Amalgamated Plantations Private Ltd (APPL), an associate company of Tata Consumer Product Ltd (TCPL), is looking to ramp up its packet tea business in the eastern and north-eastern parts of India. Plans are afoot to launch more product variants, particularly in the specialty and organic tea segments, and strengthen its distributor network.

According to Vikram Singh Gulia, MD & CEO, APPL, the company is in the process of revamping its e-commerce site. Once that is done in the next one or two months, it would be looking to tap the digital marketing channel to push its packet tea sales.

“APPL started its packet tea business somewhere in the second half of 2018 and we primarily cater to the eastern and north eastern markets, which are relatively low in terms of tea consumption as compared to the north or western India. However, we clocked a little over 1 million kg (mkg) of sale under the packet tea business last year and this year we are looking to sell close to 2 mkg,” Gulia told BusinessLine .

The company has engaged a brand team for its packet tea business and is also looking to revamp e-commerce site to push online sales. Gulia is optimistic that e-commerce would give the company the leverage to reach out to its consumers and help earn better margins.

APPL primarily has three brands for packet tea – Hathikuli which sells specialty and organic teas; Majuli Mist is the premium and mass premium brand, and Anshi for ready-to-drink teas targeted at the millennials.

“We are going to add more blends and variety under organic, specialty and other segments. We are also looking at launching custom made teas for consumers,” he said.

The aim would be to increase packet tea sales to 10-12 mkg in the next five-to-seven years.

According to industry sources, the packet tea market is estimated to be close to ₹10,000 crore, and is currently dominated by brands such as Tata Tea, Brooke Bond and Wagh Bakri. The segment has been steadily growing backed by favourable demographic factors such as rise in disposable income and increasing health consciousness.

A number of bulk tea producers have been trying to enter into packet tea business to improve profitability and de-risk portfolio.

Production down

The current year is likely to be challenging for most tea companies, particularly in North India, since their production is estimated to be lower by around 140-150 mkg this year as the plucking activities had come to a standstill between March 25 and April 13 on account of the countrywide lockdown due to Covid-19 pandemic.

APPL, which is estimated to be the second largest producer of tea in the country with an annual production capacity of 44 mkg (own production and outsourcing from small tea growers put together), also witnessed a 50-55 per cent drop in production between March and May this year. While its own production up to June 8 is down at 1.2-1.3 crore kg (2-2.5 crore kg last year), outsourcing from STGs is also lower at around 65 lakh kg (2 crore kg last year).

The company has 25 estates spread across Assam (21) and Dooars (4) in West Bengal.

APPL, which also has a Spice Park in Assam, is in talks with its parent company — TCPL — to explore the possibility for forward integration of spices, primarily pepper and turmeric.