Adverse weather conditions have driven up bulk tea prices, prompting major packet tea companies, including Tata Consumer Products and Hindustan Unilever (HUL), to implement gradual price increases. Further hikes are expected.

       During the 2024-25 second-quarter earnings call, Sunil D’Souza, managing director and chief executive officer of Tata Consumer, informed analysts that erratic weather patterns had impacted tea and salt production, leading to input cost inflation. “We will start passing this on to consumer prices,” he said.

       Staggered price increases have already been introduced in tea, though not all cost increases have been passed on.

       During the after-results conference call, Ritesh Tiwari, chief financial officer of HUL said, “We now have a deterministic signal that this season is inflationary. In the same quarter or the one before, we weren’t sure, as early data was still coming in. But now, well into the commodity tea season, we know it’s inflationary due to lower production.”

       He noted that tea commodity inflation had reached 25 per cent, and the company would continue to increase prices.

       “We have started implementing price increases in the October-December quarter, and you will see how it unfolds,” he added.

       More From This Section

       Govt launches digi platform to empower artisans from marginalised sections

       JNPA records nearly 12% rise in Oct container traffic to 614,651 TEUs

       Pralhad Joshi stresses on increasing solar projects efficiency, reduce cost

       4.8 million weddings this year to generate over Rs 6 trillion: Cait

       Oil prices trade in tight range ahead of US Presidential poll result

       The heavy cropping months for tea are June to September. However, the industry has not been able to offset initial losses.

       A dry spell followed by erratic rainfall has resulted in a production loss of 76.73 million kilograms (mkg) up to September 2024 compared to the same period last year. This decline is reflected in bulk tea prices.

       Tea Board data showed that the average auction price for North India tea up to September 2024-25 was Rs 247.33 per kg, a 23.98 per cent increase over the same period last year. The average price for South India tea was Rs 126.22 per kg, a 16.19 per cent rise, while the all-India average price of Rs 215.34 per kg marked a 22.01 per cent increase.

       Most tea consumed in India, in both urban and rural households, is in packaged form.

       Sumit Jhunjhunwala, assistant vice-president of ICRA, pointed out that until October, the tea season was still unfolding. “Now that it’s certain no more tea will enter the system, packet tea companies will pass on the increase to consumers,” he said.

       It’s a favourable year for bulk tea producers, who usually face stagnating prices, though not all are benefiting equally. Indian Tea Association Chairman Hemant Bangur remarked that while the trend is largely positive for Assam, it has had a negative impact in North Bengal, where crop losses were higher during critical production months.

       Anshuman Kanoria, chairman of the Indian Tea Exporters Association, added that apart from weather-related production losses, mandatory auctioning of dust tea and restrictions on banned chemicals have also tightened supply, pushing prices higher.

       Moreover, tea gardens in North India are heading for an early production closure this year, with the last date for plucking and receiving green leaves set for November 30. Typically, closure occurs around mid-December. North India, which includes Assam and West Bengal, accounts for more than 82 per cent of total tea production.

       “Until September, the shortfall is over 76 mkg. The early closure will increase the deficit to 100-125 mkg, setting up a strong start for next year,” said Sandeep Singhania, president of the Tea Association of India.

       Jhunjhunwala added that lower inventory levels would shape next year’s market. “Opening prices look firm,” he said.

       Also Read

       Finmin asks banks to focus on cybersecurity to ensure customer protection

       Premium

       MPLAD schemes: Detractors warn of eroded separation of powers in governance

       Dynamic bond funds: Outsource duration investment bets to fund managers

       Premium

       Underwhelming economics Nobel: Winners reveal little we didn't already know

       LIVE: Govt to sell up to 2.5% stake in Hindustan Zinc, targets Rs 5,000 cr