Tea companies likely to see 8% revenue de-growth this fiscal

The tea industry in India is expected to register an 8 per cent de-growth in revenue this financial year, led by a decline in exports.


Operating profitability is also expected to fall for the second year in a row, shedding 100 basis points (1 per cent is equal to 100 basis points) to 5 per cent, due to lower tea prices.


Profitability had fallen 150 basis points last financial year, primarily because of an increase in wages. Wages, which constitute 20 per cent of total cost of production, was hiked 15 per cent last fiscal.


Domestic demand, which accounts for 82 per cent of sales volume, should remain steady at 1,100 million kg this fiscal. However, exports, which make up 18 per cent by volume and 30 per cent by value, may slide 12 per cent on-year to 200 million kg. Last fiscal, the export volume had increased 14 per cent due to lower production in Sri Lanka, a major tea exporting country.


India as a whole contributes 23 per cent to the global tea output and employs around 1.2 million workers in the tea plantation sector.


For several years now, India’s tea industry has been struggling with issues such as rising production costs, relatively stagnant consumption, subdued prices and crop losses due to climate change. It also faces the challenge of finding a footing and

holding its ground in a competitive global market.


Source: Associated News India (Extracts), Courtesy: Tea Exporters’ Association Sri Lanka

Innovative Technology to produce tea powder

In a groundbreaking stride, Assam Agricultural University (AAU) has unveiled an innovative technology for producing tea powder from raw tea leaves. This pioneering technique is set to invigorate Assam’s tea economy and usher in a windfall for over 500 organic tea cultivators in the region.


The process involves the transformation of tea leaves into a fine powder through drying and grinding. The resulting tea powder, endowed with antioxidants, stands as a potent shield against various diseases, amplifying its health benefits. Moreover, it serves as a robust source of caffeine, bestowing consumers with an energizing uplift.


The advent of tea powder technology holds the promise of renewed opportunities for modest tea farmers. This innovation ushers in a more convenient and budget-friendly method of savoring tea. Its prolonged shelf life and ease of transport translate to a hassle-free experience for individuals.


Source: Assam News (Extracts), Courtesy: Tea Exporters’ Association Sri Lanka

Kenya's tea exports on decline

The ongoing armed conflict in Sudan, as well as the Russia -Ukraine conflict, have affected Kenya's tea exports, stifling half-year exports amid low global prices.


Kenya exported 191,000 tons of tea worth 62.1 billion Kenyan shillings (about 432 million U.S. dollars) in the period ending June, a major decline from 243,000 tons valued at around 614 million dollars in a similar period in 2022. The 29 percent decline in the value of exports is due to lesser demand for Kenya's tea in the global market.


Despite the decline in volumes exported, tea production increased significantly in Kenya to stand at 273,640 tons in the six months, a rise from 271,300 tons in a similar period in 2022, due to favorable weather.


Source: Xinhua (Extracts), Courtesy: Tea Exporters’ Association Sri Lanka

Inter-Africa trade to boost Kenya tea

Intra-Africa trade presents a big opportunity for Kenyan smallholder tea farmers to secure an additional market and improve their income.


According to Central Bank of Kenya, Africa accounted for only 19.4 per cent of Kenya’s Sh827.2

billion total trade value in the first three months of 2023, a slight growth compared to 18.3 per cent in 2022.


With about 1.4 billion people, Africa presents a huge market opportunity for Kenyan tea. At the global market, Kenyan tea is highly sought after and is commonly used to blend teas sourced from other countries.


Source: Standard Media (Extracts), Courtesy: Tea Exporters’ Association Sri Lanka

Declining trend in tea prices encourage CTC tea production

A declining trend in the prices of orthodox leaf tea is reported to have prompted some manufacturers in North India with dual production facilities to convert their produce into CTC grades.


Orthodox prices in North Indian markets have been declining for quite some time and

this might have forced some producers to shift to CTC considering the domestic market demand for dust grades. This will lead to a situation where the dust offerings in the auctions would be on the higher side in the coming period. However, such a practice has not been reported from any South Indian auctions so far.


Meanwhile, orthodox leaf prices continue to decline in Kochi auctions. The prices continue to be lower with heavy withdrawals for almost all grades because of the subdued export demand from CIS and West Asia. The quality of tea also dropped due to rush crop because of rains.


Source: Hindu Business (Extracts), Courtesy: Tea Exporters’ Association Sri Lanka

About F&W

Forbes & Walker was set up in 1881 as a partnership between James Forbes and Chapmen Walker. Although there is no actual record of the date on which it was established the very first cash book, still in the possession of the Finance Director, indicates the brokerages were earned from 1st August 1881. In Sir Thomas Villiers' book “Mercantile Lore” the date of establishment of Forbes & Walker has been put down      Read More...

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