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'Revitalizing Indian Tea Export in Russia' AA GGLLOOBBAALL SSTTUUDDYY RREEPPOORRTT OONN ‘‘RReevviittaalliizziinngg IInnddiiaann TTeeaa EExxppoorrtt IInn RRuussssiiaa’’ Submitted to: Gujarat Technological University IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION Under the guidance of: Dr. Viral Bhatt Principal SAL Institute of Management, Ahmedabad. Submitted By: SSttuuddeennttss oofff MMaarrkkeettiiinngg,,, SSEEMM::: IIVV,,, MMBBAA::: 22001100--1122,,, SSAALL IInnssttiiittuuttee oofff MMaannaaggeemmeenntt... SAL INSTITUTE OF MANAGEMENT MBA PROGRAMME Affiliated to Gujarat Technological University, Ahmedabad. March, 2012. Certificate This is to certify that this Comprehensive Project Report title, ‘‘RReevviittaalliizziinngg IInnddiiaann TTeeaa EExxppoorrtt IInn RRuussssiiaa’’ is the bonafide work of SSttuuddeennttss ooff MMaarrkkeettiiinngg,,, SSEEMM::: IIVV,,, MMBBAA::: 22001100--1122,,, SSaalll IInnssttiiittuuttee ooff MMaannaaggeemmeenntt who carried out the research under my supervision. I also certify further, that to the best of my knowledge the work reported herein does not form part of any other project report or dissertation on the basis of which a degree or award was conferred on an earlier occasion on this or any other candidate. Project Guide: Dr. Viral Bhatt Principal, SAL Institute of Management, A’bad. Sign: __________________ SAL INSTITUTE OF MANAGEMENT Affiliated to Gujarat Technological University, Ahmedabad. We, SSttuuddeennttss ooff MMaarrkkeettiiinngg,,, SSEEMM::: IIVV,,, MMBBAA::: 22001100--1122,,, SSAALL IInnssttiiittuuttee ooff MMaannaaggeemmeenntt, hereby declare that the Global Study Project entitled ‘‘RReevviittaalliizziinngg IInnddiiaann TTeeaa EExxppoorrtt IInn RRuussssiiaa’’ is a result of our own work and our indebtedness to other work publications, references, if any, have been duly acknowledged. Date: 22/03/2012 Sign, Place: Ahmedabad SStttuuddeenntttss oofff MMaarrkkeetttiiinngg,,, SSEEMM::: IIIVV,,, MMBBAA::: 22001100---1122,,, SSAALL IIInnsstttiiitttuutttee oofff MMaannaaggeemmeennttt... I “Experience is the best teacher’’ This saying has played a guiding role in including GSR as a part of the curriculum of the M.B.A. programme of the Gujarat Technological University. This study Report allows students to do practical work and to study real global business environment which develops a feeling about the difficulties and challenges in the business world. In this direction, we have tried our best to present a project report. This project report will help the readers to know in-depth about global tea business environment and major reasons for poor performance of Indian tea export in Russia during last few years along with measures to revitalize Indian tea export in Russia. The preparation of this project is based on facts and findings noted and information collected from various secondary sources such as internet, Books, News Papers, Magazines and written and published documents. In spite of our best efforts, there may be omission and commissions which may please be excused..! II AAcckknnoowwlleeddggeemmeennttss We are extremely thankful to Dr.Viral Bhatt for his valuable guidance and helpline that was provided to us throughout completion of this project. He was always there to lend a helping hand & directed us towards proper attitude to develop the project. He has always welcomed our queries and doubts regarding the project work. Without his help and right guidance the completion of the project would have been very difficult. The level of knowledge he possess has covered entire aspects of the management expertise in different fields, particularly in market research and marketing management. We are also really indebted to those all people who heartily helped us throughout completion of this project. We are also thankful to our institute SAL Institute of Management and GTU for offering us such a great subject that bind all the knowledge we have gained throughout our study And last but not the least we would like to thank all our friends who have provided their thoughts and help directly or indirectly about our project during development and for the further enhancement. With Thanks… SSttuuddeennttss ooff MMaarrkkeettiiinngg,,, SSEEMM::: IIVV,,, MMBBAA::: 22001100--1122,,, SSAALL IInnssttiiittuuttee ooff MMaannaaggeemmeenntt... III Revitalizing Indian tea export in Russia Table of conTenTs Sr. No. Particulars Page No. Chapter-1 Introduction 2 Chapter-2 Problem statement 7 Chapter-3 Research Methodology 28 Chapter-4 India: Tea sector analysis 32 Chapter-5 Russia: Tea Market & consumption Pattern 62 Chapter-6 Competitive analysis of Tea Exporters 87 Chapter-7 Findings 111 Chapter-8 Suggestions / Recommendations 128 Chapter-9 Conclusion 134 Chapter-10 Bibliography/ References 137 1 GSR-SAL Institute of Management, A’bad. Chapter 1 IntroduCtIon Revitalizing Indian tea export in Russia InTroducTIon: Tea is the oldest and the most widely consumed beverage in the world after water. It is estimated that there are over 2,000 different types of tea. Though several varieties of tea such as green tea and herbal tea are now becoming popular, by far the most important tea to international trade is black tea. In the global tea market, China, India, Kenya, and Sri Lanka are the major producers and also play a major role as exporters of tea, while Russia, U.K., U.S., Pakistan, and Japan form the major markets for these exports. Consumer awareness of the health benefits of tea and premium have been the growth drivers of the tea market recently. The global tea industry is largely dominated by India, the second largest producer and one of the largest consumers of tea. India is succeeded China and followed by Kenya Sri Lanka, Vietnam and Indonesia in the production hierarchy of countries. The tea industry is peculiar, the soil characteristics, the climate and the rainfall determine the nature of the tea and its taste. Tea affects the taste buds; therefore, it is difficult to replace a particular variety with a substitute. This explains why certain types are favored by certain countries: for example, the CIS (commonwealth of independent states i.e. Russia) countries favor Indian and Sri Lankan teas. UK and Pakistan favor Kenyan teas. India accounts for 23.6 per cent of world's production. While Sri Lanka, Kenya and Indonesia are the other leading producers; their combined production is lower than that of India. What makes India an interesting object of study is that its size is no millstone around its neck; its production growth between 1996 and 2 GSR-SAL Institute of Management, A’bad. Revitalizing Indian tea export in Russia 1998at 5.63 per cent was way ahead of the increase in world production of one per cent only. In 2008, world tea production reached over 4.73 million tones. Producing 1.16 billion kilos (2.56 billion pounds) of tea per year, China is the number one source for tea on the planet. At 980million kilos (2.16 billion pounds), India stands at number two. Kenya and Sri Lanka follow. When it comes to exports, China ships out 297million kilos (654.78million pounds) of all types of tea whereas India, with primarily black tea, moves 203 million kilos (429.9 million pounds). This ranking is fairly recent. Prior to the 1960s, India was the top producer and exporter. For example, in 1955, India shipped out 165 million kilos (363.77million pounds) of her total production of 301 million kilos (663.59 million pounds). The stern contention with Sri Lanka saw the two jockeying back and forth for top exporter position from the 1960s through the ’80s. Butin 1991, Sri Lanka surpassed India for good with 211 million kilos (465.12 million pounds). 3 GSR-SAL Institute of Management, A’bad. Revitalizing Indian tea export in Russia China caught up in 1993 with 201 million kilos (443.13 million pounds) to India’s 175 (385.81million pounds). Kenya’s exports exceeded India’s that same year with 188million kilos (414.47 million pounds). For total production, India has taken second place to China since 2006. (All figures come from respective countries' tea boards.) Issues and Trends Affecting the Global Tea Market: 1. Rising Affluence: swift economic growth in a number of developing nations such as China, India, and Russia, has resulted in an increase in middle class consumers who have high disposable incomes. These consumers have exhibited premium purchasing behavior, upgrading their purchases from unpackaged tea to branded and specialty varieties. 2. Growing Health and Wellness Trend: The growing health and wellness trend has been a major driver for the value growth of tea in the global tea market. These consumers are keen to pay a premium price for the advertised health benefits of specialty tea varieties such as herbal/fruit tea and other tea. 3. Higher disposable incomes in many developing economies such as China, India, and Russia prompting a shift from unpackaged to branded and specialty tea varieties Types of Tea: All true tea comes from the Camellia sinensis plant. But the different types of tea stem from the processing. Main varieties: Black, Oolong, Green, White, Loose teas and Tea Bags. 4 GSR-SAL Institute of Management, A’bad. Revitalizing Indian tea export in Russia Black tea It is rusty and fermented during processing, to give it its distinctive flavors’. Black tea has a full, rich taste. This particular variety of black tea is called Keemun. Oolong Tea It is tea that falls between a black and a green tea. It only undergoes a small amount of fermentation during processing. The variety of oolong tea in this photo is infused with jasmine. Green tea It has undergone less processing than black tea, and have a much lighter flavor. The health benefits of green tea are seemingly endless. Since the leaves are not fermented, the taste is pleasantly fresh and herbal. White Tea It comes from the Camellia sinensis plant. But the leaves are picked and harvested before the leaves open fully, when the buds are still covered by fine white hair. Hence the name, White tea is scarcer than the other traditional tea, and quite a bit more expensive. This variety of white tea is called Silver Needle. Loose tea It is typically whole leaves or at least large pieces of leaves.
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