Trends and Future of Tea Trade in India and the Role of Supply Chain

As per a report by Expert Market Research firm, the Indian tea industry is expected to grow at a CAGR of 4.2 percent from 2021-26 and reach an approximate valuation of 1.40 million tons.
Trends and Future of Tea Trade in India and the Role of Supply Chain

Tea is arguably one of the most popular and oldest beverages in India. The people of India have enjoyed this hot beverage for generations and consider it to be one of the most cherished parts of their rich native food and drink variety. The love of the Indian audiences for this authentic beverage has given its industry a deep-rooted loyal customer base in the country, which has facilitated its paced growth in recent times. 

Over the years, tea has become a comprehensive million-dollar industry in India with the projection of even sharp growth in the future. As per a report by Expert Market Research firm, the Indian tea industry is expected to grow at a CAGR of 4.2 percent from 2021-26 and reach an approximate valuation of 1.40 million tons by the end of this period. Thus, evidently, the industry is fast striding on a high growth trajectory.

Any firm operating in an industry that is undergoing such fast growth needs to be aware and anticipating of the industry trends to be able to take timely measures and capitalize on market changes. Some of the trends that are expected to dictate the landscape of the tea industry in the forthcoming times and their possible consequences are discussed briefly below -

Increasing Intricacies of Customer Preferences - With the advent of globalization, there has been a substantial surge in the complexities of consumer demand. As the varieties available to customers in all fields of products increased due to the opening of global barriers, they started seeking innovation and diversity in all areas.

In this scenario, teas are no different as the tea market demand of today is looking at various exotic and mixed flavors of teas that are new and refreshing. Consumption habits for RTD, sparkling teas and flavored teas are on the rise as the consumer needs for innovation grow.

Further, recent decades have also seen an increasing inclination of consumers towards health-conscious products and eatables. Nowadays, everything from the main food product to the packaging needs to be absolutely non-toxic, healthy, and hygienic. This preference has only hiked with the introduction of the Covid pandemic that has further escalated the health and sanitation trend. One can speculate that the viral outbreak has transformed people's preferences forever and that the increased concern for health will be seen translated into all eatable purchases of the present as well as the foreseeable future.

Capitalization of Medicinal and Therapeutic Features of Tea - As discussed in the pointer above, several 'new' types and strains of tea are emerging in the market as innovation is on the rise. That clubbed with the health trend has led the market towards an opportunity to capitalize on the wonder beverage for its various medicinal properties. Several types of teas carry healing and therapeutic properties that calm the body and mind. These are gaining immense popularity in the present day where several people, especially youngsters are suffering from chronic diseases of both the body and the mind. Functional teas like immune boosters, stress relief, teas for insomnia, inflammation that contains adaptogens, and Ayurvedic spices like Cordyceps are expected to gain even more popularity amongst the young generations in the coming times.

Teas for Gifting and Gourmet Teas - Teas have also gained prominence in the gift market in recent times. Brands are now providing premium strains in elegant packaging as gift sets. Gourmet teas and customized blend teas with luxurious and convenient packaging like pyramid teabags are preferred for gifting purposes and thus are expected to be in higher demand. Consumers are now increasingly opting for teas brewed in a highly sophisticated manner or new and trendy tea options with infusions for gifting. Since tea enjoys a predominant presence in India, this trend is expected to escalate in the future.

Growing Brand Consciousness - As gifting tea packages becomes a common norm, brand consciousness comes into play. People are now progressively opting for branded labels instead of products from the unorganized sector's tea sellers. This has led to increased global investment in modern tea shops and marketing.

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 if it is branded, customers that are concerned about the authenticity and sanitation of the product are also likely to turn towards brands. Customers of today are looking for innovation, flexibility, and compatibility for the 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 forthcoming times. 

Demand for Sustainability - Sustainability is the norm of the day, and the FMCG sector is not making an exception in this regard either. The certified tea sales are growing rapidly. Fairtrade is an important consideration in the present-day tea trade. Organic teas and rainforest alliances are some other ways in which the practice of sustainability is being conducted. As the need for and awareness regarding sustainability is only rising with time, one can expect this to have lasting effects on the tea industry too. 

Role of Supply Chain

The supply chain is an integral component of the supply process and thus holds critical influence over the overall results of the process. Implementing new-age strategies and modifying the stricture of the supply chain can prove to be beneficial in the modern-day. Since digitization is the standard nowadays, switching to online channels of selling can boost tremendously the visibility and thus the sales of the products of the tea vendors. 

Also, since people are displaying an active interest in the purchase of premium teas online, online mediums could facilitate sales by providing additional product information digitally and bolstering consumer knowledge and awareness. 

Additionally, virtual platforms also enable easy-to-understand and often measurable insight into the patterns and preferences of the target customers and consumer behavior which can help to improve future product innovations and sale mechanisms. This is a perk that is not otherwise available in other distribution models.

Summing Up

Tea that was traditionally a simple, warm drink loved for its great taste and health properties has now transformed into a big and complex million-dollar industry. The tea industry in India is amongst the fastest growing industries and has several changing trends and dynamics. Some important trends that a firm operating in the industry must be mindful of were discussed in the scope of this article along with the role played by the supply chain in accommodating these trends.

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