Tea exports from India is likely to witness a decline this year despite steady demand from some of its traditional markets. Exports in volume terms could see a 10-20 per cent drop on the back of the estimated decline in production and the resultant increase in prices.
In 2019, India exported close to 248.29 million kg (mkg) of tea, which was down by around three per cent as against 256.06 mkg in 2018. In value terms, however, it fetched around 5 per cent higher price and sold at a unit price of ₹ 225.81 a kg in 2019, as against ₹ 216.16 a kg in 2018.
In value terms, however, India earned around 8 per cent higher price and sold at a unit price of ₹225.97 a kg in 2019, as against ₹208.36 a kg in 2018.
According to Anshuman Kanoria, Chairman of Indian Tea Exporters’ Association (ITEA), while it is difficult to estimate the exact impact as yet, it is likely that exports could decline by 10-20 per cent this year over last year.
“We are probably looking at some decline in exports – whether it will be 10 or 20 per cent remains to be seen. However, given the fact that there is good global demand, we are optimistic of keeping the decline to the minimum. We expect the drop to be more in volume terms because the unit price of tea is slightly higher this year,” Kanoria told BusinessLine.
Firm demand
There was a spurt in branded tea sales at supermarkets at the beginning of this year, primarily due to panic buying by consumers due to the pandemic scare. There has also been good demand for tea on online and e-commerce channels.
“The overall trend in terms of international demand is positive. Some of the key markets for Indian tea, such as Iran, is also short on supply and is looking for tea at the moment. So, in terms of overall demand, it is a plus … how long it will sustain is something that needs to be seen,” he said.
The higher production in Kenya has brought down the price of CTC. This can have some negative impact on CTC exports from India. However, the demand for orthodox tea looks good.
Iran and CIS together account for 40 per cent of India’s tea exports. While the demand for Indian tea in Iran has been firm so far, Russia, which is a price sensitive market, is likely to see some impact.
“My main concern is not so much of demand but the availability of raw material. We are really looking at an uptick in quality and crop from June onwards because so long as there is a shortage and prices are high, there would be a resistance to markets willing to take. In Russia, we are seeing a bit of an impact where there is price resistance and they are looking at lower value teas and if they don’t get it then we might lose some share in that market,” he pointed out.