The Hindu Business Line : Tea parlours to challenge coffee houses: Wagh-Bakri takes lead

Ahmedabad, June 13 Concerned over the ‘invasion’ of swanky coffee houses in towns and cities by the private sector in the domain of tea stalls in India, the Ahmedabad-based Wagh-Bakri Group, the country’s third largest tea packager, plans to set up a chain of tea parlours and launch new products such as ice tea in ready-to-serve cartons.

Other players in the tea business will also follow suit to promote tea across India in a big manner.

The company is expanding capacity by installing a Rs 5-crore facility here to make 450 tea bags a minute with the target to meet 20 per cent of the total demand in this segment. It is also launching, in the next few weeks, three varieties of ice tea on the lines of packaged fruit juices.

Early next month, the group, with a turnover of Rs 280 crore in 2007-08, is opening its 100-sq. ft. tea parlour near the Santa Cruz Airport in Mumbai, to be followed by similar outlets in Jaipur and Kolkata.

Besides, the company would also set up parlours at other places to encourage domestic consumption, Mr Piyush Desai, Chairman and Managing Director, Gujarat Tea Processors and Packers Ltd, which owns the Wagh Bakri brands, told Business Line here.

Organic Darjeeling tea

As part of its efforts to popularise the premium organic Darjeeling tea amongst connoisseurs, the company is contemplating fresh moves, including buying tea estates where no pesticides or fertilisers would be used.

Regretting that the growth of tea business has been “affected” due to the promotion of coffee aggressively, he also appealed to major tea packagers such as Tata Tea and Hindustan Unilever to open tea parlours across India and take other measures to encourage consumption.

“Big companies should open air-conditioned tea parlours and restaurants. Regional tea packaging brands like us, too, are likely to set up nearly 100 tea parlours in the next couple of years.”

Currently, the Wagh-Bakri brands are sold mainly in Gujarat (50 per cent market share), Rajasthan (20 per cent) and Madhya Pradesh (10-15 per cent) and it has a presence in over 30 countries.

By year-end its brands would be available in more than 20 towns and cities of Maharashtra as well.

The company, having a production capacity of one lakh kg (10 lakh packets) a day at its packaging facility in Ahmedabad district, sells nearly 180 lakh kg of tea annually.

Production, exports

Mr Desai, who is also Vice-Chairman of Tea Packers Association of India and Chairman of Western India Tea Dealers Association, pointed out that India’s tea production increased from 874 million kg (mkg) in 1998 to 944 mkg in 2007 whereas exports declined from 210 mkg to 157 mkg during the decade due to, among other reasons, Sri Lanka, Kenya and other countries coming in as new competitors.

Consumption up

While domestic consumption increased from 650 million kg (mkg) to 810 mkg, imports also increased from 9 mkg to 16 mkg.

Between 2002 and 2006, the tea business witnessed a recession and lower prices which de-motivated planters and others in the trade.

This slowed down a general improvement in varieties at many places although some took lead in producing good quality tea and secured higher prices, Mr Desai said.

Among major tea producers, India registered an 11.2 per cent slump, the sharpest decline , last year as production decreased from 956 mkg in 2006 to 944 mkg in 2007.

This year, however, the situation has improved in the first four months of 2008 as production has gone up by 17.9 per cent, from 152 mkg in January to 170 mkg in April 2008.

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