Santanu Sanyal

Mulls launching tea bags

Kolkata June 20 Apeejay Tea Group, having a total of 17 gardens under two companies, namely, Apeejay Tea Ltd and Empire & Singlo Tea Ltd, producing about 21 million kg (mkg) of teas annually, proposes to launch new retail brands next year.

Right now, the group has only two brands, "Mantra" and "Maha Mantra" selling in Tamil Nadu, Karnataka, Rajasthan, Punjab and Jammu & Kashmir.

"The thrust in coming years will be on retailing and branding," Mr D. Atal, Managing Director of the Group, told Business Line. "By 2009, the share of the retail business is estimated to be 30 per cent of the total production of about 22 mkg." There was also a proposal to launch tea bags as part of the retailing drive, he said.

The existing brands, it was indicated, would be pushed in new markets such as Uttar Pradesh and Himachal Pradesh. With several retail chains emerging in the market, the group was also exploring opportunities to push its teas in various ways, including under various brand names not necessarily owned by it. "Part of our retail sale might be under our own brands and part under other brands but packaged by us," he said adding, "all kinds of options are being examined with an eye on value addition".

Mr Atal indicated that the proposed retailing drive also presupposed the launching of the "Typhoo", the UK's third largest brand acquired by the group, in India.

Production base

By 2009, when the production base would be expanded, the exports would continue to be maintained at the current level of 22/23 per cent. Which means, the bulk sale through auctions, direct sales or private sales would be around 47 per cent against around 77 per cent at present. "We'll be in every segment of the tea market," he observed.

Mr Atal, however, felt that the cost of exports would go up in the coming years because of the stricter norms being laid down by western countries in regard to the use of pesticides in tea crops and, worse, different countries would stipulate different norms.

"Ultimately, we may have to segregate a few gardens for the purpose exports," he said. Also, with a demand growth of more than three per cent annually, the domestic market, often with higher average unit value realisation, would hold out bigger promise.

The teas of the Apeejay Group, according to him, would attract higher prices on an average this year - about Rs 7-8 per kg more than the prices in the last year. This would happen because of two reasons, namely, quality upgradation and more production of orthodox varieties. "We propose to produce about two million kg of orthodox this year," he added.

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