With nearly six lakh hectares area under tea cultivation, the domestic tea industry is growing at a compound

annual growth rate (CAGR) of about 15 per cent. India is the worlds largest consumer, second largest producer and fourth largest exporter of tea after China and accounts for nearly 30 per cent of global output and nearly 25 per cent of tea produced worldwide is consumed in India. Branded tea market accounts for nearly 55 per cent of the total market and is growing at about 20 per cent while the unbranded market is growing at 10 per cent annually. Top leading Companies

Hindustan Level Ltd Tata Tea Ltd Ducans Industries Wagh Bakri Ltd Goodricke Group Ltd Hasmukhrai & Co Girnar Food & Beverages P Ltd Sapat Packaging Industries.

Hindustan Unilever is the current market leader in terms of sales value with over 20 per cent market share; while Tata Tea is the leader in terms of sales volume with nearly 20 per cent market share. (Source: Report published by Associated Chambers of Commerce and Industry of India (ASSOCHAM)) In this segment there are 40 mid-size players having 80 brands among them. The remaining market is far more fragmented and shared between numerous small players. Tata Tea has Agni brand as key growth driver in the economy segment within packaged tea. Hindustan Lever has brands such as Taj Mahal, Red Label, Taaza, A1 and 3 Roses, which are all popular. While packet tea segment has more than 300 brands and is characterized by severe price competition, the teabag segment is a product category, which is not a mass product yet. The largest tea bag manufacturer in India which packs several of the leading tea bag brands Lipton, Taj Mahal, Tetley, Nestle, Double diamond etc estimates 7000 tons/annum as the tea bag consumption in the Indian with an annual growth rate of 20 per cent of which majority comes from the out of home segment. The current Indian tea bag market is similar to Russia in mid nineties when it was in nascent state and then showed a meteoric rise. It is estimated that by 2015 the Indian teabag market shall touch the figure of 15000 tons/annum.

Market leaders of the packaged teas viz. HLL and Tatas hitherto had not shown much interest in teabags but both of them have become aggressive in last three years, as they have realized the potential of this category. (Source:http://www.commodityindia.com/templates/more_articles.aspx?gid=All&fn=tea0409 11)

Regional preferences in branded tea:

Major players are offering different types of tea in different parts of the country with a focus on the quality perception of the particular demography. For example, in most cases the tea available in the south of India is mainly dust, whereas the north Indians prefer leaf tea. On the other hand, western market of Gujarat and Maharashtra prefer good quality packet and loose tea while in MP and Rajasthan CTC fanning is the choice. States like West Bengal and Assam do not hold packet tea as a value for money and mostly go for loose tea. The fall in auction prices for tealeaves over the last few years has led to a huge gap between the commodity and the consumer prices of packaged teas. Low entry and exit barriers in the packaged tea business have allowed local entities to prosper. These are primarily wholesalers who can retail products at lower prices, while offering customised blends, thanks to minimal overheads. Many established brands have resorted to tactical measures such as consumer freebies and heavy trade discounting in an attempt to hold on to their volumes. Some have come out with lower-priced brand variants.