India Tea Market Size, Share and Growth Analysis Report - Forecast Trends and Outlook (2024-2032)

India Tea Market Insights

• India is the world's second-largest tea producer. Assam and West Bengal produce the majority of the nation's annual tea production, accounting for 83% of the total in India's northern area in 2021-22.
• India is also one of the largest consumers of tea globally. Tea is deeply ingrained in Indian culture, and per capita consumption continues to rise, which is further supporting the India tea industry revenue.
• The Indian government has implemented various initiatives to support the tea industry, including the Tea Development and Promotion Scheme aimed at improving tea cultivation techniques and boosting exports.

India Tea Market Trends

Growing adoption of premium and speciality tea

Indian customers have started looking for high-end tea options in recent years, like Darjeeling tea, Assam orthodox tea, and specialized green teas. Rising disposable money and the desire for a healthy lifestyle have been responsible for the increasing demand of India tea market. For instance, the demand for Darjeeling white tea, which is prized for its subtle flavor, and Nilgiri oolong, which is praised for its smooth texture and fragrance, is rising. Specialty teas are becoming more and more popular among Indian customers instead of only being found in export markets. In 2022, Chado Tea, a newly established specialty tea brand in India, recorded a 30% surge in sales of its white and oolong teas. The company attributes this growth to consumers' growing curiosity about the diverse origins and flavors of tea. Furthermore, contemporary stores such as Foodhall and Nature's Basket are creating sections dedicated to specialty teas, giving customers the opportunity to taste premium tea blends. These establishments enhance customer connection with premium teas by providing tailored suggestions and tasting sessions.

Eco friendly packaging of tea bags gaining traction

There is a growing adoption of recyclable, landfill-friendly tea bags, supporting sustainable development and environmental safety. According to a PwC India poll on consumer sentiment, 60 percent of Indian customers are actively selecting sustainable products, marking a substantial movement towards sustainability. The move in the tea business toward eco-friendly packaging has been hastened by the Indian government's increased emphasis on cutting down on plastic waste. The goal of the 2016-introduced and 2021-amended Plastic Waste Management Rules is to gradually phase out single-use plastics nationwide. The aforementioned rules have exerted pressure on tea brands to implement environmentally-friendly packaging options that align with national policies that aim to mitigate plastic pollution. A number of tea brands have voluntarily switched to packaging that is plastic-free and biodegradable in response to these rules. For instance, one of the biggest tea brands in India, Tata Tea, declared in 2022 that by 2024, all of its product lines would use only 100% biodegradable tea bags for packaging.

Industry News

Opportunities in the India Tea Market

Growing demand for organic tea and their online availability

The increasing awareness regarding the health benefits of herbal and organic tea and their improved availability through online channels contribute to tea demand in India. Nearly 50% of Indian consumers said in a 2022 India Today survey that they choose organic products because of their health benefits. The Food Safety and Standards Authority of India (FSSAI) has released a report estimating that over the next five years, there will be a 12% annual growth in demand for organic tea. Out of the 87 gardens in Darjeeling that are certified with the Tea Board, about 62 of them cultivate organic tea.

People may now get a variety of artisanal and organic teas from all over the world through websites that specialize in tea, such as Amazon, Flipkart, and other platforms. To meet the needs of customers seeking better tea options, online grocery stores such as Grofers and BigBasket have also increased the size of their sections dedicated to organic products. A further factor propelling India tea market expansion is the availability of subscription services for organic tea, which allow customers to get customized mixes on a regular basis.

Tea Production in India (Million Kg)

India Tea Market Dynamics

The growth of India tea market is driven by high penetration of the beverage in the country across socio-economic classes. India’s healthy economic growth and a subsequent rise in the middle-class population is proving to be a catalyst in the market growth, with consumers increasingly gravitating towards premium brands. The rising demand for packaged tea leaves in both urban and rural areas due to lesser chances of adulteration, convenient storage, and their superior quality further favours the India tea market value. The demand for packaged varieties with natural ingredients is witnessing a surge, especially variants like Darjeeling, Kangra, and Sikkim tea.

The middle class is also willing to experiment more with tea blends, thus, providing impetus to segments like herbal, flavoured blends, and other speciality variants. With busier lifestyles and a growing workforce, the sales of herbal tea are expected to rise, as consumers seek healthier alternatives to beverages like carbonated drinks. The urban sector is currently a major consumer of herbal tea. The market will also be driven by increasing innovations in packaging and flavours in the coming years. The consumer demand for wider beverage options and innovations like eco-friendly packaging is compelling manufactures to launch improved product range.

Market Restraints

India’s tea plantations, especially in regions like Assam and Darjeeling, are vulnerable to climate change. Erratic weather patterns, including unpredictable monsoons, rising temperatures, and frequent droughts, have reduced tea yields and affected the quality of the tea, reducing the India tea market revenue. Data from the Tea Board of India shows a projected 40% decrease in Assam and 23% decrease in West Bengal production until March 2024 due to inadequate and uneven rainfall. Further, rising operational costs, combined with relatively stagnant tea prices, were squeezing profit margins for small tea growers and estates.

India Tea Market Growth

The India tea market dynamics and trends are shaped by the increased domestic consumption of different varieties of tea, including green tea, rising disposable incomes, and the expansion of online distribution channels.

India is the second largest producer of tea, globally, after China. The country is a leading consumer of tea (the beverage) and accounted for nearly a fifth of the global consumption in 2016. India attained the highest exports of tea in 2017 in almost four and a half decades. However, the annual growth of the exports from the country was only moderate due to the high domestic consumption. Almost 80% of the total output in India is consumed domestically. The per capita consumption of the beverage in the country has witnessed a significant increase in the last decade. As reported in H2 2023, India is gradually replacing Sri Lankan tea in new export destinations namely, Iraq, Turkey, and Jordan.

Tea Industry Statistics in India

In 2022–2023, India exported 228.40 million kg of tea for a total value of US$ 793.78 million. India exported 200.79 million kg of tea for US$ 726.82 million during the fiscal year 2021–2022. India's overall tea export revenue from April to February of 2024 was US$ 752.85 million. Indian tea from the Nilgiri, Darjeeling, and Assam regions is regarded as some of the best in the world. About 96% of all tea exported from India is black tea, which accounts for the majority of the country's exports. India is a major exporter of green tea, herbal tea, masala tea, black tea, ordinary tea, and lemon tea. Of these, about 80%, 16%, and 3.5% of all tea exported from India is made up of black tea, regular tea, and green tea.

Market Share of Export Revenue by Country (2022-2023)

India Tea Industry Segmentation

“India Tea Market Report and Forecast 2024-2032” offers a detailed analysis of the market based on the following segments:

India Tea Market Share

By Distribution Channel Analysis

Convenience stores are the leading distribution channel, accounting for most of the India tea market share

The convenience stores account for the major share of the total market value as local ‘kirana’ stores are a popular choice to buy daily essentials, including tea, for the Indian population. Meanwhile, supermarkets/hypermarkets have also gained considerable popularity in the last few years owing to shifting consumer behaviour and changing shopping habits. The robust expansion of online channels is expected to significantly influence the India tea market dynamics, with the online segment projected to register the fastest growth rate over the forecast period.

By Type Analysis

Green tea is becoming a popular choice among Indians, with rise in awareness regarding its health benefits

Green tea is expected to grow at a CAGR of 4.9% between 2024-2032. The demand for green tea is expected to witness robust growth in the coming years as people become more aware of its health benefits. The market for green tea in India is being driven by rising urban population and their increased focus on health and wellness. The rise in disposable incomes and the increasing demand for premium varieties in the country are further aiding the tea demand growth. The growing popularity of cafes/lounges primarily serving herbal and organic variations is expected to aid the market in the coming years. Meanwhile, black tea is expected to grow at a CAGR of 4.4% during the forecast period.

By Packaging Analysis

Tea bags are expected to grow at a CAGR of 4.8% during the forecast period. Due to their convenience and simplicity of use, tea bags have become incredibly popular, particularly in metropolitan areas where customers seek quick and mess-free solutions. The increase in demand for convenience among busy, health-conscious urban customers is the reason for the expansion.

In traditional and rural markets, where buyers appreciate the affordability and authenticity of buying tea in bulk, loose tea is still the most popular variety. Since loose tea has a strong cultural connotation, it is still commonly used in India even in spite of the growing popularity of tea bags.

By Application Analysis

As per the India tea industry analysis, the residential segment is the most popular application segment. This is mostly because tea is so widely used in Indian homes, where it is a daily necessity for the majority of families. In India, tea is a deeply embedded part of the culture, with many people drinking it many times a day. Consequently, the bulk of tea sales in the nation come from the residential market.

India Tea Market Regional Insights

North India Tea Market Trends

North and East India represents the leading Indian tea markets, accounting for over three-fourths of the total market share. Assam is the major tea producing state in the country followed by West Bengal. According to the place of origin, Assam and Darjeeling tea varieties are globally the most recognised types. The climate and topography of the North-East region are ideal for tea cultivation, with the high humidity, rainfall, and temperature fluctuations providing perfect conditions for growing high-quality tea. This region’s tea gardens have become globally recognized for producing a wide variety of teas, including Assam orthodox and Darjeeling tea, both of which are in high demand.

East and Central India Tea Market Dynamics

East and Central region is expected to grow at a CAGR of 4.7% during the forecast period. A number of interrelated reasons, such as the region's cultural attachment to tea, rising disposable incomes, expanding urbanization, and the accessibility of high-quality tea locally, are contributing to the growing demand for tea in East and Central India, thus impacting the tea demand forecast in the country. In East India, tea is deeply rooted in culture, particularly in places like West Bengal, Assam, and Bihar where it is a daily necessity. Tea is not merely a beverage but also a social custom in places like Kolkata. Due to improved distribution networks that deliver premium tea from neighboring tea-producing states, Central Indian states like Madhya Pradesh and Chhattisgarh are witnessing an increase in tea consumption.

South India Tea Market Opportunities

South India accounts for nearly a fifth of the market with the production concentrated in the Nilgiris. While the region has a significantly lower output than North India, the market is driven by the production of premium variety and superior quality. South Indian customers are becoming more health conscious and turning toward organic, herbal, and green teas due to their alleged health advantages. Rapid urbanization is occurring in South India, especially in places like Bangalore, Chennai, and Hyderabad. This is causing changes in lifestyle that encourage the drinking of tea. People who relocate to metropolitan areas frequently pick up new habits there, such sipping tea in restaurants, offices, and cafes.

Competitive Landscape

• Due to increased concerns about environmental safety, market players are concentrating on adopting sustainable packaging and are investing more in product marketing to expand their reach. 
• Companies like Tata Tea and Brooke Bond (Hindustan Unilever) have added specialized and premium teas to their offerings, like flavored, herbal, and green tea. 
• Businesses such as Tetley (Tata Global Beverages) and Organic India have introduced antioxidant-rich teas, herbal infusions, and health-focused green teas, thus increasing the tea market share in India. 
• Companies are employing targeted advertising more and more to draw in younger, urban customers. For example, Tata Tea's "Jaago Re" campaign combined marketing with a purpose by connecting with socially conscious consumers through social awareness messaging.

Key Industry Players

Other notable players operating in the India tea market report include Wagh Bakri Tea Group, Pataka Group of Companies, The Bombay Burmah Trading Corporation. Ltd, Assam Company India Limited, Ramesh Tea Traders, Amar Tea Pvt. Ltd, Rossell India Ltd., and Goodricke Group Limited, among others. Manufacturers are upgrading their portfolios and are launching new products, focusing on product packaging and format, in order to meet evolving demands of consumers.

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