With the upcoming festival season, tea sales have been strong and the realisations are up at two-month highs. Higher sale volumes have led to prices going up.
Despite the gains, the average prices are trading at around or below Rs 100 per kg, which is the lowest since March 2020. However, sales volumes have continued to gain and it is at a three-month high.
In 2020, the household demand for tea was strong but the HoReCa (Hotel, Restaurant, Cafe) numbers were on the weaker side. However, the global tea consumption was still strong at around 6.3 billion kgs for the calendar year 2020. And the expectations are the compounded growth will continue to be on the same line. So, by 2025, we are perhaps looking at 7.4 billion kgs of global consumption.
Also Read: Tata Consumer expects margins to improve as tea prices cool off; oil-led inflation still cause of concern
For the Indian market, this is going to be a second straight year of lower than normal crop. For FY21, the crop estimates standard around 1145 million kgs, having exported crop worth $704 million.
In the current markets, we are still looking at lower prices as compared to last year. However, when you compare the prices from 2019, the average sale auction of tea has been about 25 to 36 percent on the higher side in sense of prices.
Around 89 percent of India's tea production is consumed within the country. Even then, India is the fourth-largest exporter in the international markets, behind Kenya (28 percent of the exports). India is preceded by China and Sri Lanka.