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Coffee and Tea Reports from the Front Lines

Export Units Allowed to Sell More “Instant Tea” Locally

New Delhi - In a boost to the domestic tea vending industry, the Indian government has allowed export-oriented units (EoUs) to sell more “instant tea” in the domestic market to meet the growing demand in the country. There is a strong demand for instant tea due to increased consumer preference for convenient, instant food and beverage products.

The Commerce Ministry has now increased the cap on EoU sales of “instant tea” in the domestic tariff area (DTA) from the existing 20% of free-on-board value of exports to 30%. This will improve availability of “instant tea” for the tea vending industry, which has been importing (instant tea) from Sri Lanka and other foreign markets, say industry players.

The “instant tea” exports have recently seen some slowdown due to a decline in export orders on account of the appreciation of the rupee against the dollar. However, the domestic tea vending industry, valued at about Rs 400 crore, has been growing at 35% compounded annual growth rate (CAGR) in the recent years, say industry observers.

“This is a progressive step. It will not affect the domestic tea industry, as EoUs are still not permitted to sell tea (instant tea excluded) in the domestic market. The tea growers will continue to be protected. The cap should have been raised to 50% as available for a number of products,” industry sources said.

In fact, seeing the growth prospects for this industry and also its employment creation potential, the finance minister, P. Chidambaram, had in budget 2008-09 announced full excise duty exemptions on tea/coffee pre-mixes.

Currently, EoUs are permitted to sell up to 50% of their free-on-board (f.o.b.) value of exports in the DTA. There are, however, exceptions to this norm. The EoUs are not allowed to sell motorcars, tea (excluding instant tea) and alcoholic beverages in DTA.

New Coffee Brand to Boost Farmers’ Income

Addis Ababa - The Ethiopian government launched a new coffee brand with a view to boost income of the country’s 15 million coffee farmers. The launch is seen as an innovative and radical new brand management program intended by the government to champion Ethiopia’s fine coffee export industry and the nation’s unique, distinctive coffees. It is the first time that an African nation has undertaken such a contemporary approach to developing its economy through brand management and begins a new era in Africa’s economic development and independence, according to experts in the international coffee market.

Ethiopia is the historical birthplace of coffee and exports more than 177,000 tons of coffee a year, representing about 15% of the world’s total coffee production. However, until now, the international promotion of these famous fine coffees has not been proactively managed by Ethiopia. While coffee professionals are very conscious of Ethiopia’s distinctiveness, there is a significant opportunity to broaden consumer awareness and appreciation of coffee brands such as Yirgacheffe, Sidamo and Harar.

Leading brand specialist Brandhouse was commissioned to create a distinctive and easy-to-use brand identity system for Ethiopian Fine Coffees and for the three initial trademarked fine coffee brands that will be used wherever these coffees are distributed and sold.

The new brand identity comprises a central logo for Ethiopian Fine Coffee, which takes its inspiration from the coffee bean itself, together with individual designs for each of the coffee designations. Licensees are required to feature Ethiopia’s new brand identity in their marketing as part of their licensee agreements.

A broad-based Stakeholders Group led by Getachew Mengistie, director general of the Ethiopian Intellectual Property Office, launched Ethiopia’s Trademarking and Licensing Initiative in 2004.

Licensing agreements are now in place with more than 70 companies in North America, Europe, Asia and Africa, with licensees committed to promoting Ethiopian Fine Coffees using the brand in their particular markets.

India’s Increased Tea Exports to Egypt

Egypt - The country’s existing tea production at 945 million kg (mkg) annually is likely to remain unchanged but the country’s export of tea to Egypt may increase from 5 mkg in 2007 to 8 to 10 mkg this year.

Since no fresh land is being brought under tea cultivation due to the States’ reluctance to encourage use of agricultural or forest land for the purpose, the country’s tea production is expected to remain stable, an official said. Egypt’s increased import of tea from India, to supplement its own production of 4.9 mkg, is due to the prevailing drought and political instability in Kenya which has reduced production by 20% there, Basudeb Banerjee, chairman of the Tea Board of India, who recently toured Egypt to promote the production, commented.

Prices are expected to remain globally high but the rise is unlikely to affect exports. Last year, India produced 945 mkg of tea, of which 200 mkg was exported at an average price of $2/kg. About 80-90 mkg of exports were in the category of orthodox (leaf) tea, he said.

The average productivity of tea is 1,800 kg/acre. Of the 1,600 tea estates, 22 have closed down in the recent past. However, the country has now come out of the recession felt in this industry between 1999 and 2006. Assam was the largest tea producer (51%), followed by West Bengal (24%) and the southern States, including Tamil Nadu (17%). The average per capita consumption of tea is 750 gm a year, less than in Pakistan (1 kg).

Tea & Coffee World Cup/ASIA, Hyderabad Update

Hyderabad - As November is quickly approaching, we are gearing up and getting ready for Tea & Coffee World Cup/ASIA taking place on November 20-22 in Hyderabad, India at the HITEX Convention Center, Hall 1. With more symposiums and events being added and new exhibitors signing up, this will surely be one of the most comprehensive and successful events in the industry. Remember, hotel rooms are filling up quickly, so visit www.tcworldcup/hyderabad to book your room today and to find the most up to date information.


Tea & Coffee - August, 2008
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