Agri Business

Jay Shree looks to sell 10 mkg of packet tea

Shobha Roy Kolkata | Updated on August 16, 2019

BK Birla group outfit Jay Shree Tea and Industries Ltd is looking to scale up the sale of its packet tea to 10 million kg (mkg). The company currently sells around 5 mkg of packet tea under brand name Birla Tea.

The ₹10,000-crore packet tea market accounts for roughly 50 per cent of the country’s total tea consumption of one billion kg, sources said. The segment is currently dominated by brands such as Tata Tea, Brooke Bond and Wagh Bakri Tea.

Packet tea, which is essentially considered to be value-added tea, ensures higher margins compared to bulk tea.

“Our packet tea business is currently only around 5 mkg, unless we are able to scale it up to 10 mkg we will not be able to reap in the real benefits,” DP Maheshwari, Managing Director, Jay Shree Tea, told BusinessLine after the annual general meeting here on Wednesday.

The company’s packet tea is available in Rajasthan, Punjab, Haryana and Uttar Pradesh. Plan would be to increase the penetration in these markets to shore up volumes.

Growing demand

According to a study conducted by Tea Board of India, the demand for packet tea is on the rise as it is preferred by close to 80 per cent of urban and around 75 per cent of rural households.

The perception that packet tea is adulteration-free and has better storage options are the key driving factors packet tea. Favourable demographic factors such as increase in disposable income, aspiration levels, more participation in workforce and increasing health consciousness have contributed to the shift from loose tea to packet, the study said.

Higher Production

Jay Shree Tea is expecting around 9 per cent growth in production to close to 24 mkg this year against 22 mkg recorded last year. The higher growth will come on the back of good weather and developmental work undertaken at the estates, Maheshwari said.

The company is expecting the average prices of tea to be higher than last year’s, backed by a good demand, particularly for orthodox. The average prices last year for Jay Shree Tea across its various gardens put together was around ₹172 a kg.

Published on August 16, 2019

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