Companies

Luxmi aims to boost online sale of specialty, value-added teas

Shobha Roy Kolkata | Updated on August 05, 2020 Published on August 05, 2020

Tea industry facing challenging times due to severe drop in production

Luxmi Tea Company, which owns the Makaibari estate in Darjeeling, is looking to push sale of specialty and value-added teas through online channels, including its own website.

The company, which sells its exotic blends through online marketplace, including Amazon and Flipkart, has launched sales through its own website. It sells the Makaibari, best quality Assam and African tea through its own website.

Potential to grow

According to Rudra Chatterjee, MD, Luxmi Group, online sales are currently a small fraction of its total salesbut have a good potential to grow.

“At Luxmi Tea we are focussed on making good quality tea, and we will continue to focus on that moving forward. We can see that customers are appreciating good quality tea and the demand is steadily building up,” Chatterjee told BusinessLine.

While online offers a huge potential, however, one of the key challenge could be the packaging and distribution of the product, particularly for a company like Luxmi Tea, which is primarily into tea production. However, it also has its unique advantage.

“One of the advantages of online sales is that the tea straight from the gardens can be despatched to customers, so it is a lot fresher. Though there were some difficulties in logistics, particularly in the north-eastern region; however, things have improved during this pandemic with courier services improving. Moreover, customers are getting more comfortable buying online, so we are seeing an increase in sales,” he said.

There has been a surge in at-home consumption of tea not just in India but across the globe in the wake of the pandemic, and people are consciously consuming more teas, which are both traditional and good for health.

According to Chatterjee, exports account for a “significant chunk” of its sales.

“A majority of our Makaibari tea and a significant part of our Assam teas are exported. We have tea estates in Africa. Our buyers in countries such as UK, Japan and US are some of the best brands in those countries. Globally also, demand has been very robust,” he said.

Lower crop

While the demand has been steadily increasing, however, the Indian tea industry is facing challenging times because of the severe drop in production.

Luxmi Tea has 25 estates, of which, 22 are in India. The crop loss across these various estates till July-end is estimated to range anywhere between 15 and 40 per cent. While tea prices have been an upward swing due to lower crop, however, it might not be enough to offset for the dip in production this year as the industry has fixed costs to deal with, he pointed out.

Luxmi Tea is expecting to see “consolidation and growth” in production through better planting programmes, operations, better yields on estates. The company has also undertaken greenfield operations at estates in Rwanda, and is expecting “significant growth” from its operations there.

“We are producing 5 million kg of tea in Rwanda, and we expect the crop to double in the next five years because of the greenfield operations,” he said.

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Published on August 05, 2020
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