The Hindu Business Line : Global slowdown may dampen tea exports

Hyderabad, Nov. 21 It’s testing time for tea exporters. While the demand for Indian tea has shot up following the production woes in Kenya, the global slowdown in economy might prove to be a dampener.

Pressure seen

Though the effect of slowdown is yet to be seen, tea exporters foresee pressures on the demand and spending plans of companies to expand their capacities. “There will be an impact on luxury products. There, definitely, will be some amount of pressure on spending on these products in some countries as the emphasis is more on staying liquid in tough times,” Ms Ritu Joshi, Director of Sapat International Pvt Limited, told Business Line.

According to Mr Sachen Verma, Senior Vice-President (Marketing) of $200-million J V Gokal and Company, the industry was yet to see the impact. “It might take 4-5 months more to see any impact. Since tea is almost an essential commodity, the impact may not be that high,” he said.

Putting off spends

He, however, felt that it could lead to deferment of spendings by companies on expansion plans. “Also, the marketing and branding expenditure could see a plateau,” he said.

India produces 44 per cent of all the global tea output, followed by Sri Lanka (22 per cent) and Kenya (20 per cent). But the dip in production in Kenya by 21 per cent this year dramatically increased pressure on Indian tea from global markets.

Mr Sandip Kayan, Director of the Kolkata-based Inderchand Sitaram Kayan Agro Industries and Company, felt that the pinch (of slowdown) was not high. “The industry sees a slight decrease in orders from Europe. But Commonwealth of Independent States is still buying,” he said.

Hope

The CIS, which consisted of former States of USSR, dominated the Indian exports with 27 per cent, followed by United Arab Emirates (19 per cent) and Iran (7 per cent).

The tea industry, however, is not deterred by the slowdown or its likely impact. A host of exporters and equipment manufacturers from all over the world have gathered here for the three-day Tea and Coffee World Cup Asia. The meet would conclude on Saturday.

Prices raised

Buoyed by the steep prices in the last few months (some manufacturers had revised the price upwards more than once), the manufacturers and sellers were busy connecting with their peers from different countries to explore newer markets.

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