The Hindu : Business : New quality norms will check dilution of brand equity in tea

Online edition of India's National Newspaper
Sunday, Apr 10, 2005

Business

Business

New quality norms will check dilution of brand equity in tea

By Indrani Dutta

KOLKATA, APRIL 9. The new Tea (Distribution and Export) Control Order, 2005 issued by the Government recently will arrest dilution of India's brand equity in tea in the international market.

Even as they await the fineprint, the industry has welcomed the order which takes retrospective effect from April 1, 2005.

"We have been pursuing for long with the Tea Board for this order and it is welcome," an industry source said.

The Indian Tea Association (ITA) Chairman, C. K. Dhanuka, said import of bad quality would be restricted by this order. The United Planters' Association of Southern India (UPASI) President, Ulhas Menon, said the order would control the unhealthy inflow of cheap quality teas to the country.

Manufacturing exporters like the Goodricke group too were glad that such an order had been promulgated. Peter Legatt, Chairman, Goodricke, said the tea industry had been working with the Government for quite some time to put in place a curb on imports of bad quality teas. "Some of the teas coming into India from Vietnam and Indonesia were not up to the mark," he observed.

The Managing Director of Goodricke, K. A. David, was happy that at last some sort of a law to curb bad imports was in place, though he was wary of the power of ingenuity of people who look for loopholes in the system.

Goodricke, whose Darjeeling gardens produce some premium quality teas, is controlled by Camellia of the U.K. which describes itself as the world's largest non-governmental producer of tea with a crop of almost 79 million kg worldwide.

More than the volume of tea imports (which touched 30.5 million kg in 2004), the flow of cheap quality tea had caused consternation to the industry. The average price of imported tea was Rs. 45.70 while the price of teas coming Vietnam — India's single biggest source — averaged Rs. 32.60 a kg, that from Nepal and Indonesia averaged Rs. 57.70 a kg. The basket contained mainly orthodox tea which enjoys good global demand. Frequently, it was found that merchant exporters were just re-exporting cheap imported tea, using the India brand and trying to negotiate higher prices instead of blending the imported teas with Indian teas as was expected of them.

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