New trends defining the tea industry in India

First published on The Organic Magazine; contributed by Madhav Sarda, Managing Director, Golden Tips Tea

The demand for premium teas has increased and customers are displaying an active interest in the purchase of premium teas online which, in turn, is facilitating sales by providing additional product information and bolstering consumer knowledge and awareness.

Tea is one of the most loved beverages in India and across the world. People have enjoyed tea since times immemorial and consider it to be one of the most cherished parts of their native culture. The love of Indian audiences for this super beverage has given the tea industry a loyal customer base in the country, which has resulted in fast-paced growth in recent times.

In the past few decades, tea has become a multi-million dollar industry and India is the second-largest producer of tea globally, after China. According to expertmarketresearch.com, the Indian tea industry is expected to grow at a CAGR of about 4.2% in the 2021-26 period and reach an approximate volume of 1.40 million tonnes by the end of this period.

Some trends that are dictating the landscape of the tea industry in India are as follows:

The emergence of tea as a wellness superfood

Due to the ongoing Covid pandemic, there is a huge resurgence of teas with proven health benefits. It has established itself as a wellness and lifestyle beverage and several new varieties and blends of tea are emerging in the market. Immunity-boosting teas and superfoods with Ayurvedic ingredients like Turmeric, Ashwagandha, Moringa, Tulsi, etc., are in big demand.

The Indian government’s role in inviting key players to invest in the wellness sector under its flagship “Make in India” scheme and its move to establish the Ministry of AYUSH is also indicative of the thriving health and wellness market in the country. As per a study by Numr Research, about 443 million Indian millennials spend more than Rs. 4000 on their health and wellness every month. Both established companies and startups have caught on to this trend and have witnessed phenomenal growth.

One can say that the viral outbreak has transformed people’s preferences forever and that the increased concern for health will translate into higher purchases of healthy foods and beverages in the foreseeable future.

Immunity Booster Teas

Increasing customer preference for premium teas

With the advent of globalization and internet penetration, there has been a substantial surge in consumer demand, which has sparked new trends in the tea segment. As the variety of teas available to customers increased due to the opening of global barriers and the advent of e-commerce, discerning customers started seeking innovation and diversity in the products being offered by tea brands.

In this scenario, the demand for premium teas has increased. As customers are displaying an active interest in the purchase of premium teas online, this medium is facilitating sales by providing additional product information and bolstering consumer knowledge and awareness. These premium teas include immunity-boosting specialty and flavored teas, and the younger generation is lapping them up.

Most Expensive Teas

Eco-friendly and sustainable packaging

Tea packaging has come a long way over the years. Standup pouches have become the preferred choice for many of today’s top brands in the beverage market because they are able to hold a large amount of the product, and more of these can fit on shelves at retail stores. Stand-up pouches for tea packaging keep the leaves fresh and protect against outside elements that can compromise the flavor, aroma, and healthful benefits of the product. We, at Golden Tips, are also using zipper pouch bags because they help maintain longer shelf life for the natural leaves that haven’t been treated with harmful chemicals to preserve their longevity.

These tea pouches are recyclable, landfill friendly, and don’t rip, tear, or break like traditional boxes or cartons. They can keep both loose-leaf and individually packaged tea protected. The wide face of stand-up pouches acts as the perfect surface for your company’s branding and designs that reflect its sustainable values and practices. This trend has only accelerated with the Covid pandemic and tea brands are rolling out biodegradable tea bags, muslin tea bags, improved packaging in paper tins, and removing plastics from outer packaging.

In this scenario, the demand for premium teas has increased. As customers are displaying an active interest in the purchase of premium teas online, this medium is facilitating sales by providing additional product information and bolstering consumer knowledge and awareness. These premium teas include immunity-boosting specialty and flavored teas, and the younger generation is lapping them up.

Growing brand consciousness

As gifting tea packages at corporate events, weddings, etc., becomes a common trend, brand consciousness comes into play. People are now progressively opting for branded labels instead of products from the unorganized sector. This has led to increased global investment in tea brands that have a compelling story to tell and a scalable business model.

As per Neilsen’s insights, Indian consumers these days look at food labels more than ever before and are willing to pay more for products that make the cut, especially those with added nutrients. They are also more loyal to trusted brands. The surge in brand preference has also come because of the inclination towards health and hygiene factors since people generally expect a product to be premium & reliable if it is branded. Customers who are concerned about the authenticity and hygiene of the product are also likely to turn towards reputed brands. Customers today are looking for innovation, flexibility, and compatibility for their fast-paced lifestyle. The variety and reach of a brand can provide all of these under one umbrella. Conclusively, branding and labels will be on the rise in the future.

Use of new-age technology in tea production and marketing

Working from home with limited social activities and several other pandemic-induced restrictions have pushed businesses to adopt the digital format for survival. And when it comes to the tea industry specifically, the landscape appears to be no different. Not surprisingly, the advent of technology in the tea industry is proving to be a game-changer. One of the ways in which technology helps to ease the process in the tea industry is by digitizing tea farming to consolidate financially, and field-level records of the complete plantation activity, and supply chain management.

Technologies such as AI (Artificial Intelligence), improve quality as well as enable efficiency in the production stage. The use of technology makes the processes more precise and accurate, and this reduces the probability of mistakes and wastages. The infusion of technology in the manufacturing process reduces the cost of production and time consumption of the entire activity significantly. Needless to mention, as operations become more efficient, the chances of human error shrinks and the amount of time spent on unnecessary tasks reduces, and the organization saves expenditure and generates more revenue.

With the ever-changing times, tea companies have also shifted their approach to targeting customers. They are using less of the traditional marketing strategies, such as television, papers, and billboards, and have since embraced the digital space. Although not all traditional marketing techniques have ended, digital marketing is far more favored. It provides several opportunities to brands, regardless of their size, to give real-time and personalized customers experience and garner increased AOV (Average Order Values). Greater visibility via digital marketing will also attract more overseas customers who are enthusiastic about purchasing tea from India, owing to their unmatched quality. This will further help Indian brands to enhance their economies of scale.

Increased tea consumption during Covid times

There is a clear increase in the consumption of tea after the pandemic outbreak and the numbers prove it out. During FY20-21, India consumed 89.24% of its tea production, as per the latest data available with the Tea Board India. According to the Tea Board, India’s consumption rose to 1,145 million kg in 2020-21 from 1,116 million Kg in the previous fiscal. This shows a Y-o-Y increase of 2.60%.

E-commerce and D2C brands fuelling the growth of the tea industry

Last year, offline stores remained shut during the lockdown except for the ones dealing in essential items. This resulted in e-commerce growing at a phenomenal pace in India with order volume increasing by 36% (Source: The Hindu) in the last quarter of 2020. From personal care to food and beverage, consumers took to buying everything online. However, as the market opened up in 2021, it didn’t take long for customers to venture into a brick-and-mortar mode of shopping.

The pandemic also saw the rise of many D2C (direct-to-consumer) tea brands in India, witnessing phenomenal growth by having an ‘online-only’ sales strategy. But, entrepreneurs believe that experiential shopping will never go out of fashion, and these D2C brands are now gearing up to foray into physical retail. Even traditional brands are aiming to expand their offline presence.

Mushrooming of Tea Boutiques and Cafes

Tea stalls are a common sight across India but they are typically fragmented and unorganized. Tea café chains emerging across India are giving consumers a midway option between at-home consumption and the humble roadside stall. A number of companies with tea outlets similar to modern coffee chains have mushroomed, and are slowly revolutionizing the tea industry in India. These companies are looking to appeal to young Indians by offering them an upgraded version of the tea at “Dhabas” and their efforts are paying off. Some of these start-ups are now national chains.

To conclude, companies with tea outlets are opening their own tea café chains revolutionizing the tea industry. Tea companies are now banking on innovation and the use of new marketing techniques to spur higher consumption, which has already been seeing an increase since the outbreak of the pandemic.

Flagship Tea Boutique and Cafe Teattoria
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