BUSINESS

High on Chai

Tea is one of the most popular drinks globally, which is consumed in various forms in different parts of the world. The global market for tea reached a volume of 6.2 million tons in 2018 and is expected to touch 7.58 million tons by 2024. In India, however, its consumption is pretty low as compared to several other countries. There is thus ample opportunity for entrepreneurs to increase the per capita consumption of this beverage by popularising this drink among the youth. This can be done by opening up more tea shops/lounges serving a variety of tea. They could also start marketing of packaged tea under their own brand. Ashok Malkani discusses about the low consumption of tea and how it can be popularised in the country. Tea is one of the most popular drinks globally, which is consumed in various forms in different parts of the world. The global market for tea reached a volume of 6.2 million tons in 2018 and is expected to touch 7.58 million tons by 2024. In India, however, its consumption is pretty low as compared to several other countries. There is thus ample opportunity for entrepreneurs to increase the per capita consumption of this beverage by popularising this drink among the youth. This can be done by opening up more tea shops/lounges serving a variety of tea. They could also start marketing of packaged tea under their own brand. Ashok Malkani discusses about the low consumption of tea and how it can be popularised in the country.

British writer and lay theologian, Clive Staples Lewis said, “you can never get a cup of tea large enough or a book long enough to suit me.” That is a perfect sentiment that one can think of for a nice cup of tea. This beverage, which comes in a wide variety of different flavours is one of the most popular drinks in India.

The British love the tea so much that they have specifically marked afternoon time as ‘tea time’. Legend has it that afternoon tea was created by Anna Maria, the seventh Duchess of Bedford. She is believed to experience a ‘sinking’ feeling around 4pm every afternoon; so she asked her maid to bring her tea and a slice of bread and butter to tide over the period between lunch and dinner. She found that tea was the perfect refreshment and asked her friends to join her. This quickly became a popular social event and the English afternoon tea was born.

In India, ‘Chai’ is more than just a cup of tea to start the day. It is an integral part of the rhythm of life. Tea is India’s

most popular drink. It is not just a drink for the Indians but a ritual, a celebration or, one may say, a diversion from the regular mundane affairs. Tea is, today, among the most popular drinks in the country. No wonder India has a consumption of 837,000 tonnes per year.

India is the second largest producer of tea (only behind China) but there is so much demand that 70% of the production is consumed within the country. No wonder December 15 is celebrated as International Tea Day in India. It has been celebrated, since 2005, in tea producing countries like Bangladesh, Sri Lanka, Nepal, Vietnam, Indonesia, Kenya, Malawi, Malaysia, Uganda and Tanzania.

Medicinal Beverage With an estimated liquid beverage equivalent of around 85 liters per person a year, tea is the most consumed hot drink worldwide and indeed the most consumed non-alcoholic beverage overall. With the benefits that come with drinking tea, its high status is a positive thing. Tea is said to be a medicinal beverage. Tea leaves are full of antioxidants and contain substances that reduce the risk of cancer, diabetes and heart disease. It can also help reduce joint inflammation due to presence of polyphenols. Tea helps reduce cholesterol, encourages weight loss and sharpens mental alertness. Health experts advice drinking less processed teas and

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Though India is the second largest tea producing country in the world and consumes about 70% of its product, it is still far behind several other countries as far as consumption of tea is concerned

Low consumption in India Tea Board of India has appointed a consultancy firm to study consumption patterns of this beverage. According to preliminary reports the overall consumption was low. P K Bezboruah, chairman of Tea Board, is reported to have stated “Although, per capita consumption has increased to 800 grams now from [the] 700 earlier, Indians still drink lesser tea per person as compared with even some of their neighbours like Pakistan and Sri Lanka.”

It may be mentioned here that though 850 million kg, of the 1,200 million kg produced in India, is consumed internally it is mainly due to the fact of the large population. It does not reflect the low per capita consumption.

Contrary to the popular imagery of India being a tea-drinking nation, its per capita tea consumption is low at 786 gm. A burgeoning population has ensured that 80% of the crop is consumed domestically, but per capita consumption remains a pain-point for the industry and the regulator.

As a tea drinking nation India stood at No. 27.

A study conducted by the Tea Board of India showed that the tea consumption in India is skewed towards the northern and the western parts, which together consume 63 % of the beverage. It also disclosed that the trend of drinking tea outside home was increasing in western and southern states mainly due to urbanisation and industrialisation.

Opportunity for Tea Shops/ Lounges With a high rate of tea consumption and the trend to have this beverage,

out of home, with friends, i t i s surprising that there are few exclusive tea shops, while there are several outlets offering coffee, along with wi-fi. These are frequented by millennials who spend precious hours in these places. It has now become important to bring millenials into the tea drinking fold. This is something that the Tea Board is contemplating on. This also provides an opportunity for the enterprising entrepreneurs to enter this arena and open tea shops which will attract the youth of the country.

One can start a small profitable and self rewarding business. Depending on your investment capacity, you could decide on the size and site of the tea outlet. You could start the business not only in metros but also in Tier II and Tier III cities, which have shown an equal demand as those in the metros. This business can also be started by women entrepreneurs who are keen to be financially independent. However, it may be mentioned that the business demands long working hours, hard work and maintaining direct customer interaction.

One can also choose the franchisee option. With the increase in demand for Tea bars or tea lounges several companies are offering franchise opportunities to new entrepreneurs. Franchise enables you to start business with a established brand.

But for those who want to venture on

their own there is ample opportunity too. Depending on your investment capacity you could start a small tea shop, which also sells other eatables. This type of stall can be opened with a meager investment of Rs. 50,000. The other option is a tea bar or tea lounge or Chai café with a retail location that provides a good sitting arrangement and comfortable ambiance. These are the outlets which are likely to be patronised by students or the working youth. Tea lounges are usually air conditioned providing different types of teas at a premium price. Most of these Tea bars offer iced tea, green tea, bubbles tea, cardamom tea, aroma tea, etc. This type of outlet would need a moderate initial investment, depending on the size of the store and the infrastructure of the building, besides the location or surroundings.

One has to remember that location plays a crucial role in the success of the place. Your shop has to be easily accessible and preferably near commercial locations, colleges. Malls are also ideal places for setting up tea shops.

You require permissions and licenses for starting the tea shop or tea bar.

Registration is necessary. It can be either proprietorship or partnership concern. For Partnership operation, you have to register as a limited liability partnership (LLP) or Pvt. Ltd. company with Registrar of Companies (ROC).

Other documents required are: GST Registration, Trade License, MSME/SSI Registration, Food Safety and Standard Authority of India (FSSAI) License and Fire License.

Market for Packaged Tea Besides starting a tea shop one can

also venture into packaged tea business. The global tea market reached a volume of 6.2 Million Tons in 2018. The market is projected to reach a volume of 7.58 Million Tons by 2024. A rise in the disposable incomes of consumers has enabled the tea manufacturers to introduce premium and health-oriented products. They have started adding several healthy ingredients to their organic tea formulations in order to target some of the common health conditions including diabetes, beauty, obesity, heart health, etc. Therefore, a shift towards the consumption of organic tea acts as an emerging trend which is having a positive impact on the growth of the tea market.

With rural India buying more packed tea there is ample opportunity to package the tea and sell it in the market. But you have to remember that taste and strength is important.

Mintel’s latest research report reveals that India currently vies with China as the world’s biggest packaged tea market. In 2017, India consumed a total retail volume of 678,200 tonnes worth of packaged tea, followed by China in second place at 576,800 tonnes. Meanwhile, Turkey (173,400 tonnes), Russia (134,200 tonnes) and Japan (92,900 tonnes) complete the top five global ranking.

According to Mintel Global New Products Database, 27% of the global new tea launches were of hot tea while Ready to Drink (RTD) launches in Asia Pacific accounted for 13% of the global tea launches. Although hot tea continues to be the biggest tea subcategory globally, RTD tea has started to build its base in the global tea market. Tea bags were the leading format type of global new hot tea launch activity in 2017.

EMR report states that nearly 1.10 million tons of tea was consumed in the country in 2019 and the market is projected to grow at a CAGR of 4.2% during the period 2020-2025 to reach 1.40 million tons in 2025.

Types of Tea Since packaged tea is now becoming the norm, it provides ample opportunities for one to venture into packaged tea market. Though Packet tea market is penetrated with more than 300 brands in the country, making the entry of a newcomer difficult, yet one’s ingenuity and never-say-die spirit can enable one to make a significant mark in the packaged tea market – not only in India but also globally. There are various types of tea, besides the black tea, making it easier to venture – and succeed – in the market, if one studies the market. The different types of tea available are Black tea, Oolong tea, Green tea, Matcha tea, Yellow tea, Kukicha or twig tea, Pu-erh tea and White tea.

Black tea is a popular choice, with a higher caffeine amount of about 40-50 milligrams of caffeine per cup.

Oolong tea is also made from the leaves of Camellia sinensis (like black tea). However the oxidizing period is shorter. There is a lower amount of caffeine per cup – about 30 milligrams. One way to think of oolong tea is half way between green tea and black. Green Tea is made from the same plant but the leaves are not allowed to oxidize at all. They are heated soon after the harvest, allowing them to retain their natural green color. This tea is the most popular one in many Asian countries. It has a caffeine content of about 25 milligrams.

Matcha tea is a non-oxidised tea in a powder format. Yellow tea is made in a similar way as green tea, but the leaves are dried slower.

Kukicha or twig tea is low in caffeine and has a sweet, wellrounded flavour.

Pu-erh tea is also referred to as ‘dark tea’. Instead of being fermented once, it is fermented twice. Unlike other teas that lose value and flavour with age, a good pu-erh will actually improve in flavour, like wine.

White tea is light in colour when brewed, and light in caffeine (about 15 milligrams per cup).

Packaging of Tea While the above description will enable one to dabble in different formats of tea, it is important for an entrepreneur to also know about packaging.

Competition for tea packaging, which preserves and protects the product within, has become fierce. Packaging also helps in increasing the sales of the product. It is important for brands to use packaging to communicate the healthful benefits of the drink to consumers. Green tea appeals to health-conscious consumers and should be enveloped in tea packaging that coincides with the immune and mood-enhancing qualities of the leaves.

The packaging must inform the buyers about the qualities of the contents. It must also be attractive to entice the customer to pick it off the shelf.

Conclusion

Trends come and go but the popularity of tea will never wane. It

is the most widely consumed beverage in the world, next to water.

It is the only beverage commonly served hot or iced, anytime,

anywhere, for any occasion. Tea consumption has grown 20%

since the turn of the millennium and it’s becoming the beverage

of choice for people of all ages. The popularity of tea can be stated to be due to the perceived health benefits particularly of green tea which, scientists claim, increases the body’s ability to burn fat as fuel, improving muscle endurance. Drinking tea could help reduce the risk of heart attack and might also help protect against cardiovascular and degenerative diseases.

With increasing sales of tea an entrepreneur could venture into this business either by opening a tea bar/lounge or a tea shop. Or, he could venture into marketing packaged tea. The opportunities for an ingenuous entrepreneur are galore! n

Rank of tea drinking countries

Rank Country/Region Annual per capita tea consumption 2016 1 Turkey 6.96 lb (3.16 kg) 2 Ireland 4.83 lb (2.19 kg) 3 United Kingdom 4.28 lb (1.94 kg) 4 Russia 3.05 lb (1.38 kg) 5 Morocco 2.68 lb (1.22 kg) 6 New Zealand 2.63 lb (1.19 kg) 7 Chile (2018) [2] 2.62 lb (1.19 kg) 8 Egypt 2.23 lb (1.01 kg) 9 Poland 2.20 lb (1.00 kg) 10 Japan 2.13 lb (0.97 kg) 11 Saudi Arabia 1.98 lb (0.90 kg) 12 South Africa 1.79 lb (0.81 kg) 13 Netherlands 1.72 lb (0.78 kg) 14 Australia 1.65 lb (0.75 kg) 15 United Arab Emirates 1.59 lb (0.72 kg) 16 Germany 1.52 lb (0.69 kg) 17 Hong Kong 1.43 lb (0.65 kg) 18 Ukraine 1.28 lb (0.58 kg) 19 China 1.25 lb (0.57 kg) 20 Canada 1.12 lb (0.51 kg) 21 Malaysia 1.06 lb (0.48 kg) 22 Indonesia 1.01 lb (0.46 kg) 23 Switzerland 0.97 lb (0.44 kg) 24 Czech Republic 0.93 lb (0.42 kg) 25 Singapore 0.81 lb (0.37 kg) 26 Slovakia 0.80 lb (0.36 kg) 27 India 0.72 lb (0.33 kg) 28 Taiwan 0.65 lb (0.29 kg) 29 Sweden 0.64 lb (0.29 kg) 30 Hungary 0.62 lb (0.28 kg) 31 Norway 0.60 lb (0.27 kg) 32 Austria 0.59 lb (0.27 kg) 33 Finland 0.54 lb (0.24 kg) 34 United States 0.50 lb (0.23 kg) 35 Argentina 0.47 lb (0.21 kg) 36 Israel 0.45 lb (0.20 kg) 37 France 0.44 lb (0.20 kg) 38 Vietnam 0.44 lb (0.20 kg) 39 South Korea 0.37 lb (0.17 kg) 40 Spain 0.32 lb (0.15 kg) 41 Denmark 0.32 lb (0.15 kg) 42 Italy 0.31 lb (0.14 kg) 43 Belgium 0.28 lb (0.13 kg) 44 Bulgaria 0.24 lb (0.11 kg) 45 Romania 0.16 lb (0.073 kg) 46 Portugal 0.14 lb (0.064 kg) 47 Thailand 0.11 lb (0.050 kg) 48 Philippines 0.06 lb (0.027 kg) 49 Greece 0.05 lb (0.023 kg) 50 Venezuela 0.05 lb (0.023 kg) 51 Peru 0.05 lb (0.023 kg) 52 Colombia 0.04 lb (0.018 kg) 53 Brazil 0.04 lb (0.018 kg) 54 Mexico 0.03 lb (0.014 kg)