Wagh Bakri Tea looking to extend its reach; releases new health-related variants

Wagh Bakri Tea Group, headquartered in Ahmedabad, is looking to expand its distribution reach and introduce more health and fitness variants in order to increase revenue. To increase out-of-home tea consumption, the company plans to open tea lounges across the world.

As per Parag Desai, Executive Director of Wagh Bakri Tea, 2020 was a “demanding” year due to a demand-supply imbalance, which drove up tea prices. Tea intake outside of the home was also affected by the Covid-19 outbreak. 

“Due to a shortage of high quality tea and the lockdown, our profits were nearly sluggish. As a result, we expect the current fiscal year to end on a somewhat flat note. However, things are improving, and if Covid-19 does not pan out, we expect to rise by about 20% in 2021-22,” Desai said. 

According to production figures on the Tea Board of India portal, tea production in North India in 2020 was 1,033.73 million kg (mkg), significantly down 137.18 million kg (mkg) from 1,170.91 mkg in 2019. Since North India produces nearly 84 % of the country's total tea, any decrease in demand in the area has a negative impact on the system's tea supply. Prices rose as a result of the decrease in demand. It was not necessary, though, to pass on the full expense to customers. 

“As an industry, premiums increased by about 50%, but we were only able to pass on about 30%; the remainder had to be absorbed. However, markets are relatively low at the moment,” he added. The tea industry ought to be able to play better in FY22, with demand resurrecting and increased momentum on the ground. 

Tea business in packets: 

At over 40 million kilograms tea delivery, Wagh Bakri Tea is the nation's third-largest packaged tea company, with an annual revenue of about Rs. 1,500 crore. The ten-billion-dollar packet tea industry forms a major part of the country's one-billion-kilogram tea intake. Brands like Tata Tea, Brooke Bond, and Wagh Bakri presently lead the market. 

As per a research carried by the Tea Board of India, the market for packet tea is increasing, with close to 80% of urban households and about 75% of rural households preferring it. The belief that packet tea is free of adulterants and has more storage options is one of the main factors driving its development. 

According to the report, favorable demographic factors such as increasing disposable incomes, ambition rate, and health consciousness have led to the change from loose tea to packet tea. Wagh Bakri, which currently has 15 tea lounges, plans to expand by 50 in the next 15 months. It will be in big metropolitan areas. 

“We're attempting to reintroduce tea as a fashionable beverage. People are searching for more value-added options now that they've upgraded to higher-quality tea. We want to expand our wellness line with new products,” he added.