The Hindu Business Line : Tea sector exploring ways to expand market share

“We expect to gain from Kenya’s civilian unrest and dry weather problem as we compete for the CTC teas. Going by current trends, we should be doing better this year.”

M.R. Subramani

Chennai, March 3 The tea industry is exploring various ways and means to expand its market share abroad with specific focus on Egypt, Pakistan and Iran.

“We are trying to find out if we can appoint some agency or representatives to take care of business interests in these countries,” industry sources said.

Help assured

“The Centre has told us to have considerable presence in these markets and the Union Minister of State for Commerce, Mr Jairam Ramesh, has assured help under the private-public partnership initiative. In fact, we see good scope for our tea in the West Asian market. Initially, we plan to have some arrangement for marketing our tea in Cairo and Teheran,” the sources said. This means the Centre would chip in some financial help in the industry’s efforts to find new markets for its tea. While Egypt has become one of the focal point of the industry’s attention in the last couple of years, Indian tea sector sees good scope in Pakistan, particularly this year. Iran is also seen as another market with promise.

“With Kenya in turmoil due to political crisis and weather also playing truant, we feel we have a good chance to improve exports this year. Kenya is likely to witness a 25-30 million kg shortage in the first quarter,” the sources said.

Kenyan output

During January, Kenya’s tea production declined 29 per cent to 29.7 million kg compared with the year-ago period due to dry weather. In fact, analysts see Kenyan tea facing problems more due to weather than civilian unrest.

“We expect to gain from Kenya’s civilian unrest and dry weather problem as we compete for the CTC (crushed tear curl) teas in markets such as Egypt, Pakistan and Iran. Going by current trends, we should be doing better this year,” the sources said.

Drop in shipments

Last year, tea exports declined to 156.71 million kg (mkg) from 218.73 mkg in 2006, as imports by Iraq declined to a bare minimum, while Pakistan’s purchase also slipped. A lower production of 944.7 mkg against 955.9 mkg due to weather woes which also had an effect on the sector.

In 2006, Pakistan had bought significantly higher volume as then, too, Kenya face problems in production due to drought. Exports are estimated at less than 10 mkg in 2007 against nearly 18 mkg in 2006. Shipments to Iraq were down to 3-4 mkg against 42 mkg. Exports to Pakistan are expected to get a helping hand once the Wagah border is opened for tea trade. On exports to Iraq, the sources said cheaper varieties could find their way to Baghdad. The problem of payment was being sorted out.

Lanka exports strong

The sources ruled out competition from Sri Lanka since the island-nation mainly produces orthodox tea that it exports to Russia. In fact, Lanka’s penetration into the Russian market has dented Indian exports in a big way.

Thanks to the initiative to earn market share in West Asia, the over-dependence on Russia has declined. Until early 1990s, Russia had accounted for over 100 mkg of Indian tea exports, but with the dismantling of the erstwhile Soviet Union, exports are now around 40-45 mkg. “We still have an eye on it and are making efforts to win them back,” the sources said.

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