Indian Tea Industry under pressure:

The scenerio for the Indian tea industry is not looking too good for the balance of this year.

Indian tea exports are down. And exports from Kenya & China are up substantially. Kenya, which had a bumper crop this year, reported over 24% jump in exports up-till June. This is almost the quantity India will be hoping to export in the whole year. And China is up 8.7%.

1. CTC teas (bulk of what will be produced for the rest of the season, will have lower export enquiry & lower price realization, because –

a) Kenya exports have replaced these in the international markets

b) Some of the bigger CTC exporters, like McLeod Russel India, will find better value in domestic market, because of the rupee being the strongest it has been in almost a decade. This will put further pressure on the domestic CTC prices as supply will outstrip demand & that too with better quality teas.

c) The bottom of the market will continue to fall.

2. ORTHODOX – This will continue to perform better on the back of Sri Lankan crops having dropped. However, the internal production has been very high and so the dream run will now ease out. It will be easier to get export orders for these than the CTCs for the rest of the year.

3. South India will come under more pressure as the exports have declined by almost 5 million & North Indian teas are going to be cheaper.

4. Branded tea exporters have also lost money because of the strengthening of the Rupee.