The demand for packet tea is on the rise as it is preferred by close to 80 per cent of urban and around 75 per cent of rural households.

According to a recent study on the domestic consumption pattern conducted by the Tea Board of India, the perception that packet tea is adulteration free and has better storage options are the key driving factors.

Favourable demographic factors such as increase in disposable income, aspiration levels, more participation in workforce , and increasing health consciousness have contributed to the shift from loose tea to packet, the study said.

In addition to neighborhood kirana stores, modern retail is emerging as the second biggest channel for purchasing of tea. With increased connectivity even in rural areas, online channels will also be a major outlet.

The penetration of modern retail chains increasing with supermarket space increasing in Tier II and Tier III cities, this channel may become a major outlet for packet tea, the study said.

According to industry sources, the ₹10,000-crore packet tea market accounts for roughly 50 per cent of the country’s total tea consumption of one billion kg. The segment is currently dominated by brands such as Tata Tea,, Brooke Bond and Wagh Bakri Tea.

A number of bulk tea producers are entering the packet tea business. The country’s largest producer of bulk tea, McLeod Russel, is in a joint venture with Willamson Magor Group’s Eveready Industries India which owns brands like Tej and Jaago.

“There has been a gradual shift from loose tea to packet tea because of the value addition. Margins are better,” KK Baheti, wholetime director, McLeod Russel told BusinessLine .

Amalgamated Plantations (APPL), the country’s second largest producer, is also exploring the possibility.

However, despite better margins, not many companies have been successful with packet tea in the past as it calls for a ‘different kind of expertise and focus on branding and marketing’, said DP Maheshwari, managing director, Jay Shree Tea and Industries. Over ₹10-20 crore annually may needed for advertising and marketing individual brands.

Companies like Hindustan Unilever Ltd and Tata Tea exited plantation business to focus on marketing beverages.

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