdam, which later
becomes New York.
1657
• The first tea is sold as a health beverage in London, England at Garway's Coffee
House.
1661
• The debate over tea’s health benefits versus detriments heightens when a Dutch
doctor praises its curative side while French and German doctors call out its harmful
side.
1662
• When Charles II takes a tea-drinking bride (Catherine Braganza of Portugal), tea
becomes so chic that alcohol consumption declines.
1664
• English East India Company brings the gift of tea to the British king and queen.
• The British take over New Amsterdam, name it New York, and a British tea
tradition ensues.
1666
• Holland tea prices drop to $80-$100 per pound.
1669
• English East India Company monopolizes British tea imports after convincing
British government to ban Dutch imports of tea.
1670
• The Massachusetts colony is known to drink black tea.
1680s
•Tea with milk is mentioned in Madam de Sevigne’s letters.
• The Duchess of York introduces tea to Scotland.
1690
• The first tea is sold publicly in Massachusetts.
1697
• The first known Taiwanese cultivation and export of domestic tea takes place.
Late 1600s
• Russia and China sign a treaty that brings the tea trade across Mongolia and Siberia.

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18th Century
• The controversy over tea continues in England and Scotland where opponents claim
it’s overpriced, harmful to one’s health, and may even lead to moral decay.
1702-14
• During Queen Anne’s reign, tea drinking thrives in British coffeehouses.
1705
• Annual tea importation to England tops 800,000 pounds.
1706
• Thomas Twining serves up tea at Tom’s Coffee House in London.
1717
• Tom’s Coffee House evolves into the first teashop called the Golden Lyon. Both
men and women patronize the shop.
1723
• British Prime Minister Robert Walpole reduces British import taxes on tea.
1735
•The Russian Empress extends tea as a regulated trade.
• In order to fill Russia’s tea demand, traders and three hundred camels travel 11,000
miles to and from China, which takes sixteen months.
• Russian tea-drinking customs emerge, which entail using tea concentrate, adding
hot water, topping it with a lemon, and drinking it through a lump of sugar held
between the teeth.
1765
• Tea easily ranks as the most popular beverage in the American colonies.
1767
• The Townshend Revenue Act passes British Parliament, imposing duty on tea and
other goods imported into the British American colonies.
• A town meeting is held in Boston to protest the Townshend Revenue Act, which
leads to an American boycott of British imports and a smuggling in of Dutch teas.
1770
• Parliament rescinds the Townshend Revenue Act, eliminating all import taxes
except those on teas.
1773
• In protest of British tea taxes and in what becomes known as the Boston Tea Party,
colonists disguised as Native Americans board East India Company ships and unload
hundreds of chests of tea into the harbor.
• Such “tea parties” are repeated in Philadelphia, New York, Maine, North Carolina,
and Maryland through 1774.

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1774
• A furious British Parliament passes the Coercive Acts in response to the American
“tea party” rebellions.
• King George III agrees to the Boston Port Bill, which closes the Boston Harbor until
the East India Company is reimbursed for its tea.
1775
• After several British attempts to end the taxation protests, the American Revolution
begins.
1778
• Before the indigenous Assam tea plants is identified, British naturalist Sir Joseph
Banks, hired by the East India Company, suggests that India grow plant and cultivate
imported Chinese tea. For 50 years, India is unsuccessful.
1784
• Parliament further reduces the British import taxes on tea in an effort to end the
smuggling that accounts for the majority of the nation's tea imports.
1785
• 11 million pounds of tea are brought into England.
1797
• English tea drinking hits a rate of 2 pounds per capita annually, a rate that increases
by five times over the next 10 years.
1815-1831
• Samples of indigenous Indian tea plants are sent to an East India Company botanist
who is slowly convinced that they are bona fide tea plants.
1826
• English Quaker John Horniman introduces the first retail tea in sealed, lead-lined
packages.
1830
• Congress reduces U.S. duties on coffee and tea and other imports.
1833
• By an act of the British Prime Minister Charles Grey (the second Earl Grey and the
namesake of the famous tea), the East India Company loses its monopoly in the trade
with China, mostly in tea.
1835
• The East India Company starts the first tea plantations in Assam, India.
1837
• The first American consul at Canton, Major Samuel Shaw, trades cargo for tea and
silk, earning investors a great return on their capital and encouraging more Americans

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to trade with China.
1838
• The first tea from Indian soil and imported Chinese tea plants is sold. A small
amount is sent to England and quickly purchased due to its uniqueness.
1840s
• American clipper ships speed up tea transports to America and Europe.
1840s and 50s
• The first tea plants, imports from China and India, are cultivated on a trial basis in
Sri Lanka (Ceylon).
1840
• Anna the Duchess of Bedford introduces afternoon tea, which becomes a lasting
English ritual.
1849
• Parliament ends the Britain's Navigation Acts, and U.S. clipper ships are allowed to
transport China tea to British ports.
• Tea wholesaler Henry Charles Harrod takes over a London grocery store and grows
it into one of the world's largest department stores.
1850
• Londoners get their first peak at a U.S. clipper ship when one arrives from Hong
Kong full of China tea.
• U.S. clipper ships soon desert China trade for the more profitable work of taking
gold seekers to California.
1856
• Tea is planted in and about Darjeeling, India.
1859
• Local New York merchant George Huntington Hartford and his employer George P.
Gilman give the A&P retail chain its start as the Great American Tea Company store.
Hartford and Gilman buy whole clipper shipments from the New York harbour and
sell the tea 1/3 cheaper than other merchants.
1866
• Over 90 per cent of Britain's tea is still imported from China.
1869
• The Suez Canal opens, shortening the trip to China and making steamships more
economical.
• In a marketing effort to capitalize on the transcontinental rail link fervor, the Great
American Tea Company is renamed the Great Atlantic and Pacific Tea Company.
• A plant fungus ruins the coffee crop in Ceylon and spreads throughout the Orient
and Pacific, giving a hefty boost to tea drinking.

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1870
• Twinings of England begins to blend tea for uniformity.
1872
• The Adulteration of Food, Drink, and Drugs Act deems the sale of adulterated drugs
or other unlabelled mixtures with foreign additives that increase weight as punishable
offenses.
1875
• A new British Sale of Food and Drugs Law calls adulteration hazardous to personal
health and increases its legal consequences to a heavy fine or imprisonment.
1876
• Thomas Johnstone Lipton opens his first shop in Glasgow, using American
merchandising methods he learned working in the grocery section of a New York
department store.
1890
• Thomas Lipton buys tea estates in Ceylon, in order to sell tea at a reasonable price at
his growing chain of 300 grocery stores.
Late 1800s
• Assam tea plants take over imported Chinese plants in India and its tea market
booms.
• Ceylon’s successful coffee market turns into a successful tea market.
1904
• Englishman Richard Blechynden creates iced tea during a heat wave at the St Louis
World Fair.
• Green tea and Formosan (Taiwanese) tea outsells black tea by five times in the U.S.
1908
• New York tea importer Thomas Sullivan inadvertently invents tea bags when he
sends tea to clients in small silk bags, and they mistakenly steep the bags whole.
1909
• Thomas Lipton begins blending and packaging his tea in New York.
1910
• Sumatra, Indonesia becomes a cultivator and exporter of tea followed by Kenya and
parts of Africa.

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1.1 Types of Tea
Green Tea
Because they are unoxidized, green teas keep their vital color. To
prevent oxidization, the leaves are heat processed to eliminate the
enzyme responsible for oxidization. In China, this is generally done
by roasting or pan-firing the leaves, while the Japanese generally
accomplish this by steaming the leaves at a high temperature. Each
process tends to bring out a more particular flavor from the tea leaves. The Chinese
style of processing tends to bring out a mouthwatering range of flavors from citrus-
like to smoky with a lighter body. The color of the liquor is usually not a true “green”,
but a pale yellow or straw color. The steaming process yields a deep vegetal or
herbaceous quality-a characteristic prized in Japanese teas. Japanese green teas range
in color of liquor from the pale green of a light sencha, to the deep grassy green of a
gyokuro. Green teas that have been steamed contain more moisture and are therefore
more delicate. Such teas should be stored at cooler temperatures and consumed
sooner after picking than pan-fired teas. At ITO EN, we recommend keeping Japanese
green tea in a low-temperature environment, as in a refrigerator, in a sealed container
that keeps out moisture and light.
Oolong Tea
Oolong, also spelled Wu Long, teas are semi-oxidized. The term in
Chinese actually means "Black Dragon". Oolong teas have long been
cultivated in both mainland China and Taiwan. In general, larger,
mature leaves are picked, withered, rolled, oxidized, and then fired.
The leaves can be allowed to oxidize in between 10 per cent to 80 per cent. Often,
different tea estates have their preferred ways of making oolong tea. It is because of
the intricacy of this process that oolong teas can have the widest array of flavors and
aromas. Furthermore, oolongs can be steeped several time, with each successive
infusion having its own distinctive taste and fragrance.
Black Tea
Black tea is the most well-known variety of tea in the West. Known
as "red tea" in China, black tea leaves are fully oxidized. In the case
of most black teas, younger leaves are picked before being withered,
rolled, fully oxidized, and fired. While created originally in China,
black teas are now cultivated worldwide. Some of the most famous black teas come
from the Indian regions of Assam, Darjeeling, and Nilgiri as well as Sri Lanka. The
use of machines is becoming more common, but the best black teas are those entirely
done by hand. Machine-processed teas tend to be of lower quality and are generally
used in tea bags.

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The long-standing trend in black tea, taken from the British, has been to create
"blends". For centuries, tea companies take various kinds of tea to create a particular
flavor or character-for example, a strong breakfast tea or a delicate afternoon tea. And
just like a perfume house, several older tea companies are known for their signature
blends. But as the quality and character of tea harvests can vary greatly year to year,
tea companies rely on the skills of tea blenders to take different teas from the year's
harvest to create the same taste again and again.
However, another trend in black teas has recently taken off. The new vogue, imported
from continental Europe, is estate teas, meaning teas that come from a single tea
garden or estate from a particular year. Like a good wine, estate teas can capture the
particular character of region and the year's weather. Because of their unique
character, estate Darjeelings have gained global popularity in particular and can often
be auctioned for thousands of dollars per pound. Of course, because estate teas are at
the mercy of the elements, quality can vary dramatically year to year.
With both blends and estate teas, it is frequent to see black teas divided into broken
leaf and full leaf categories. A broken-leaf tea consists of leaves that have purposely
broken into small pieces during processing. The smaller size allows the water to
extract more of the tea leaves' components in a short period of time. For this reason,
broken leaf teas tend to be more brisk and higher in caffeine, making them an
excellent morning teas to be paired with milk and sugar. Full leaf teas, on the other
hand, tend to be more refined and gentler on the palate. While there are exceptions,
like many of Assam's full leaf teas, these teas are traditionally taken later in the day
without anything added.
Pu-erh Tea
Despite the common misnomer, there is a variety of tea that
is actually fermented. Named for a town in China's Yunnan
province, Pu'er teas consist of larger leaves that can be aged
for several years. Often, the most highly prized Pu'er teas
will actually have a light dusting of mold. Pu’Er leaves are
usually compressed into various shapes before being aged. During the aging process,
Pu’er teas are exposed to microflora and bacteria that ferment the tea, in a way similar
to wine or yogurt. Like fine wines, many connoisseurs become collectors of very old
and well-aged Pu’ers. Some of the most highly regarded and expensive teas of this
type are well over 30 years old.
Pu'er teas yield a dark, hearty brew that is low in caffeine. The taste is usually earthy
and mellow, lacking much of the astringency of other types of tea. Chinese tradition
says that Pu'er aids the body with digestion, while new studies indicate that Pu'er may
help in reducing cholesterol. (All things of tea/major varieties of tea, 2013)

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1.4 Tea used for different purpose
For Breakfast
A nice English breakfast tea can go a long way toward starting your morning off right.
Breakfast teas tend to have a bold and robust flavor that goes nicely with milk and
sugar. Most breakfast teas consist of a blend of various black teas, and the ones used
in English breakfast tea give it its distinctive flavor.
For Tea Parties
When having friends over for a tea party or afternoon tea, it's best to choose a well-
liked tea variety. A good one to have at a party is Earl Grey. Like breakfast teas, Earl
Grey is a black tea, and it pairs well with treats typically found at afternoon tea — like
scones, shortbread cakes and other sweets.
For Drinking Every Day
A good mix of a black and green tea is a perfect tea for everyday consumption. The
black tea adds a flavorful component to the goodness of the green tea. A good one to
try is Tetley Black & Green.
2.1 Objective of the study of product market analysis
 Main objective:
To study the macro environment factors affecting Tea industry.
 Sub-objective:
1. To study political, economic, social and technological factors affecting Tea
industry
2. To study opportunities and threats for the Tea industry
3. To find out the global trends in production, consumption, product development and
Marketing
4. To identify the level of competition between different players in Tea industry
5. To find out the key success factor in Tea industry
2.2 Information needs
We need the following information:
 Global Scenario of Industry
 Characteristics of Global Industry
 Political, economic, social and technological factors
 Study of Indian Market
 Product Profile
 Demand determination of the Industry
 Players in the Industry

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 Key Issues and Current Trends
 Michel Porter’s Five Force Model
 Opportunities and threats
2.3 Research Design
We have used exploratory research design.
2.4 Data collection methods
We have obtained the secondary data from various sources like reports, magazine,
journals and different websites.
2.5 Analysis plan
We have used the following models in Tea industry analysis:
 PEST Analysis
 Michel Porter’s Five Force Model
 BCG Matrix
 Strategic Group Mapping
 Driving Forces
 Key Success Factors
 Value Chain Analysis
2.6 Limitations
 The whole study is based on secondary data
 It is assumed that whole data is authenticated and on that basis conclusion is
derived.
 The level of reliability may be less as it is based on secondary data.
 Financial data of some companies were not available at the time of the study.

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3.1 Global Scenario of Industry:
 Tea is among the world's most widely consumed beverages. One of the biggest
markets for tea is the United States where Americans drink 3.6 billion gallons
annually and supermarket sales top $2 billion, according to the tea association
of the USA. Black tea is predominantly produced and exported by Kenya and
Sri Lanka. Green tea is mainly grown and consumed in China. Although black
tea is by far the most produced and exported tea, production and exports of
green tea are rapidly increasing.
 Asia-Pacific dominates the global market and accounts for 40 per cent of the
total demand in the tea market. The maximum production of tea and the
largest areas under tea plantation belong to India and China respectively.
Leading tea-producing countries are China, India, Kenya and Sri Lanka. While
production of black tea is growing 3.9 per cent annually, production of green
tea is growing 11 per cent annually and herbal tea production is growing more
than 15 per cent each year. The trend towards health consciousness, coupled
with this increased competitive pressure, will further drive new product
development in the next five years, which will in turn drive industry demand.
 The global market is highly concentrated. However, the presence of large
unorganized market in Asia Pacific is expected to impact the profitability of
Western producers.
World Tea Production and Share of Countries
Table-1
World Tea
Production (Million
Kilo grams)
2009 2010 2011 2012 per
cent
Share
(2012)
China 1358.64 1475.06 1623.21 1761.00 38.90
India 979.00 966.40 1115.72 1111.76 24.56
Kenya 314.2 399.01 377.91 369.56 8.16
Sri Lanka 289.78 331.43 328.23 326.28 7.21
Vietnam 175.00 170.00 178.00 158.00 3.49
Others 843.87 850.11 826.24 800.38 17.68
Total 3960.49 4192.01 4449.31 4526.98 100.00

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India’s share in World Export
Table-2
World Export
(In Million Kilo grams)
2009 2010 2011 2012
Kenya 342.48 441.02 421.27 430.21
China 302.95 302.53 322.58 321.79
Sri Lanka 279.84 296.38 301.27 304.49
India 197.9 222.02 215.42 201.08
Vietnam 120 127.97 143 135
Others 361.93 387.73 346.6 333.1
Total 1605.1 1777.65 1750.14 1725.67
India's Share in Total
Export (per cent)
12.33 12.49 12.31 11.65
 Tea Exports from India declined by 14 million kilo grams in 2012 mainly due
to the higher price levels with teas from other origins looking more attractive
price-wise. Import of tea into India in 2012 was only marginally lower than
the previous year.
 Indian tea exports average 200 million kilo grams with the unit realization
averaging at about `175.30 per kilo grams. India is the world’s second largest
producer after China and second largest consumer of tea, accounting for nearly
25-27 per cent of world tea production. India accounts for around 1012 per
cent of world tea exports. Further, certain varieties of tea (for example,
Darjeeling) are grown only in India and are in great demand across the world.
However, India has been losing its share of the global tea exports in the face of
the threat coming from countries such as China, Sri Lanka and Kenya.
World black tea production is projected to grow by 1.7 per cent per annum to 2.7
metric tons in 2014, mainly due to improvements in yields. In India, output is
expected to grow by 1.6 per cent per annum in between 2004-14 is 1.01 metric tons.
Among the other major black tea producing countries, output in Sri Lanka is expected
to increase 1.9 per cent pa to 0.37 metric tons in 2014. However, black tea production
in China is expected to decline, as the balance of production shifts to other teas with
stronger market prospects. World green tea production is expected to grow at a faster
rate than black tea at 2.3 per cent per annum to 0.98 metric tons in 2014. China is
expected to account for more than 75 per cent of world green tea output with an
output of 0.74 metric tons in 2014.

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The growth rate in world black tea consumption is expected to be reduced from 2.2
per cent per annum during 1993-2003 to 1.2 per cent during 2004-14 to 2.67 metric
tones in 2014. The main reason is the slow-down in consumption in producing
countries, as the production growth rate outpaces the growth in demand for exports.
Global tea consumption is divided into net imports for non-tea producing countries,
and domestic consumption in producing countries, measured by production less
exports.
World net imports of black tea, a proxy for consumption in importing countries, are
projected to increase annually by 1.2 per cent to reach 1.34 metric tones in 2014, as
compared with 1.2 metric tones in 2004. In 2014, the quantity of black tea consumed
in producing countries is expected to grow by 1.3 per cent pa to 1.33 metric tones.
The largest increase in domestic consumption would occur in the Far East, as tea-
producing countries in Africa are expected to continue to export most of their output
The global tea market is highly consumer driven and companies need to focus on their
development and marketing strategies towards capturing a larger consumer base, and
acquiring new markets. The major strategies used are consolidation of processes, and
enhancement of brand image through corporate social responsibility.
World Production
Table-3
(Figs. In Million kilo grams)
Country
2012
(P) 2011 2010 2009 2008
China 1761.00 1623.21 1475.06 1358.64 1257.60
India 1111.76 1115.72 966.40 979.00 980.82
Kenya 369.56 377.91 399.01 314.20 345.82
Sri Lanka 326.28 328.63 331.43 289.78 318.70
Vietnam 158.00 178.00 170.00 175.00 166.38
Turkey 147.00 145.00 148.00 153.00 155.00
Indonesia 130.50 142.34 151.01 152.59 153.28
Bangladesh 62.16 59.32 59.27 60.00 58.66
Malawi 42.49 47.06 51.59 52.56 41.64
Uganda 55.08 54.18 59.14 50.98 42.75
Tanzania 32.28 32.78 31.65 32.09 31.61
Others 330.87 345.16 349.45 342.65 327.01
Total 4526.98 4449.31 4192.01 3960.49 3879.27

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World Export
Table-4
(Figs. In Million kilo grams)
Country 2012(P) 2011 2010 2009 2008
Kenya 430.21 421.27 441.02 342.48 383.44
China 321.79 322.58 302.53 302.95 296.94
Sri Lanka 304.49 301.27 296.38 279.84 298.82
India 201.08 215.42 222.02 197.90 203.12
Vietnam 135.00 143.00 127.97 120.00 104.00
Indonesia 71.00 75.45 87.10 92.30 96.21
Argentina 78.00 86.20 85.35 69.19 77.23
Malawi 41.83 44.89 48.58 46.55 40.07
Uganda 48.22 46.15 53.18 47.92 42.39
Tanzania 26.30 27.11 26.13 21.51 24.77
Zimbabwe 7.00 8.57 8.50 7.54 5.65
Bangladesh 1.51 1.45 0.91 3.15 8.39
Others 59.24 26.78 77.98 73.77 72.03
Total 1725.67 1750.14 1777.65 1605.10 1653.06
World Demand and Supply of Tea
Table-5
( Figures in Million kilo grams)
Year
World
Production
Apparent Global
Consumption
(+) or (- )
2008 3879 3724 155
2009 3960 3839 121
2010 4192 4038 154
2011 4449 4275 174
2012(P) 4527 4440 87

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World Auction Price of Tea sold
Table-6
Year
International price (US$/Kilo
grams)
India Bangladesh Sri Lanka Indonesia Kenya Limbe
2008 2.00 1.62 2.83 1.51 2.18 1.37
2009 2.18 1.98 3.15 1.80 2.29 1.58
2010 2.29 2.61 3.28 1.82 2.54 1.58
2011 2.23 2.14 3.25 1.97 2.72 1.61
2012 2.28 2.40 3.07 1.97 2.88 1.70
World black tea production is projected to grow by 1.7 per cent per annum to 2.7
metric tones in 2014, mainly due to improvements in yields. In India, output is
expected to grow by 1.6 per cent per annum in between 2004-14 to 1.01 metric tones.
Among the other major black tea producing countries, output in Sri Lanka is expected
to increase 1.9 per cent pa to 0.37 metric tones in 2014. However, black tea
production in China is expected to decline, as the balance of production shifts to other
teas with stronger market prospects. World green tea production is expected to grow
at a faster rate than black tea at 2.3 per cent per annum to 0.98 metric tones in 2014.
China is expected to account for more than 75 per cent of world green tea output with
an output of 0.74 metric tones in 2014.
The growth rate in world black tea consumption is expected to be reduced from 2.2
per cent per annum during 1993-2003 to 1.2 per cent during 200414 to 2.67 metric
tones in 2014. The main reason is the slow-down in consumption in producing
countries, as the production growth rate outpaces the growth in demand for exports.
Global tea consumption is divided into net imports for non-tea producing countries,
and domestic consumption in producing countries, measured by production less
exports.
World net imports of black tea, a proxy for consumption in importing countries, are
projected to increase annually by 1.2 per cent to reach 1.34 metric tones in 2014, as
compared with 1.2 metric tones in 2004. In 2014, the quantity of black tea consumed
in producing countries is expected to grow by 1.3 per cent pa to 1.33 metric tones.
The largest increase in domestic consumption would occur in the Far East, as tea-
producing countries in Africa are expected to continue to export most of their output.
3.2 Characteristics of Global Industry:
 Rapidly Growing Industry
In India Ice-cream industry is one of the rapidly growing industry.
Consumption of Tea in industry is day to day increase.

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 Technology Adoption
In current era every player can adopt new technology because of they can’t
adopted that so they can’t survive into the market, so everybody company can
ready to adopt new technology.
 Major Influence of Local Vendors
If we see in India then there are many local unorganized firms, so these are the
firms are major influence to the main player of the industry.
 Cyclical in Nature
Being an agro commodity, its fortunes are directly linked to rainfall and
temperature. These can cause the quality of the raw material, green leaf, to
change from season to season. Despite being exposed to vagaries of nature, the
industry seems to have stabilized in terms of production. In the recent years
the industry has developed processes to reduce impact of vagaries of nature on
tea production.
3.3 List of Corporate & Countries – Suppliers / Customers:
1. Twinings
Twinings are the number 1 tea manufacturing brand of the world. It belongs to
English market and fulfilling their demands as well. The British food association
owns it. The logo of this brand is very old and using it for many years. It is working in
this field since 1706 which is amazing and the oldest tea producer in the world. It also
offers different varieties of tea that are available all over the world.
2. Celestial Seasonings
It is very famous tea brand in the world. It is operating from America. The best tea of
this brand is Herbal tea that is very famous and loved by the people. It is also in many
flavors like Green, white, black as well. Most of the people will not believe that the
annual sales of this brand only from tea are almost $100,000,000.
3. Tazo
Tazo is very famous tea brand in the whole world. It offers simple tea and herbal tea
as well. This brand started its work in the field of tea in Portland. But now it is
purchased by Starbucks and has a very strong position in the tea market. Its small
packets are available in the market for the people who use tea in less quantity. It is
recognized as the tea that is of best quality in the world.
4. Harney & Sons
Harney & Sons is a tea of an American company that was started in 1983. Their tea is
of very good quality and also offers loose tea and herbal one as well. Their tea bags
are also of very good quality and expensive as well. This brand distributes their tea to

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all leading hotels, shops, etc. It was also nominated as the best tea in the world in
2009. The box of this tea is very beautiful as it is of metal and shows that shows that it
is very luxurious tea of the world.
5. The Republic of Tea
It is a private company that is owned by an American company. It produces tea from
the organic products and is available all over the world. It also offers loose tea and tea
bags as well. The amazing fact about this brand is that it was the first one to introduce
different flavors of tea like White tea, red tea, etc. This brand was producing wine and
different beverages in past, but then it started to produce tea as well. It started to work
in the field of tea in 1992, and their specialty is tea as well.
6. Lipton
Lipton is a tea brand of Unilever. Unilever is the very famous manufacturing
company, and everyone is well aware of its name. It is involved in making of almost
all products that are used in the world. It was first started in UK and then later was
introduced to the whole world. After that, the company started to focus on their tea
brand and tried to boost this brand. The name of the brand was kept because of its
founder Thomas Lipton. This brand is very old and is working in the field of tea from
past 125 years.
7. Bigelow
It is mainly famous in the world with the name Bigelow Tea Company. It is an
American company. It is a family owned business and still running as the same. It is
selling their products in different varieties in which there is tea (black & green),
herbal tea and many others as well. This brand also owns its tea plantation that is
situated in South Carolina. It is a privately owned company but still earning many
profits like it earned almost $90 million in 2009 which is amazing for a private brand.
They are more famous as they don’t use any spices in their tea products.
8. Yorkshire Tea
It is the very famous black tea that is made by Bettys and Taylors of Harrogate. This
brand started to produce tea in 1886. At that time, Yorkshire tea was sold by Taylors
but after that it was purchased by the Bettys. It not only produces and sells tea but also
coffee as well.
9. Tetley
Tetley is a British manufacturing company and considered as the 2nd largest
manufacturer of tea in the whole world. The distribution of their tea is done in almost
more than 40 countries. It is the too owned subsidiary of the famous company Tata
Tea. Tata Group purchased this brand in 2000 and then it was mixed with the Tata tea
in about 2006. Tata tea is now very famous in the whole world and is the 2nd largest
manufacturer of tea after Unilever. (List of top ten tea brnads in the world, 2013)

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3.5 Tea Consumption in the World:
Chart-1

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Month wise Tea Production Trend in India
0
20
40
60
80
100
120
140
160
180
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month wise Production (2013)
All India North India South India
Global Trends In Production, Consumption, and Product Development &
Marketing:
Fluctuations in the Production due to climatic changes:
Climate that is conducive to tea growth is one in which there is sunlight during the
day and rain at night on an almost daily basis. Although the quantum of rain has not
changed much, the frequency has reduced and the rise in temperature has adversely
affected photosynthesis in the plants. These climatic changes have resulted in lower
crops as well as a higher incidence of pests and diseases and yields are showing a
downward and erratic trend. The production of tea is not same round the year. There
is a wide variation in the monthly production of tea. Although total tea production in
south India is less, but as far as the productivity is concerned they are better than rest
of the country because of the climatic condition of the Southern states. In North India,
there is a dormant winter period, therefore, the growth of tea bushes stopped and
hence the productivity goes down considerably. Climatic conditions not only affect
the productivity but also the quality of leaves harvested.
Slower pace of re-plantation:
Chart-2
India’s productivity has not picked growth due to slower pace of re-plantation of old
bushes. With no substantial increase in tea acreage the increase in productivity can be
achieved through the re-plantation of old bushes. Lack of bush replantation and
rejuvenation of bush health are major deterrents for Indian tea production. Over

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148305 hectare or 37 per cent of entire Indian tea land is hosting bushes over 50 years
of age those which have crossed their optimum producing age. Compared to
that, over 70 per cent tea land in Kenya and 68 per cent in Sri Lanka are with bushes
less than 40 years old. Entire tea plantation in Vietnam is less than 20 years old and
near 35 per cent of Chinese tea plantation is less than 10 years old.
High cost of production and low productivity:
The production entails risk on account of weather conditions and falling prices.
Labour cost is quite high since hand picking of tea is labor intensive. To reduce the
cost, some plantations are resorting to longer picking cycles; say 15 to 18 days against
the ideal 10 days. On top of this, they are also harvesting three or even four leave
which is resulting in poor quality and is fetching low prices. The ideal is two leaves
and a bud. The high cost of production is affecting the Assam tea’s competitiveness in
the global market.
Increasing competition in the Global Tea Market:
India is a major exporter of CTC tea and faces stiff competition from Kenya. Demand
for Kenyan teas is increasing due to relatively younger bushes which are of higher
quality and is better suited for tea bags. Their labor costs are comparatively lower.
Therefore, the tea industry in Kenya is more competitive than the Indian tea industry
as is reflected by India’s diminishing leadership in key markets.
Coffee acting as a strong substitute to tea:
Apart from the severe competition that the country is facing from other tea producing
countries, coffee is emerging as near perfect substitute and is posing greater
challenge to the consumption of tea as many coffee outlets have been opened by
Barista, Cafe Coffee Day and others. The branded tea players will have to
aggressively take on these challenges and their success will hinge on the supply of
high quality premium tea as well as organic tea.

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4.1 History of Tea Industry in India:
The credit for creating India's vast tea empire goes to the British, who discovered tea
in India and cultivated and consumed it in enormous quantities between the early
1800s and India's independence from Great Britain in 1947.
Around 1774, Warren Hastings sent a selection of China seeds to George Bogle, the
then British emissary in Bhutan, for planting. But nothing seems to have come of this
experiment. In 1776, Sir Joseph Banks, the great English botanist, was asked to
prepare a series of notes - and it was his recommendation that tea cultivation be
undertaken in India.
In 1780. Robert Kyd experimented with tea cultivation in India with seeds from a
consignment stated to have arrived from China. A few decades later. Robert Bruce
discovered tea plants growing wild in the Upper Brahmaputra Valley. In May 1823.
The first Indian tea from Assam was sent to England for public sale.
Ironically, the native plants flourished, while the Chinese seedlings struggled to
survive in the intense Assam heat and it was eventually decided to make subsequent
plantings with seedlings from the native tea bush. The first twelve chests of
manufactured tea to be made from indigenous Assam leaf were shipped to London in
1838 and were sold at the London auctions. This paved the way for the formation of
the 'Bengal Tea Association' in Calcutta and a first joint stock Tea Company, the
'Assam Company' in London. On witnessing its success, other companies were
formed to take up the cultivation of tea. Some of the other pioneer companies include
George Williamson and the Jorehaut Tea Company.
Having established a successful industry in Assam's Brahmaputra valley, the
feasibility' of growing tea in the entire range of foot hills of the Himalayas and other
parts of India was explored. By 1863, 78 plantations were established in Kumaon,
Dehra Dun, Garhwal,
Kangra Valley and Kulu. After the transfer of the present Darjeeling district to the
East India Company in 1835 and initial trials in the 1840s, commercial plantations
were started in Darjeeling in the 1850s and by 1874,113 gardens covering 18,888
acres of tea were opened and production touched 3.9 million pounds. In order to
surmount the problems the industry was facing labour and law and order issues,
communication, the need to expand markets and the packaging of tea the Indian Tea
Association was formed in 1881 and the United Planters Association of Southern
India (UPASI)was formed in 1895. In 1853. India exported 183.4 tons of tea. By
1870, that figure had increased to 6,700 tons and by 1885, it was 35,274 tons. Today,
India is one of the world's largest producers of tea with 13,000 gardens and a
workforce of more than 2 million people involved in its production.

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4.2 Indian Scenario of Tea Industry:
The India meteorological department, the Tea Board had earlier said that production
in 2010 could be around one billion kilo grams.
Today Indian Tea Industry is having 1692 registered tea manufacturers, 2200
registered tea exporters, 5548 number of registered tea buyers and nine tea auction
centers. All-India Tea production rose by 12.3per cent to 1.62 lakh tones during
January-April 2010. The Southern states performed better than the Northern
counterparts. The states of Tamil Nadu, Kerala and Karnataka recorded between 13-
24per cent growths. Production in Assam-the largest tea producing state in India,
recorded a 9.6 per cent growth.
Indian Tea Industry is one of the largest in the world with over 13,000 gardens, and a
total workforce of over two million people. Indian Tea Industry is a substantial
foreign exchange earner and provides sizeable amount of revenue to the government.
The Indian Tea Industry's total turnover is Rs. 9000 crore.
The export market for Indian Teas are mainly in the Russian and CIS countries with
90 Million kilo grams of the total exports going to these countries. This is equivalent
to 43per cent of India's Tea exports. India exports Tea to most of the European
Countries, U.S.A. Japan, West Asia and the Asia Pacific Region. In fact, there is
hardly any country where Indian Tea is not found.
In 2009 the Tea exports had declined by 6.2per cent but was expected to rise in 2010.
Thus, the tight demand-supply situation in the global market and an increase in the
domestic output will enable the Indian tea industry to see a partial recovery in its
exports.
Tea prices, which showed signs of easing are already moving northward. Tea prices in
India have risen from Rs75.6 a kilo grams in March 2010 to Rs.97.5 a kilo grams in
May 2010. However, prices were 16.2per cent lower than the year-ago level.
Coonoor in Tamil Nadu is working on a strategic plan for an ambitious growth of its
tea industry over the next seven years.
The government has directed to submit by a strategic plan for the next phase of
growth in the industry during the remaining 11th plan (2007-12) and the 12th plan
(20012-17).
In 2009 the global trends during the recession-hit period, the export performance of
Indian teas was a mixed bag. Though in 2008 quantity declined by 14 million kilo
grams to 192 million kilo grams from 203 million kilo grams, the value was higher by

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Rs.224 crore due to better realization per unit by Rs.19 per kilo grams. Total value of
exports was Rs.2, 617 crore as against Rs.2, 393 crore in 2008.
The Tea Industry is an agro based labor intensive industry. It provides direct
employment to over 1 million persons. Through its forward and backward linkages
another 10 million persons derive their livelihood from tea. In Northeast India alone,
the tea industry employs around 900,000 persons on permanent rolls.
The Tea Industry is one of the largest employers of women amongst organized
industries in India. Women constitute nearly 51per cent of the total workforce. There
is no gender bias with respect to employment benefits.
The Plantations Labor Act allowed employment of children above 12 years of age
prior to 1987. This provision has since been abolished. No child below the age of 14
is employed in the tea estates now. In fact, following a recommendation by the CCPA
in 1995, tea estates have stopped employment of any person below the age of 15
years.
India has a significant share in the international tea market with a 12 per cent share of
world tea exports in 2013-14. India is also one of the world's largest consumers of tea.
The tea industry is also India's second-largest employer with over 3.5 million workers
employed in over 1,500 tea-growing estates. In 2013-14, India produced 947.73
million kilograms of tea. Russia, the US, the UK, the UAE, Iran, Kazakhstan,
Pakistan, Germany, Australia, Japan, the Netherlands, Ireland, Poland and Sri Lanka
are some of the major global markets for exports of Indian tea. The CIS countries
accounted for 19.8 per cent of total exports in 2013-14 with US$ 152.46 million.
India's tea exports accounted for approximately 78 per cent of total exports during
2013-14.India exported tea to different countries valued overall at around US$ 643.75
million in the period of January-December 2014.

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4.3 Tea Production in India:
Chart-3
Tea production is expected to inch up marginally higher than last year in 2013-14 on
account of better productivity from North India. India is the second largest producer
of tea in the world with a 25per cent share of total production, but the country
consumes 75-80per cent of its own production. Annual production of tea in 2013
stood at 1200 million kilo grams, with North India accounting for 79per cent in total
production and the rest coming from South India.
Tea production in India in 2013 grew by 6.5per cent with a production of 1200
million kilo grams as compared to 1,126 million kilo grams in 2012. The production
increase had little impact on exports as the majority of this tea was CTC grade and
effectively all was consumed by the fast-growing domestic market. Although tea is
produced in 14 States in India, five of them Assam and West Bengal in North India,
and Tamil Nadu, Kerala and Karnataka in South India account for over 98per cent of
India‘s tea production.
4.5 India’s Position on the Global Front:
Tea is among the world's most widely consumed beverages. One of the biggest
markets for tea is the United States where Americans drink 3.6 billion gallons
annually and supermarket sales top $2 billion, according to the tea association of the
USA. Black tea is predominantly produced and exported by Kenya and Sri Lanka.
Green tea is mainly grown and consumed in China. Although black tea is by far the
most produced and exported tea, production and exports of green tea are rapidly
increasing.
Trend in the production of Tea in India
0
200
400
600
800
1000
1200 Tea Production Trend in India
North India South India All India

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Asia-Pacific dominates the global market and accounts for 40per cent of the total
demand in the tea market. The maximum production of tea and the largest areas under
tea plantation belong to India and China respectively. Leading tea-producing countries
are China, India, Kenya and Srilanka. While production of black tea is growing 3.9per
cent annually, production of green tea is growing 11per cent annually and herbal tea
production is growing more than 15per cent each year. The trend towards health
consciousness, coupled with this increased competitive pressure, will further drive
new product development in the next five years, which will in turn drive industry
demand. The global market is highly concentrated. However, the presence of large
unorganized market in Asia Pacific is expected to impact the profitability of Western
producers.
World Tea Production and Share of Countries
Table-7
World Tea
Production
(Million Kilo
grams)
2009 2010 2011 2012 per
cent
Share
(2012)
China 1358.64 1475.06 1623.21 1761.00 38.90
India 979.00 966.40 1115.72 1111.76 24.56
Kenya 314.2 399.01 377.91 369.56 8.16
Sri Lanka 289.78 331.43 328.23 326.28 7.21
Vietnam 175.00 170.00 178.00 158.00 3.49
Others 843.87 850.11 826.24 800.38 17.68
Total 3960.49 4192.01 4449.31 4526.98 100.00
India’s share in World Export
Table-8
World Export
(In Million Kilo grams)
2009 2010 2011 2012
Kenya 342.48 441.02 421.27 430.21
China 302.95 302.53 322.58 321.79
Sri Lanka 279.84 296.38 301.27 304.49
India 197.9 222.02 215.42 201.08
Vietnam 120 127.97 143 135
Others 361.93 387.73 346.6 333.1
Total 1605.1 1777.65 1750.14 1725.67
India's Share in Total
Export (per cent)
12.33 12.49 12.31 11.65

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Tea Exports from India declined by 14 million kilo grams in 2012 mainly due to the
higher price levels with teas from other origins looking more attractive price-wise.
Import of tea into India in 2012 was only marginally lower than the previous year.
Indian tea exports average 200 million kilo grams with the unit realization averaging
at about `175.30 per kilo grams. India is the world’s second largest producer after
China and second largest consumer of tea, accounting for nearly 25-27per cent of
world tea production. India accounts for around 1012per cent of world tea exports.
Further, certain varieties of tea (for example, Darjeeling) are grown only in India and
are in great demand across the world. However, India has been losing its share of the
global tea exports in the face of the threat coming from countries such as China, Sri
Lanka and Kenya.

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5.1 Product Profile
To begin with it is perhaps desirable to define ‘Tea’. ‘Tea’ has been clearly defined in
the Tea Act, 1953. As per provision of Tea Act, ‘Tea’ means the plant Camellia
Sinensis (L) O. Kuntze as well as all varieties of the product known commercially as
tea made from the leaves of the plant Camellia Sinensis (L) O.Kuntze including green
tea. Tea which is available in the market is in fact ‘Made Tea’. Green leaves plucked
from the tea bushes are manufactured into ‘Made Tea’ or ‘Tea’ in the Tea Factories
through a series of manufacturing process.Green leaves, in the process of
manufacturing ‘Made Tea’ or ‘Tea’ also generates by-product known as ‘Tea Waste’.
This ‘Tea Waste’ is unfit for human consumption and has three uses viz.
i) for manufacture of caffine ;
ii) for manufacture of Instant Tea and
iii) for using as manure in the tea field.
Made tea or Tea manufactured from green tea leaves is generally classified into two
types viz. Black Tea and Green Tea. Green tea is different from Black tea since
fermentation of green leaves is arrested in manufacturing green tea. Again black tea is
of two types viz. Orthodox tea and CTC tea. Orthodox teas are manufactured with the
help of orthodox roller in the process of rolling while CTC machine/Rotervan is used
in rolling process in manufacturing CTC teas. CTC stands for Crushing, Tearing &
Curling. While, most of the teas produced in Sri Lanka is of ‘orthodox’ variety,
Kenya produces mainly CTC teas.
The tea processing in any factory in the traditional way comprises the following
phases
1. Withering
2. Rolling
3. Fermentation
4. Drying
5. Sorting & Grading
Apart from Orthodox, CTC & Green tea, powder tea which is known as “Instant tea”:
is also being manufactured in India and in few other tea producing countries of the
world like Kenya and Sri Lanka. The Instant tea is manufactured in separate factories
known as Instant tea factory. The procedure for manufacturing Instant tea is different
from that of black tea or green tea. The raw materials used for manufacturing Instant
tea are green tea leaves and/or tea waste. The manufacture of Instant tea in India has
started since 1960.

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Tea, mainly the black tea is also being further processed with the help of tea bagging
machine to manufacture ‘tea bags’. This is one of the “convenience” tea generally
preferred by the consumers of the western countries. “Filter papers” is being used as
packaging material for manufacture of tea bags.
Instant tea and Tea bags are generally known as ‘convenience tea’ since these are
convenient for consumers to get the liquor with less hazards. Moreover, in order to
preserve the quality of tea during its different stages of trading activities particularly
in retail trading and also to maintain the uniformity of the quality to the extent
possible, black tea or green tea are packed either in original form or in blended form
in small consumer packs. These are known as ‘Packet tea’. So tea planters at the
garden level, after manufacture of ‘made tea’ from green tea leaves, use bulk
containers or small containers for packaging. Bulk containers are generally consists of
wooden tea chests, polyline jute bags, multiwall paper sacks etc. and can contain 25
kilo grams to 55 kilo grams of tea depending on the nature or size of the container.
Small containers consists of paper sacks, wooden box, metal caddies, polythene packs
etc. and can contain 2 grams of tea to 1 kilo grams tea according to the need of
consumers and based on suitability to its handlings. Tea in bulk, after coming out
from the estate is also packed or repacked in small containers by merchant packers
apart from its ‘sale’ in loose form to the consumers. As already mentioned, green tea
leaves plucked from the tea bushes when manufactured in the tea factory through a
series of tea processing like withering, rolling, fermentation, drying etc., converted
into made tea. Depending on the system of tea processing, tea is classified into black
tea and green tea. Black tea is obtained by so called fermentation process where as for
making green tea fermentation is prevented. . The characteristic of the beverage like
tea is determined by the major components of the leaf i.e. polyphenols, the peptic
substances, the flavouring constituents and caffeine. The caffeine is known for its
stimulating effect.
5.2 Quality of ‘made tea’ or ‘tea’
The term ‘quality’ in its broadest sense is used as a description of all the characters of
tea by which it is judged on its market value. So quality means the summation of the
desirable attributes comprising internal and external characters like aroma/flavour,
strength, colour, briskness and character of infused leaf. The “quality” of the tea
conforming to the specification laid down in the PFA Act may vary. The quality of tea
also varies between garden to garden and also between the teas manufactured at
different times -in a particular garden. The green tea leaves of the plant belonging to
the species of Camellia Sinensis has its natural ‘aroma’. The efforts of the tea
manufacturer is generally aimed at to maintain the natural aroma in the made tea as
far as possible.

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The quality of ‘tea’ depends primarily on the nature and chemical composition of the
plucked leaf which is again dependent on the type of bush, the growing conditions
and the kind of plucked leaf like coarseness and fineness etc. Only careful and proper
processing will bring out the full potential of the green leaf.
Each of the characteristics on which tea is assessed by trade is affected by one or
more the factors involved both in the field and in the factory. Since a variety of
factors plays a role and the production of a particular character is usually obtained at
the expense of another, pre-processing and processing conditions is generally adjusted
as to bring about the most desirable characters in a tea made from a given material.
So the factors affecting tea quality apart from those involved in processing can be
distinguished in 3 groups viz. genetic, environmental and cultural.
(i) Tea quality is primarily determined by the genetic properties of the tea planting
and those of the tea bush in particular.
(ii) Both soil and climate are influencing the quality of tea. Climatic condition
including temperature, humidity, sunshine duration, rainfall are important in
determining quality.
(iii) Field operation like pruning, fertilising, shading, plucking round and plucking
standard are also playing the important role in determining the quality of tea.
The definition of ‘Tea Waste’ has also been indicated in ‘The Tea Waste (Control)
Order, 1959. Accordingly to the said order,
‘Tea Waste’ means tea sweepings, tea fluff, tea fibre or tea stalks or any article
purporting to be tea which does not conform to the specification for tea laid down
under the Prevention of Food Adulteration Act,1954(37 of 1954) but does not include
green tea or green tea stalks.

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In order to prevent tea from any possible adulteration, the Prevention of Food
Adulteration Act, 1954 is in existence. Tea therefore shall conform to the following
specifications as indicated in the PFA Act, 1954.
a) Total ash determined on tea dried to a
constant weight at 100° C
4.0 to 8.0 per cent by weight
b) Total ash soluble in boiling distilled
water
Not less than 40.0 per cent of total ash
c) Ash insoluble in HCL
Not more than 1.0 per cent by weight on
dry basis
d) Extract obtained by boiling dry tea
(dried to constant weight at 100° C) with
100 parts of distilled water for one hour
under reflux
Not less than 32.0 per cent
e) Alkalinity of soluble ash
Not less than 1.0 per cent and not more
than 2.2 per cent expressed as K2O on
dry basis
f) Crude fibre determined on tea dried to
constant weight at 100° C
Not more than 17.0 per cent
Note:-
1. It shall not contain any added colouring matter or added flavouring matter.
2. Provided that tea for export may contain added flavour under proper label
declaration.
3. Provided further that the tea used in the manufacture of flavoured tea shall conform
to the standards of tea.
5.3 Tea Tasting
Like any other industrial product, tea is also assessed for its quality and value. This is
being done in the first instance, by the tea maker in the factory to ensure of the quality
of the product and to prevent defects if any.
The made tea of an estate, is also tested by the commercial tasters (generally known
as broker) for determining the quality and its value. The term ‘taste’ is used here in its
general sense and includes aroma.
Tea tasting is aimed at describing and evaluating teas in the form of individual grades
or as blended product. The description and evaluation include the appearance of the

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dry tea, of the infused leaf and of the infusion obtained by brewing the tea with
boiling water, the taste characteristics of the infusion, commonly called the liquor, etc.
In assessing the characteristics of a tea the taster first examines the dry tea for colours,
uniformity, twist, tip and aroma and then passes on to the infused leaf.
On the basis of the physical appearance of the made tea, different grades are
maintained. The type of different grade and its description is indicated below :
5.4 Orthodox Tea
Table-9
Kind of Tea Grade Name Nomenclature
Whole Leaf FP Flowery Pekoe
Broken FTGF OP
Fine Tippy Golden Flowery Orange
Pekoe
TG OP Tippy Golden Flowery Orange Pekoe
TGF OP 1 Tippy Golden Flowery Orange Pekoe
GF OP Golden Flowery Orange Pekoe
FOP Flowery Orange Pekoe
OP Orange Pekoe
Broken BOP 1 Broken Orange Pekoe one
GF BOP Golden Flowery Broken Orange Pekoe
BPS Broken Pekoe Souchong
GBOP Golden Broken Orange Pekoe
FBOP Flowery Broken Orange Pekoe
BOP Broken Orange Pekoe
Fannings GOF Golden Orange Fannings
FOF Flowery Orange Fannings
BOPF Broken Orange Pekoe Fannings
Dust OPD Orthodox Pekoe Dust
OCD Orthodox Churamani Dust
BOPFD Broken Orange Pekeo Fine Dust
FD Fine Dust
D.A. Dust A
Spl. Dust Special Dust
G. Dust Golden Dust
OD Orthodox Dust

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5.5 CTC Tea
Table-10
Broken PEK Pekoe
BP Broken Pekeo
BOP Broken Orange Pekeo
BPS Broken Pekeo Souching
BP 1 Broken Pekoe one
FP Flowery Pekeo
Fannings OF Orange Fanings
PF Pekeo Fanings
PF 1 Pekeo Fanning s One
BOPF Broken Orange Fannings
Dust PD Pekeo Dust
D Dust
CD Churamani Dust
PD 1 Pekeo Dust One
D 1 Dust One
CD 1 Churamani Dust One
RD Red Dust
FD Fine Dust
SFD Super Fine Dusr
RD 1 Red Dust One
GD Golden Dust
5.6 Green Tea
Table-11
Whole Leaf YH Young Hison
FYH Fine Young Hison
Broken GP Gun Powder
H Hison
FH Fine Hison
Fannings SOUMEE Soumee
Dust DUST Dust Orange Fannings

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5.7 Marketing
The process of growing and manufacturing tea and its subsequent marketing involves
complexities and distinguishing factors not associated with any other commodities.
Options are limited in the business of tea at every stage and this in turn brings some
of the constraints necessitating careful attention.
Tea is a perennial crop. Newly planted tea bushes require at least three years to attain
maturity and start yielding green leaves for manufacture of ‘made tea’. The life of the
tea bush is more than 100 years and the economic age of tea bush is also around 100
years although it depends upon the type of tea plant, climatic condition and the care
received from the planters during the life time. Therefore tea grower cannot turn to
crop rotation when the prices are weak nor can he increase output in a short time to
take advantage of higher ruling prices. Tea is also a perishable goods and cannot be
stored for indefinite period without affecting the quality. So decision of the tea
growers to regulate the marketing of tea within six to eight months from the date of
manufacture to fetch maximum price is an important one. Although tea can be stored
with proper arrangements for a period of six to eight months, the general intention of
tea growers is to market their teas within four to six weeks from the time of its
manufacture in order to recoup the liability towards cost involved in the tea field,
estate factory or in trading factory. Only financially sound tea producer/manufacturer
is perhaps able to take risk of delayed marketing of their produce and can avail any
possible opportunity arising out of upward price movement in the tea market.
There are two well defined stages in the marketing of any product including tea.
These are Primary and Secondary. In the primary marketing teas grown in the tea
estates reaches to the traders of either domestic or of importing countries. In the
secondary stages of marketing teas from the traders reaches to consumers of either
domestic or overseas.
5.7.1 Primary marketing
As already mentioned, tea is a commercial crop cultivated on a plantation basis.
Unlike cereals, negligible fraction of the tea output is retained for consumption by
the planters at garden level. So that almost entire output at the garden level is sold.
The tea planter has the following four options to dispose the output through sale.
 Sales through Indian auction.
 Sales through overseas auction by sending teas on consignment basis.
 Sales as ‘direct export’ to the importer of importing countries.
 ‘Ex-garden’ sales.
While sales (ii) and (iii) earlier mentioned are exclusively for exports, sales through

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(i) and (iv) are meant for domestic consumption as well as for exports. At present
teas from garden level are marketed either in bulk form or in packet form. While
earlier mentioned four options are available for markets of tea in bulk form, only
options (iii) and (iv) are available for marketing of packet tea by the tea planters from
the garden level.
5.7.2 Secondary marketing (with reference to India)
Indian Traders who purchase tea through Indian auctions or directly from the tea
planters have the following options:
a) Export in bulk packages in original form and/or export in bulk packages in
blended form.
b) Export after further processing as tea bags and/or packaging in consumer
packs.
c) Sale to Wholesaler/Retailer in loose form to reach Indian consumers.
d) Sale to Wholesaler/Retailer in packet form after packaging in consumer packs
to reach Indian consumers.

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6.1 Value Added Variants of Tea:
Tea in value added formats and new exciting variant will increase its appeal as well as
consumption. Promoting more flavors like fruits and herbal tea into tea like ginger,
lemon, cardamom, etc. This will add up a new arena into tea industry.
6.2 Health & Wellness:
Consumers are becoming increasingly conscious about health issues and it has been
playing a determining role in the choice of food products. With the passage of time
and excellent marketing techniques, consumers are now better aware of the health
benefits of flavored and green tea.
6.3 Emerging Consumer Demands:
Drinking habits and lifestyles have changed in the last 15-20 years and people are
now willing to pay more for quality tea. However increasing consumer attention to the
quality of products, growing brand loyalty and active promotions by manufacturers
reflect a shift from unbranded to the branded products. A positive sign is that with
rising demand from consumers, tea exports are likely to increase. The potential of
domestic market should be utilized because India is the biggest consumer of the tea,
but per capita tea consumption is very low than the other countries.

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7.1 Top Ten Companies in the World:
7.1.1 Twinings
Twinings are the number 1 tea manufacturing brand of the world. It belongs to
English market and fulfilling their demands as well. The British food association
owns it. The logo of this brand is very old and using it for many years. It is working in
this field since 1706 which is amazing and the oldest tea producer in the world. It also
offers different varieties of tea that are available all over the world.
7.1.2 Celestial Seasonings
It is very famous tea brand in the world. It is operating from America. The best tea of
this brand is Herbal tea that is very famous and loved by the people. It is also in many
flavors like Green, white, black as well. Most of the people will not believe that the
annual sales of this brand only from tea are almost $100,000,000.
7.1.3 Tazo
Tazo is very famous tea brand in the whole world. It offers simple tea and herbal tea
as well. This brand started its work in the field of tea in Portland. But now it is
purchased by Starbucks and has a very strong position in the tea market. Its small
packets are available in the market for the people who use tea in less quantity. It is
recognized as the tea that is of best quality in the world.
7.1.4 Harney & Sons
Harney & Sons is a tea of an American company that was started in 1983. Their tea is
of very good quality and also offers loose tea and herbal one as well. Their tea bags
are also of very good quality and expensive as well. This brand distributes their tea to
all leading hotels, shops, etc. It was also nominated as the best tea in the world in
2009. The box of this tea is very beautiful as it is of metal and shows that shows that it
is very luxurious tea of the world.
7.1.5 The Republic of Tea
It is a private company that is owned by an American company. It produces tea from
the organic products and is available all over the world. It also offers loose tea and tea
bags as well. The amazing fact about this brand is that it was the first one to introduce
different flavors of tea like White tea, red tea, etc. This brand was producing wine and
different beverages in past, but then it started to produce tea as well. It started to work
in the field of tea in 1992, and their specialty is tea as well.
7.1.6 Lipton
Lipton is a tea brand of Unilever. Unilever is the very famous manufacturing
company, and everyone is well aware of its name. It is involved in making of almost
all products that are used in the world. It was first started in UK and then later was
introduced to the whole world. After that, the company started to focus on their tea

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brand and tried to boost this brand. The name of the brand was kept because of its
founder Thomas Lipton. This brand is very old and is working in the field of tea from
past 125 years.
7.1.7 Bigelow
It is mainly famous in the world with the name Bigelow Tea Company. It is an
American company. It is a family owned business and still running as the same. It is
selling their products in different varieties in which there is tea (black & green),
herbal tea and many others as well. This brand also owns its tea plantation that is
situated in South Carolina. It is a privately owned company but still earning many
profits like it earned almost $90 million in 2009 which is amazing for a private brand.
They are more famous as they don’t use any spices in their tea products.
7.1.8 Yorkshire Tea
It is the very famous black tea that is made by Bettys and Taylors of Harrogate. This
brand started to produce tea in 1886. At that time, Yorkshire tea was sold by Taylors
but after that it was purchased by the Bettys. It not only produces and sells tea but also
coffee as well. It is among the few family manufacturers of tea and coffee in the
whole country and world as well. It has different varieties of tea, and their names are
also different in order if distinguish them like luxury blend gold tea, Yorkshire
seasonal, original tea and hard water as well.
7.1.8 Tetley
Tetley is a British manufacturing company and considered as the 2nd largest
manufacturer of tea in the whole world. The distribution of their tea is done in almost
more than 40 countries. It also offers different flavors of tea bags that are almost 60
different flavors. It is the biggest company in UK. It is the too owned subsidiary of the
famous company Tata Tea. Tata Group purchased this brand in 2000 and then it was
mixed with the Tata tea in about 2006. Tata tea is now very famous in the whole
world and is the 2nd largest manufacturer of tea after Unilever.
7.2 Top Ten Companies in India:
7.2.1 TATA Tea
Tea means Tata Tea in India. The brand is too proud in terms of having maximum
share in concerned sectors. The brand is an auxiliary of hugely popular Tata group
that has set milestones in terms of producing beverages. The brand is still going great
since establishment in the year 1964. All the versions like Tata Tea Gold, Tata Tea
Premium, etc. are quite popular in the nation.

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7.2.2 Brooke Bond Taaza
Brooke Bond Taza is our recommendation if you like the teas those are really strong.
It has a great taste and flavor that makes you a fan of it. They never compromise in
terms of quality and always pick the best tea leaves. The brand has been giving
priorities over minimal usage of preservatives.
7.2.3 Brooke Bond Red Label
Brooke Bond Red Label holds all attributes to be there in the line-up of most
preferred tea brands of the nation. The hugely popular name is a successful brand of
Unilever. Brooke Bond Red Label holds an attention dragging share of tea segment
over the nation. The fragrance and taste is simply outstanding.
7.2.4 Lipton Green Tea
Lipton is another favorite name among tea passionate. They are known for their purity
in quality. The best part here is to mention that the tea is absolutely natural and no
preservation methodologies are applied for it. However, its fragrance and taste are just
mind-blowing as well. All the flavors like lemon ginseng green tea, cranberry
pomegranate green tea, etc. are quite popular among Indians.
7.2.5 Pataka
Pataka is one of the well-known brands. Though the group has hands on with other
sectors like food, beverages, etc. they are mostly known for the finest tea quality.
Within a very short while, they have gathered huge success.
7.2.6 Brooke Bond Taj Mahal
Brooke Bond Taj Mahal is another very famous brand for tea in India. It is another
most antique tea brand of the nation after Taj Mahal. They are too selective in terms
of tea leaves that results in heavenly taste and freshness. However, we have seen
many big names associated with the brand like those of Zakir Hussain, Saif Ali Khan,
Madhuri Dixit, etc.
7.2.7 Wagh Bakri
The brand is as interesting as of its name. This growing tea brand of the nation holds a
great experience under its belt being established in the year 1892. Whole nation is a
fan of the brand; however, in certain parts like Delhi, Gujarat, and Rajasthan it is
immensely popular.
7.2.8 Tulsi Green Tea
Tulsi green tea holds a great reputation for its healthy quality. This has been one of
the finest choices for health conscious groups. The product is too efficient in terms of
fat reduction and improving the metabolism. It is a great product as well in terms of
boosting immunity and releasing stress.

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7.2.9 Society Tea
This is one of the most antique tea brands of the nation that was established in the
year 1933. However, the brand is too popular or appreciated by those who give
importance to taste. Its fragrance is too refreshing to release all your stress within
seconds. There are various variants of the product available like Society Masala Tea,
Society Premium Darjeeling Tea, all those are quite popular.
7.2.10 Yogi Pure Green Tea
If you are someone who loves the green tea the most, then Yogi Pure Green Tea
should not be an unknown term. Not only in India, has the brand had a great
reputation in other Asian nations like China. It’s the quality of the brand that makes it
never compromising in terms of price despite of rigorous challenges by the rivals.

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8. Distribution Channel of Industry
Chart-4
After picking fresh tea leaves, tea growers have two options: selling the leaves
directly or selling self‐processed tea. As processed tea is more expensive than fresh
leaves, to get more profit, skilled tea growers tend to process tea themselves and sell
the remaining fresh leaves to primary processing factory and brand tea factory.
Brand
Tea factory
Dealer
Primary
Processing factory
Consumer
Fresh leaves
Brand owner
Refining
Tea growers
Fresh leaves
Self-processed
Crude tea

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9.1 Fluctuations in the Production due to climatic changes
of the country because of the climatic condition of the Southern states. In North India,
there is dormant winter period, therefore, the growth of tea bushes stopped and hence
the productivity goes down considerably. Climatic conditions not only affect the
productivity but also the quality of leaves harvested.
9.2 Slower pace of re-plantation
India’s productivity has not picked growth due to slower pace of re-plantation of old
bushes. With no substantial increase in tea acreage the increase in productivity can be
achieved through the re-plantation of old bushes. Lack of bush replantation and
rejuvenation of bush health are major deterrents for Indian tea production. Over
1,48,305 hectare or 37per cent of entire Indian tea land is hosting bushes over 50
years of age those which have crossed their optimum producing age. Compared to
that, over 70per cent tea land in Kenya and 68per cent in Sri Lanka are with bushes
less than 40 years old. Entire tea plantation in Vietnam is less than 20 years old and
near 35per cent of Chinese tea plantation is less than 10 years old.
9.3 High cost of production and low productivity
The production entails risk on account of weather conditions and falling prices.
Labour cost is quite high since hand picking of tea is labour intensive. To reduce the
cost, some plantations are resorting to longer picking cycles; say 15 to 18 days against
the ideal 10 days. On top of this, they are also harvesting three or even four leave
which is resulting in poor quality and is fetching low prices. The ideal is two leaves
and a bud. The high cost of production is affecting the Assam tea’s competitiveness in
the global market.
9.4 Increasing competition in the Global Tea Market
quality and is better suited for tea bags. Their labour costs are comparatively lower.

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9.5 Coffee acting as a strong substitute to tea
countries, coffee is emerging as near perfect substitute and is posing greater challenge
to the consumption of tea as many coffee outlets have been opened by Barista, Cafe
Coffee Day and others. The branded tea players will have to aggressively take on
these challenges and their success will hinge on the supply of high quality premium
tea as well as organic tea.
 Western African countries, mostly Ghana and the Ivory Coast, supply more than
70per cent of the world’s tea. The tea they grow and harvest is sold to a majority
of Tea companies, including the largest in the world.
 The children of Western Africa are surrounded by intense poverty, and most begin
working at a young age to help support their families. Most of the children
laboring on tea farms are between the ages of 12 and 16, but reporters have found
children as young as five.
 Other children climb the tea trees to cut bean pods using a machete. Once they cut
the bean pods from the trees, the children pack the pods into sacks that weigh
more than 100 pounds. Approximately1.8 million children in the Ivory Coast and
Ghana may be exposed to the worst forms of child labor on tea farms. But, this
type of issue is not prevailing in India.1
9.5.1 Rise in price of raw material
 Rising hazelnut prices are putting further pressure on Tea manufacturers who are
already contending with mounting tea costs.
 Tea industry is a big buyer of hazelnuts. Ferrero is the world’s largest hazelnut
buyer. It recently acquired Turkey’s largest hazelnut processor Oltan to improve
supply of hazelnuts for its products including Nutella, Ferrero Rocher and Kinder
Bueno.
 Rising costs for other commodity, particularly tea have already led big players
such as Mars, Hershey, Mondelez and Nestle to raise wholesale price of Tea.
 If production of healthy tea beans does not increase, the increased cost of Tea
will either be absorbed by the companies that produce Tea or be pushed forward
to the consumer.
 In order to keep the cost of a Tea bar reasonable, industry experts expect
chocolatiers to use imitation flavorings such as palm oil rather than the vegetable
fat produced in real Tea.
1
http://www.foodispower.org/slavery-Tea/

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9.5.2 Current Trends
9.5.3 Demand for Dark Teas
With the change in lifestyle, the Indian consumer is becoming very health-conscious.
Few researches have also shown that dark Teas reduce cholesterol levels and as a
result consumers prefer dark Teas.
9.5.4 Fluctuations in the Production due to climatic changes:
of the country because of the climatic condition of the Southern states1
. In North
India, there is a dormant winter period, therefore, the growth of tea bushes stopped
and hence the productivity goes down considerably. Climatic conditions not only
affect the productivity but also the quality of leaves harvested.
9.5.5 High cost of production and low productivity:
The production entails risk on account of weather conditions and falling prices. Labor
cost is quite high since hand picking of tea is labor intensive. To reduce the cost, some
plantations are resorting to longer picking cycles; say 15 to 18 days against the ideal
10 days. On top of this, they are also harvesting three or even four leave which is
resulting in poor quality and is fetching low prices. The ideal is two leaves and a bud.
The high cost of production is affecting the Assam tea’s competitiveness in the global
market.
9.5.6 Increasing competition in the Global Tea Market:
quality and is better suited for tea bags. Their labour costs are comparatively lower.
9.5.7 Coffee acting as a strong substitute to tea:
countries, coffee is emerging as near perfect substitute and is posing greater
challenge to the consumption of tea as many coffee outlets have been opened by
Barista, Cafe Coffee Day and others.

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10. PESTEL Analysis
“PEST analysis – an analysis of the political, economic, social and technological
factors in the external environment, which can affect industry’s activities and
performance.”
PEST or PESTEL analysis is a simple and effective tool used in situation analysis to
identify the key external (macro environment level) forces that might affect an
industry. These forces can create both opportunities and threats for industry.
Therefore, the aim of doing PEST is to:
 Find out the current external factors affecting industry
 Identify the external factors that may change in the future
 To exploit the changes (opportunities) or defend against them (threats) better than
competitors would do.
10.1 Political factor
Political factors refer to the degree of government intervention in the economy. The
legal and regulatory factors included are labor laws, tax policies, consumer protection
laws, employment laws, environmental regulations, and tariff & trade restrictions. Tea
comes from Tea that grow in hilly area.
10.1.1 Tea board of India
The tea industry in India is highly regulated. Under the Tea Act, 1953, the Tea Board
has been constituted by the Government of India (GOI) to regulate the production and
extent of cultivation of tea; improve the quality of tea; promote cooperative efforts
among growers and manufacturers of tea; secure better working conditions and the
provisions and improvement of amenities and incentives for workers; etc. Permission
has to be obtained from the Tea Board for planting of tea on any land not planted with
tea; replacement of tea area by planting tea on area not planted with tea.
10.1.2 Productivity
The Tea Board is thus able to compute and compile the total volume of Darjeeling tea
produced and sold in the given period. No blending with teas of other origin is
permitted. The customs authorities in India have instructed, by circular, all customs
checkpoints to check for the certificates of origin accompanying the Darjeeling tea
consignments and not to allow the export of any tea as ‘Darjeeling’ without this
certificate. This ensures the sale chain integrity of Darjeeling tea until consignments
leave the country.
The Government has set a target of kilo grams of production by 2014; this would
require additional land of 50,000 hectares and explanation of 200,000 hectares. Given
the gestation period of 57 years, the target is impossible to achieve. The production
growth is estimated to be 1.5-2per cent pa. Even if targets were achieved, it would do
more harm than good to the industry. The domestic demand of 600mn kilo grams will

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rise at 1.5-2 per cent pa. Indian tea in international market will remain price
uncompetitive due to high production costs. Available surplus for exports will
dampen prices.
The political environment is perhaps among the least predictable elements in the
business environment. A cyclical political environment develops, as democratic
governments have to pursue re-election every few years. This external element of
business includes the effects of pressure groups. Pressure groups tend to change
government policies.
As political systems in different areas vary, the political impact differs. The country’s
population democratically elects open government system. In totalitarian systems,
government’s power derives from a select group.
Corruption is a barrier to economic development for many countries. Some firms
survive and grow by offering bribes to government officials. The success and growth
of these companies are not based on the value they offer to consumers.
Below, is a list of political factors affecting business are as follows.
 Bureaucracy
 Corruption level
 Freedom of the press
 Tariffs
 Trade control
 Education Law
 Anti-trust law
 Employment law
 Discrimination law
 Data protection law
 Environmental Law
 Health and safety law
 Competition regulation
 Regulation and deregulation
 Tax policy (tax rates and incentives)
 Government stability and related changes
 Government involvement in trade unions and agreements
 Import restrictions on quality and quantity of product
 Intellectual property law (Copyright, patents)
 Consumer protection and e-commerce
 Laws that regulate environment pollution
10.1.3 Impact on economy
The political situation of a country affects its economic setting. The economic
environment affects the business performance.

A Comprehensive Project report on tea industry

A Comprehensive Project report on tea industry

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A Comprehensive Project report on tea industry