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Motilal Oswal Report
Tea prices in North India have increased to Rs 261/kilogram (weighted average) over April-September 2020 (versus Rs 162/kg during the same period last year).
Note that all India weighted average tea prices have increased to Rs 224/kg (versus Rs 149/kg last year).
In this note, we have analyzed the impact of the increase in tea prices on Tata Consumer Products Ltd. in the near term as well as over the long term.
Key insights highlighted below -
Lower supply and higher demand drives Indian tea prices higher - India is the largest producer of black tea in the world and accounts for the highest consumption of tea globally.
In FY19, tea production in India stood at 1,350 million kg. Of this, 1,090 million kg was consumed domestically (81% of India’s production) and balance 260 million kg was exported.
In FY19, Tata Consumer Products sold 124 million kg, accounting for 11% of India’s total tea consumption.
The company has approximately 20% volume market share in the domestic organized market.
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