Consumers in the United States are expected to see a spike in prices of Indian tea during the months of September-October when the impact of the tariff hike is expected to take effect, said Gujarat-based tea producer Wagh Bakri that exports 10-12 percent of ₹3,000 crore worth of tea it sells annually.
“The US is our number one export market. The second biggest market is the middle-east. Then comes Europe and Australia. India is the largest grower of premium black tea. There are other tea-producing countries like Indonesia and Kenya, but their tea quality is of a lower grade. So Indian tea is one of the best options for consumers looking to have good black tea. Secondly, the US does not produce any tea. So with the increase in tariffs, there will be an inflation in prices as no distributor or company will be able to absorb 50 per cent tariff. If the tariffs play out, consumer prices will increase in the US,” Sanjay Singhal, CEO of Wagh Bakri Tea Group told businessline.
Three kinds of tea get shipped to the US market from India. One is loose tea. Second are private labels – belonging to large US based retail chains like Walmart – that are manufactured in India and get shipped. Third is packaged tea sold by companies like Wagh Bakri. All these three categories are likely to get affected by the US tariffs. “This is the time when maximum Indian food products get shipped in anticipation of the upcoming Diwali festival. A lot of our tea are currently at sea, enroute to the US, as container cargo. These will reach in 2-3 weeks. We will have to see how it goes once the consignment reaches the US. The US tariffs were imposed after the container left Indian shores,” Singhal said adding that the tea sold by Wagh Bakri reaches shelves in the US market during September and are meant to cover the spurt in sales that happen during the Diwali festival in October.
Wagh Bakri exports about four million kilograms of tea to 66-odd countries every year. Though the tea brand anticipates a possible “destruction in demand” if the US tariff takes effect, it feels that it will continue to grow by 12 per cent in the US market. “The consumption of Wagh Bakri tea is no longer restricted to the Indian community in export markets in the US and Europe. Now we are seeing even locals taking a liking to our tea,” the official remarked.
In the domestic market, Wagh Bakri is expecting to clock a single-digit growth rate during the current fiscal. “The challenge in the tea industry is that there is no volume growth. Last year the raw material prices increased in the industry and the volume growth was just 1-2 per cent and the growth in value terms was 5-6 per cent. This year, the prices of tea are declining and so where will the growth come from? The second challenge is to make tea consumption interesting for the younger generation. Tea falls in the beverage category, the youngsters of today have a lot of choices. In the last five years, coffee has grown well but tea is not growing like other beverages. In our FMCG business we are focussing on more innovative applications of tea like ice tea or instant tea. We feel that if we focus on instant tea we will be able to bring in more younger consumers,” Singhal added.
Published on August 16, 2025
