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Brewing a Strategy
The price
of the popular Darjeeling tea declines steadily at the auctions. A report
by India Today's Senior Editor Sumit Mitra on how a handful of tea growers
fight the slump
to survive.
A
century and a half after the British pioneers harvested their
first crop of Darjeeling tea, the beverage seems to be getting
flat. Though its distinctive aroma and taste still attract many,
the price it fetches has steadily come down in the past few years.
At the Darjeeling counter of the Kolkata tea auction at Nilhat
House, the price of Rs 154-158 a kg conceals a widening low end
for which, as Krishna Katyal, director of J.Thomas & Company, the
140-year-old tea brokers, says, "Getting buyers at Rs 150 a kg is
difficult."
True, some of the 86 gardens registered for the "Darjeeling"
trademark in the hill town still produce tea that fetches up to
$500 (Rs 24,000) a kg in the foreign markets. But there is little
excitement among the planters, no hint of the celebration to mark the
150th year of tea production in Darjeeling. G.C. Somani,
superintendent of the Tukvar Tea Estate, says, "How can there be
merriment when the entire industry in Darjeeling is sick?" Though
Darjeeling contributes only 8.5 million kg "or less than 5
per cent" to India's total annual production of about 185 million
kg of tea, it is decidedly India's flagship tea brand, enjoying the epithet
of being the "champagne of teas". In the colonial period, British
planters ensured its economic viability by exporting it. But after Independence,
tea estates in Darjeeling have steadily seen their profitability eroded
by rising costs and low yields even as plantations in Assam and other
parts of the country, which produce cheaper CTC tea, have prospered. The
problem is threefold. A sizeable section of the 17,500 hectares on the
hills is covered by bushes that are over 100 years old, too old to yield
the magical taste. Normally, a tea bush should be replaced by a new one
after 30 years because the yield becomes very low.
Another problem is that with the disintegration of the Soviet Union in
1991, Darjeeling tea lost a large buyer of its low-on-flavour "monsoon"
flush (the third flush, after spring and summer and before autumn) which
accounts for nearly a third of the total harvest. Besides, the factories
in most gardens are too primitive to respond to the changing needs of
the markets. There is one more major irritant. It is often said that while
Darjeeling produces around 8.5 million kg of tea, the world drinks 40
million kg of what it thinks is the real McCoy. Simply put, there is a
huge amount of spurious Darjeeling tea vying for shelf-space with the
genuine.
Two years ago, the Indian Tea Board registered and got a patent for Darjeeling
tea to prevent fake brands draining away its profits. The Certified Trade
Mark (CTM) made it obligatory for the seller, the shipping agent and the
buyer of the tea bearing the
"Darjeeling" logo to carry a certificate of authentication for
each
invoice. Darjeeling tea now enjoys as much protection as Scotch
whisky, Cheddar cheese or Cognac brandy. The area within which tea grown
can be called "Darjeeling" has also been defined under
the Geographical Indication Act.
Yet, the unit price of Darjeeling tea is dipping instead of going
up as expected. While the Kolkata auction average price per kg for 1999-2000
was recorded at Rs 173.40, it dropped to Rs 158.14 the following year
despite the CTM regime being in place. In the current financial year,
the expected average price is around Rs 155.
"The malaise," says Ranen Datta, secretary, Darjeeling Planters'
Association, "is a lot deeper than our unique tea getting deluged
by counterfeit products." Adds K.S. David of the Goodricke Group,
which owns the largest number of tea estates (11) in Darjeeling: "The
Darjeeling tea industry hasn't done enough to establish its product as
a unique beverage. It is short-sightedness for which we're paying the
price."
However, the smart planters are no longer the large corporates
like Goodricke or the B.K. Birla Group, which owns four estates
including Tukvar, but a slew of new players scouting the world
for opportunities to market their gardens "and not just the Darjeeling
name" as their brand. Most of them have gone "organic",
shunning all chemical fertilisers, and thus finding entry into the stiff
ecological barriers of the European Union market. At the same time, they're
bypassing the auction system to sell their teas on the strength of the
reputation of their gardens.
Swaraj (Raja) Banerjee, owner of the Makaibari Tea Estate in
Kurseong, for example, has set up the Hampstead Tea & Coffee
Company in the UK and the Makaibari Japan Ltd in Tokyo. These
outlets sell the Makaibari brand directly to the gourmet sections
of supermarkets like Tescos. Banerjee has considerably curbed his costs
by motivating the workers to adopt family planning because the laws require
estate owners to pay for fuel and shelter of not only the workers but
their dependants as well. Ashok Kumar Lohia of Chamong Tea Exports, which
owns half a dozen estates, is yet another new kid on the block who has
focused on getting more value out of the monsoon flush by upgrading his
plant and machinery. He says the equipment in Darjeeling for "withering"
(removing moisture) of the leaves "are based on experience of the
plains, but up there in the hills you need a lot more extra air to be
blown in as you have to remove twice as much moisture than in the plains."
The Ambootia Tea Estate, which, like Makaibari, shuns the auction, has
created considerable brand equity in Europe through fancy tea brands and
clever merchandising. The direct marketeers have been encouraged by the
endeavours of Guenter Faltin, a German economist-turned-tea-merchant who
began modestly in 1985 by importing about five tonnes of Darjeeling tea
but now imports 550 tonnes a year. His firm, Projektwerkstatt GmbH, is
the biggest mail order tea company in Germany.
These are optimistic but isolated examples of the Darjeeling tea gardens
trying to reinvent themselves. It is about time the entire industry did
so because Darjeeling tea is threatened by new developments. Planters
speak with awe about the new clones of Darjeeling tea bushes from the
neighbouring Ilam district in Nepal, which has the same flavour and colour
and a much lower price. Besides, the top end of the domestic market is
increasingly savouring the body and aroma of the best leaves from Assam.
The Darjeeling tea brand is a product of history. It should not become
history.
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