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Friday, Jul 16, 2004

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Poor promotion hits tea exports to Russia

P.S. Sundar

A MONTH and a half since the Russian tea delegation promised to get back after testing the south Indian tea samples in the home water, the tea industry is still waiting for confirmed orders. Meanwhile, the exporters for the Russian market are selective at the auctions and are paying only around Rs 33 a kg when they buy.

Despite an earlier agreement with the Tea Board to facilitate an import of 100 million kgs (mkg) annually by the Russian trading interests, the actual intake had been dismally low. Last year marked the lowest intake of the recent times at 42.8 mkg against 48.3 mkg in 2002 and 66.8 mkg in 2001. Right now, the importers are complaining of a disappointing fall in the quality of the teas on offer even as the producers contend that they could get a higher price in the home market.

The Russians have shown that they are prepared to pay more for quality teas. Last year, they imported 157.5 mkg from about 17 countries paying $800 million against 156.5 mkg worth $600 million in 2002. Recently, Mr Ramaz Chanturiya, Head of the Russian Tea and Coffee Producers' Association, went on record that many people in his country were switching to drinking higher quality and more expensive teas. Nevertheless, if the visit of the recent Russian delegation is any indication, India and more so, the South, is clearly missing the quality premium market there.

The most indigestible truth that the South Indian tea industry gained from the visitors was that many Russian traders did not even know that the South produced teas - let alone the quality ones! Even giving allowance for the fact that the delegation comprised relatively middle bracket traders and not the top notch, till now, there is no convincing explanation as to how all the money spent all these years for the promotion, marketing and visit of delegates to the Russian markets have failed even to bring forth a basic truth that the South India produces quality teas suitable to the Russian market.

India is steadily losing its ground for which, such ignorance of the buyers is a significant contributory. Prudence demands a thorough introspection into the promotion campaign used by India for, a falling market and ignorant buyers are a failure of market promotion efforts.

The Tea Board has launched the Nilgiri logo to impress on the importers that the produce bearing it is of high quality. If enough work has been done to promote this logo, how could the Russian importers claim ignorance of the Nilgiri quality teas?

An equally concerning issue is the contention that the quality of the teas the Russians get there in the name of the Nilgiris or the South as a whole is far inferior to the one they saw in the estates here. So, who is playing the mischief? Iraq which emerged as a close substitute to Russia in 2002 when it imported 44 mkg against Russia's 48 mkg., once again drifted to a lower rank in 2003 when it imported just 13 mkg against 43 mkg of Russia. Although some improvements are seen this year, it is too early to call Iraq as a fruitful substitute for Russia.

Already, India recorded the lowest export volume last year among the recent many years. As for Russia, prior to the break-down of the USSR, only 20 per cent of the tea market there was catered to by other countries as India supplied 80 per cent. Now, India is accounting for just 20 per cent with Sri Lanka 50 per cent and China 25 per cent. Whether India should regain all its lost ground is one aspect for deliberation, but how effective its promotion so far is more relevant and serious subject for introspection right now.

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