“Several new generation entrepreneurs now cater to larger global audience via D2C model”

16 July 2021 | Opinion

Kolkata-based Luxmi Tea, backed with a legacy of a century, has witnessed the evolution of the tea industry since 1912. On its way to complete 110 years in the tea business in 2022, the company has evolved, grown and embraced the gradual evolution and new innovations in the industry. Today, Luxmi Tea’s estates are spread across 25 estates, over 50,000 acres of excellent terroir in India and Africa.

Sharing his knowledge and perspective on how to enhance innovation across the tea sector, Atul Rastogi, President, Luxmi Tea Company, Kolkata spoke to NuFFooDS Spectrum in detail.

Edited excerpts;    

 

What were the key highlights at Luxmi Tea in 2020? Any new launches planned for 2021?

Teas from all our estates consistently fetch the best prices at the auctions and also among direct buyers. Teas from our Makaibari Tea Estate are also among the most prized teas in the world. Four to five per cent of business is through exports currently as India is a country with a voracious appetite for all things tea. The consumption volume of tea in India was approximately one billion kilograms during the financial year 2020. Owing to a crop shortfall during the last two tea growing seasons, due to the challenges imposed by the pandemic, the prices of Indian teas have increased and have become a deterrent to export purchases. All teas grown at our Rwandan properties are exported to all parts of the world. Our main buyers of these teas are Russia, UK and Pakistan. Markets however have been sluggish and have fallen by 6 per cent which can be attributed to over production. One of our teas, the 'Silverback Blend' is one of the finest blends in our range. The tea gets its name from the majestic Silverback Gorillas found in the prehistoric Nyungwe forest in Rwanda. We cater to the US, UK, Japan, Russia, Kazakhstan, and Africa apart from India. These are mostly bulk teas and not in any other Luxmi Tea retail packs. As the production of teas increased in India and consumption grew around the world, it became evident that quality teas would fetch the best prices.

There already existed an overproduction of teas in the mid-price range and growth was stagnant in that segment. The strategy was to invest in the quality tea growing belts in Upper Assam along with Rwanda, Africa which produces some of the best teas in the world. Leading tea brands in the domestic market such as Tata and HUL are direct buyers from our estates and also purchase our teas from the auction.  Luxmi teas are also preferred by large international players like Taylors of Harrogate, Twinings, Tetley, Ahmad Tea, Hamstead Tea, Fortnum and Mason, Dethlefsen & Balk, Sinas, RG Brands Kazakhstan, Urmi Tea of Russia and many others. But 2020-21 had its own set of challenges as we battled the pandemic. Thanks to the resilience of the pluckers and managers at our estates, we were able to meet our production targets while holding on to our philosophy of producing the best teas in India and Rwanda. The Indian tea industry is being driven by healthy demand as nearly 1.10 million tons of tea was consumed in the country in 2020. This trend continues to grow as consumers today make educated choices and are opting for better quality teas in 2021. Luxmi Tea is planning to launch an eclectic mix of naturally flavoured and herbal tea blends by combining ingredients that are grown in and around our tea estates.

 

With digitisation on the forefront, how are you implementing technology across the company's operations?

A fair bit of investments are being made on the e-commerce front wherein we are building for ourselves robust, agile and scalable e commerce platforms. The objective is to serve our customers within the quickest possible time frame while ensuring the integrity of our products and services remain intact.

 

What are your views on increasing innovation in the tea sector across India?

Innovation in the tea sector can be enhanced by looking at the right aspects – in terms of farming, logistics, packaging and distribution, marketing and sales of the products.

Farming: Biodynamic farming is an integrated practice where all components on a farm are believed to be living interrelated systems – animals, plants and the cosmos. Biodynamic practices are aimed at growing healthier plants and rejuvenating the earth by re-energising the soil and adding essential nutrients to the plant, soil and animals. Biodynamic farming practices stimulate the soil through careful monitoring of nature’s rhythms. The primary difference between organic and biodynamic is that biodynamic farming uses principles that add life force to the plant, soil and livestock, whereas traditional farming methods typically deteriorate the soil quality. Biodynamic agriculture uses specific preparations made from minerals and herbs. These preparations are used to strengthen the compost applied to the fields and heighten the microbial activity in the soil that results in better root activity and overall improved photosynthesis.

Digital (Promotion of the brand and availability online): Luxmi Teas has had a tremendous response from consumers via the D2C Model. The reviews and feedback we have received are very encouraging and we’re investing a lot of time and effort into enhancing our e-commerce presence. From Social Media Marketing to PPC to Influencer Marketing, we’re leaving no stone unturned to reach consumers across India and the world.

Logistics: Given the fact that tea estates in India are spread out amongst some of the most geographically challenging locations, shipping teas from the estates to buyers and consumers has always been cumbersome and difficult in India. The service providers who are entrusted with the task of shipping teas are unorganised, rely on primitive systems and remain quite dysfunctional. Deep rooted problems remain and simply digitising an already unorganised system is not the solution. Innovation in logistics will be possible with proper infrastructure and a greater dependence on the right technology to make the right decisions which facilitate the movement of goods as quickly and as efficiently as possible.

Packaging & DistributionTea producers in India have never excelled at value added businesses and have always preferred to be a source of raw material. With the onset of the pandemic, several new generation entrepreneurs have adopted the D2C model of business and are reaching a global audience by selling through their own websites and also through leading marketplaces.

 

What are the current challenges for the Indian tea sector?

The challenge in the tea industry today is the welfare of our workers in the midst of this pandemic. We’ve held vaccination drives and sanitation drives at all our estates and our pluckers are regularly informed about the necessity of maintaining hygiene and adequate social distancing. The lockdowns bring with them their own set of unique problems such as bottlenecks in terms of logistics. Without timely delivery of essentials for shipping teas as soon as they are manufactured such as packaging, the entire production line up can get thrown out of gear. Several tea growers are producing very average teas and these teas are saturating the market today. Thankfully at Luxmi, we’ve always believed in producing quality teas from the best cultivars available in the tea industry today. And consumers in India and across the globe are appreciating our teas and they become more aware that our teas are packed and shipped directly to the consumer from our estates.

 

Dr Manbeena Chawla

(manbeena.chawla@mmactiv.com)

 

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