8DECEMBER - JANUARY, 2023TIME FOR A NEW APPROACH FOR SUSTAINABILITY OF THE INDIAN TEA INDUSTRYINDUSTRY INSIGHTS Dr. Shatadru Chattopadhayay, Managing DirectorTea is the most consumed beverage in the world and India. It is a healthy product having properties that can lower the risk of heart disease, cancer, and diabetes. It offers direct employment to over 1.2 million persons in India. Through its forward and backward linkages, another 10 million people derive their livelihood from tea. For these and other reasons, promoting long-term health, wellbeing and the environmental sustainability of our much-beloved tea sector should be a clear priority. Yet the tea sector is experiencing a sustainability crisis, stemming from continuous low prices of tea squeezing the tea producers-large and small. A massive transformation happening in the Indian tea industryTea industry of India is going through a kind of transformation that no one has witnessed since the commencement of commercial tea plantations in 1834. The consumption of tea in India has continuously gone up from 653 million kilos at the beginning of this century to 1090 million kilos in 2018. It means every year, Indian consumption has gone up by 24.2 million kilos of tea. A study conducted by Deloitte on behalf of the Indian Tea Board summarises that 75 percent of the consumers in rural India now buy packet tea instead of loose tea. Typically speaking such a situation should be considered as most sustainable for the Indian tea industry. Yet, we saw in August 2019, The Indian Tea Association (ITA) made an appeal to the Indian Government seeking its intervention for the revival of the tea industry facing sustained low prices that is lower than the cost of production.How does it impact tea brands?Brand market power and the relatively higher margins of leading tea packers and retailers have been the story of the tea sector so far. One can visualise not only in tea but in many other industries that a rising share of total income is earned downstream, with enormous mark-ups and returns for intangibles such as brand. But in the long-run, the starkly contrasting situations of profitable downstream actors and suffering upstream ones may lead a niche segment of consumers as well as shareholders to actively question whether the tea brands they trust support producers' economic sustainability? Such consumer behaviour are increasing abroad and also in a small way in India as well which is reflected by the spate
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