THE DWINDLING fortunes, some aggressive export effort in recent months notwithstanding, seems to have sent panic waves through the tea barons.

As bottomlines begin to disappear faster than cups of tea, some of the top industry people and senior officials of tea companies are believed to be groping for answers.

In the first closed door meeting of its kind, atleast four garden owners and another handful of senior executives of leading tea companies, met to formulate what they hope will be a workable strategy before the tea industry fortunes dip to further abysmal levels.

The `close group' comprised companies like Williamson Magor, Hindustan Lever, Tata Tea, Duncans, Dhunseri, Goodricke and the Mcleod group.

After hours of brainstorming, some conclusions have been reached. One atleast is sensational.

For the first time, the producers, who are also packeters, are planning a cartel of sorts to combat the fall in prices and demand for packet teas.

Of course, no one is willing to call it a cartel, which is a bad word in the current so called competitive environment.

The group of tea barons and executives have decided to form a `committee' which will go into the various aspects of distribution costs, selling expenses, commissions etc.

Eventually the idea is to reach a common ground on the distribution and marketing costs, regionwise, so that there is no undercutting resorted to by any of the constituents in the industry.

This, it is hoped, will act as a deterrent to unwanted competition among producer-packeteers and packeteers, especially now when tea drinking seems to have declined somewhat.

Going into the reasons for the decline in prices, the industry bigwigs seem to have stumbled on to something very alarming. It is believed that a large number of unregistered bought leaf factories have begun to mushroom.

Industry estimates their production anywhere in the region of 50-70 million kg. The numbers, if proved correct, may well be the decisive factor in the downturn of the industry fortunes.

When teas of such phenomenal volumes go unnoticed by the organised trade, prices are bound to fall. And in the absence of requisite data, demand patterns too will tend to show a decline, which may not be true.

Another area which has found conformity among the closed group of tea people is to enhance the efforts on generic promotion of teas. All the top tea companies have agreed to make a higher contribution towards this exercise.

Incidentally, Ulka Advertising had been given a long term contract to explode this issue of generic promotion globally as well as domestically. Some of the top packeting companies have decided to examine this issue further.

Subhash Mohanti

CALCUTTA 10.11.2000

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