Indian Tea-coffee Industry

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Tea and coffee are among the most popular beverages, consumed both in India and around the world. The industry provides employment to several million workers worldwide, both in plantation activities, as well as in indirect and ancillary activities. http://www.bharatbook.com/beverages-market-research-reports/indian-tea-coffee-industry.html

Despite tea being cultivated in over 35 countries, only a handful of nations namely, China, India, Sri Lanka, and Kenya account for almost 75% of global production. The top two tea producing nations – China and India, collectively produced 58% of total global tea output in CY2010. India is the second-largest tea producer and consumer after China, and fourth-largest tea exporter after Kenya, China, and Sri Lanka.

The tea industry of India is around 176 years old. Total tea output in India in CY2011 was recorded at 988 million kilograms (mn kgs), posting a positive annual growth of 2.3% for the first time after three consecutive years of decline. Despite tea production improving ...
... at a marginal pace in the past decade, domestic tea consumption has increased from 653 mn kgs in CY2000 to 837 mn kgs in CY2011, while per capita tea consumption has also improved from 652 grams to 711 grams per head. However, even at the present level, Indian per capita tea consumption is considerably lower than other tea drinking nations such as Ireland (3 kg), more than 2 kg in U.K., Turkey, and Iraq, and more than 1 kg in Sri Lanka and Pakistan. This signifies remarkable potential in domestic tea consumption. The tea consumption in India is expected to grow at a moderate pace, as opposed to marginal increase in production. However, the relatively steady increase in consumption, with respect to marginal production growth would result in lower exportable surpluses, thus continuing the declining trend in tea exports. The frost damage in Kenya, a key exporting nation, which took place at the beginning of CY2012, is likely to affect global price trends, which would also greatly impact domestic auction prices.

Coffee is the second-most traded commodity in the world after crude oil, and is cultivated across 80 nations spanning Central and South America, Africa, and Asia. The key coffee producing and exporting nations are Brazil, Vietnam, Columbia, Indonesia, Ethiopia, and India, among others. Brazil is the world’s largest producer, exporter and consumer of coffee, while USA and European nations constitute key importing markets for coffee. On account of coffee being traded widely, any alteration in the demand-supply dynamics of above mentioned producing and exporting nations largely impacts international coffee prices that have recorded continuous uptrend from CY2006 to CY2011, with Arabica prices peaking at record highs of approximately 300 cents/lb during mid-2011. The trend in international prices also impacts domestic prices to a large extent as India exports more than two-thirds of its coffee output.

In coffee season (October to September) of 2010-11, India produced 3.02 lakh tonnes of coffee, most of which was grown in southern states of Karnataka (71%), Kerala (22%), and Tamil Nadu (6%). Arabica production amounted to 31% of total output, the remaining 69% being contributed by Robusta production. Coffee is cultivated on nearly 4.05 lakh hectares in India, and 70% of output is grown on small farms owning area of less than 10 hectares. The domestic coffee consumption has been continuously growing at annual average rate of 6% and is largely on account of mushrooming presence of coffee retail outlets. With the domestic coffee outlets set to increase multi-fold by with next 3 years, in addition to foray of global players such Starbucks and Dunkin’ Donuts in India, the coffee industry is likely to continue witnessing similar growth trend in future.

Though, the Indian tea-coffee industry is expected to post sound growth on account of growing domestic demand, key pressing issues of labour shortage and migration, and tremendous increase in cost of labour are major concern areas for the industry, which are to be critically addressed in order to avoid their extremely adverse impact on the future progress of this sector.

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Indian Tea-Coffee Industry

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