Indian tea growers will have to brand their produce on the lines of premium wines and chocolate if they want to stand apart in the international market, according to a study by YES Bank and the Indian Tea Association (ITA).
The study, done on 92 tea gardens in the country, has identified branding and international marketing as the two most crucial sectors for the Indian tea industry.
Samik Dasgupta, assistant vice-president for YES Bank?s food and agribusiness advisory and research unit, said: ?Branding of Indian tea will have to go to the level where it will be transformed from a mere commodity to a branded product.?
He cited the example of French wines detailing name and vintage, and premium chocolates that mention the area of origin of the cocoa beans.
?Telling a story behind the tea, as is done in wine, could not only take the brand forward, but push the pricing,? he said.
According to the study, only 40% of the tea being sold in India is branded and it is imperative to create a brand value. The branding will have to be done at three levels? specific variety, region and at the individual plantation level.
The study proposes that all major varieties be branded separately, with a good brand premium so that margins are robust.
Tea growers, the report said, should look forward to value addition for better margins as competition from rivals like coffee and the commodity nature of the tea has brought the profitability down. ?Variants like organic tea have 15% additional margins even after 25% additional costs,? said Dasgupta.
Dasgupta?s comments, made at a tea seminar organised in Guwahati last weekend, came after Union commerce and industry minister called for tea growers to develop a brand for Indian tea.
Among the other challenges, the report said, is the need to reduce the number of intermediaries and lowering packaging costs.
?The heavy tax burden on the industry with 40% corporate tax and additional state agriculture tax as high as 35% in some states, apart from indirect taxes have made it difficult for companies to invest in renovation, replantation, research and brand building,? Dasgupta said.
