India is among the finest countries indulged in tea production in the world, Indian is nearly 200 years old, at the time when India was ruling under Britishers. Robert Bruce one of the British national discovered tea plants growing in the upper Brahmaputra valley in Assam and adjoining region, in 1838 first time tea was sent to UK for public sale, Britishers never knew that they are started the business which going to contribute approx 40% of national revenue generated through export activities.

Tea in India is grown primarily in Assam, West Bengal, Tamil Nadu and Kerala, apart from this also grown in smaller quantity in Karnataka, Himanchal Pradesh, Tripura, Uttaranchal, Arunachal Pradesh, Manipur, Sikkim and Meghalaya.

India has dual tea base, unlike most other tea exporting countries, both CTC and Orthodox tea is produced in India.


The tea industry is agro-based and labour intensive, it can provide direct employment to 1 million people, though it overall provides approximately 10 million people if we count all forward and backward linkage. In Northeast India alone, the tea industry provides employment to around 900,000 persons on permanent rolls. It is one of the largest employers for women in India, here women constitutes nearly 51% of total workforce.


  1. Assam Tea: It grows in Assam and other parts of NE India.
  2. Darjeeling Tea: It grows in Darjeeling and other parts of West Bengal.
  3. Nilgiri Tea: It grows in Nilgiri hills of Tamil Nadu.


The scope of this project would be limited to the export of India CTC and Orthodox tea, to the following international markets:

  • CIS Countries:
  • Russia
  • Armenia
  • Azerbaijan
  • Belarus
  • Kazakhstan
  • Kyrgyzstan
  • Moldova
  • Tajikistan
  • Uzbekistan
  • United Kingdom



Tea is one of the oldest organized sectors in India, the market size of the tea industry was approx 420 billion in 2017. Indian tea is amongst the finest in the world  due to the heavy investments and innovations in the processing units and the care taken during harvest and processing owing to the importance the citizens give to chai in their everyday life. ¾ of the total production is consumed locally within the nation and rest of value is generated through the export of tea. Around 115 Billion in Indian rupee revenue is generated in 2018.

In 2020 ICRA estimates that 6-7% of the annual production of tea, primarily of the first flush variety, of North India (Assam and West Bengal) based organized players and another 5-6% from South India were get effected in CY 2020. And apparently production form the organized segment is estimated to decline by 45-50mm kgs.


The global tea market size was valued at $55,144 million in 2019, and is projected to reach $68,950 million by 2027, registering a CAGR of 6.6% from 2020 to 2027. The green tea segment was the highest contributor to the market, with $16,362 Million in 2019, and is estimated to reach $26,110 Million by 2027 at a CAGR of 9.8% during the forecast period. China is one of the prominent regions in the market that accounted for a sizeable share of the total market in 2019.


A compilation of the Tea Act, 1953 provide for the control by the union of the tea industry in its production and export and also to establish a Tea Board and Levy a duty of excise on tea production in India. This act extends to the whole of India but not in J&K except to the extent to which the provision of this Act relate to the control of the export of tea from, and the cultivation of tea in India.


For manufacturing and export of tea two most prominent license are required that are Tea Board of India & FSSAI discussed below in brief:

The food department has specified the FSSAI guidelines for tea business in India, in the present time, the consumer has also become conscious of what they consume and today consumers are become aware of food safety compliance and prefer to purchase a food product that is approved by the FSSAI dept. Tea is a beverage that is extensively sold across the country and sold by many manufactures under different brand names, FSSAI License is required for all type of tea business whether its trading or wholesales or retailing or Export/Import.

The Tea Board of India is a regulatory agency established by the government of India section 4 of the Tea Act, 1953. It aims to promote the domestic trade, export, cultivation and processing of tea in India. Its genesis dates to colonial India when the Indian Tea Cess Bill was passed in 1903.


A tea manufacturing may need an investment of around Rs 25 lakh, and tea board assist them with the subsidy for 40% of this cost. Such factories can manufacture up to 500kg tea per day. They can get a price of around Rs 200 a kg for quality orthodox tea and Rs 300 for quality green tea.


The scene is a home in small town India. A young girl brings her elder brother a cup of tea as he sits in the verandah. Taking a sip, he remarks that it tastes good.

Overhearing the comment, the wife in the kitchen pipes up. “I’m the one who made it,” she says.  “But I bought it,” the man retorts. “Because I told you to,” says his mother standing nearby.

To which the vendor across the lane says, “But I’m the one who sold it to you.”

If there are several contenders for praise in the Agni ad film, real life isn’t too different. While Tata Tea’s marketshare has been climbing in the past year, in June 2007, it inched past archrival Hindustan Unilever for the first time, with volume shares of 19.2 per cent compared to HUL’s 18.6 per cent (source: ACNielsen).

This time last year, Tata Tea’s volume share was just 17.5 per cent while HUL’s was a comfortable 21.5 per cent. Agni’s performance – market share increased by 50 basis points in the past year – is just one ingredient in the winning brew.


The television commercial by Dentsu can take only part of the credit for the increase in Agni’s sales.

A reduction in prices across SKUs also played a huge part in the brand upping its all-India share to 3 per cent: in October, Tata Tea dropped the price of the economy brand from Rs 128 a kg to Rs 120.

“We felt Agni was not priced correctly for the economy segment; several local brands were eating into its share. Which is why we dropped the price and that has paid off,” explains Sangeeta Talwar, executive director, marketing, Tata Tea.

Agni is just part of a new, improved Tata Tea package. Over the past year, the Rs 4,044-crore (Rs 40.44 billion) tea and coffee company has worked on almost all its brands, either dropping the price or strengthening the brew and supporting them with better packaging and new communication.

The effort has paid off in terms of volume marketshare, but in value terms, Tata Tea still has some way to go: although there’s been a 90 basis point increase since June last year, Tata Tea’s 20.5 per cent share is still far behind HUL’s 24.5 per cent.

So, is the volume share increase significant, then? Yes, say industry watchers, given the nature of the tea market in India. Tea is a widely penetrated product in India and though the market is fairly large with annual sales of 800 million kg, it is growing at barely 3-3.5 per cent a year.

And as Boston Consulting Group Partner Abheek Singhi observes, realizations in India are only about a fifth of what they are in the US and Japan. Moreover, only about 40 per cent or 320 million kg sold is accounted for by branded teas. “And that space is crowded with over 500 regional brands,” points out Percy Siganporia, managing director, Tata Tea.


The value packs were launched last year to take on these smaller brands. Tata Tea sold its products at price points of Rs 10-11 for 50 gm and Rs 5 for 25-35 gm (the grammage depending on the quality of the tea). Typically, a 25 gm packet would be enough for a dozen cups of tea.

While some of the price points had been explored earlier, this time round Tata Tea’s objective was to create a better price-value equation by increasing the grammage. In fact, for some products, the price point was dropped to even Rs 2. Siganporia says the more affordable pricing has brought Tata Tea’s brands within the reach of a new set of consumers, making it possible for them to move up from a regional to a national brand, thus fulfilling their aspirations.

That’s been reflected in the market share gains. For instance, Tata Tea Premium has seen a gain of 130 basis points to 9.4 per cent at the all-India level, with significant increases in states like Maharashtra.

Moreover, brands like Gemini in Andhra Pradesh – an atypical market where no brand is the leader across the state but only in pockets – have taken away share from the loose tea segment. And Talwar points out that in Tamil Nadu, the Chakra brand has increased its share from 16.4 per cent to 19.6 per cent.

However, Tata Tea is clear that value packs will not be the main growth driver for the firm, especially since margins on these tend to be lower. “Our largest selling SKUs will continue to be the 250-gm packs,” says Talwar, adding that what they will do is bring in new customers who, over time, will upgrade to larger packs, becoming brand loyalists in the process.

On more shopshelves

In fact, the smaller packs have helped Tata Tea create a new customer base by penetrating the remotest rural areas, including towns with a population of less than 2,000. Over the past year, the company has explored the hinterland, especially in states like Uttar Pradesh where, in addition to selling in shops, it also sent out several vans that acted as mobile sales counters.

Talwar says the rural thrust will continue this year too. In the urban market, Tata Tea teamed up with four to five big organised retailers, including Food Bazaar, Subhiksha and Reliance Fresh among others in Mumbai, Bangalore, Chennai and Hyderabad, in a bid to improve reach and visibility.

Explains Talwar, “It was a special initiative where we negotiated shelf space and our people worked closely with the retailers to see that our products were well displayed.” Among the many initiatives were gondola hiring.

The initiative seems to have paid off – same store sales are up 30 per cent compared to last year. What’s more, with these retailers expanding at a fast pace, Tata Tea’s products are now available in about 100 big format stores across the country so that its presence has effectively doubled over the past 12 months. And while it’s not easy to get great deals from modern trade with good negotiating skills called for, Talwar believes it is well worth the effort because the volumes are coming through.


At the same,Tata Tea is also taking care to see that it keeps its wholesalers and smaller retailers happy. Dealer margins remain unchanged across geographies, but the company has tried to incentivise them with new trade initiatives.

For instance, there’s the “Ek Rishta” loyalty programme launched last year for wholesalers, by which they accumulate points according to the quantity of tea they buy from Tata Tea. In return for the points, they are entitled to participate in a lucky draw and win high value gifts such as white goods or gold chains.

Explains Talwar, “Wholesalers are very important for us because they have the reach, especially in the villages. However, they tend to keep switching brands and so we decided that we needed to strengthen our relationship with them.”


Meanwhile, Tata Tea’s marketing team has been wooing small retailers and owners of hot tea shops. The company organises film screenings and other community events, making sure the families are invited and, needless to say, serving tea.

“We’re hoping the bonding will work,” says Siganporia. Sometimes, the relationship-building takes a more practical note – very often, Tata Tea offers its kirana customers better-than-average discounts.

“Kiranas fear being let down by the suppliers, as the bargaining power of organised retail grows. So we are being pragmatic and, at times, absorbing the hit in margins,” explains Siganporia.

He adds that as a result, some kiranas today are able to offer customers higher discounts than they were able to do some time back. “The gap between prices offered by big players and the kiranas is narrowing somewhat,” Siganporia observes.


As for buyers, Tata Tea is trying to win them over by coming up with new teas. In late 2006, it hopped onto the wellness platform with Tetley Green tea bags. This was followed up with Tata Tea Life, in March 2007, again for the health conscious.

Says Talwar, “Consumers today are extremely conscious of being fit and improving their health and we are looking to cater for this segment.”

Even before that, in November last year, long leaf orthodox teas – Darjeeling, Assam, Nilgiri and Ceylon – priced at around Rs 350 per kg, were launched.

The product was positioned in the premium segment and the idea was to cash in on the growing trend of consumers indulging themselves. The new launches helped Tata Tea’s domestic branded business grow 18 per cent in the June 2007 quarter, compared to the same period last year.

The right connect

What also helped were Tata Tea’s new advertising campaigns – an essential move, according to BCG’s Singhi. “It is critical to stay in touch with buyers, both for protecting market share and also for taking away share from the unorganised segment,” he points out, adding that communication could also be used to draw youngsters who are moving away from teas.

Tata Tea has four agencies for its different brands and all worked on campaigns through the past year. While McCann roped in film star Sneha to endorse Gemini in Andhra Pradesh, Saatchi chose a “facing challenges” theme to connect buyers with Kanan Devan – the brand saw a market share gain of 220 basis points in its home market Kerala.

Tata Tea Premium, too, switched to a new theme – “taste kamyabi ka” – while with Agni, according to Rajesh Agarawal, executive director, Dentsu, the task was to establish the lower price but in a manner that retained the “premiumness” of the brand. “We attempted to show that people are taking pride in being associated with Agni,” Aggarwal explains. Tata Tea certainly is.


Prepared By: Prachi Diwedi

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