Shortfall in production makes tea pricier, monthly household grocery bill shoots up

Pune: Your daily cup of cutting chai is about to become a little more expensive.
Tea vendors have already started adding Rs 1-2 to the price per cup, and in retail, the cost of tea rose by Rs 15-20 per kg compared to last year.
Tea manufacturers said that prices may rise further in 2025. "I recently realised that I have started paying more for tea. We consume about 8-10 cups of tea at home daily, so overall, it has definitely pushed up my grocery bill," said Shreya Kamdar, a resident of Vimannagar.
The demand-supply scenario governs the tea price levels in India. "The production decline in 2024 was due to a combination of early season drought in North India with heightened pest activity owing to chemical compliance initiatives taken by the industry. Early closure of the season in North India added to the decline in production. As chemical compliance becomes more stringent in 2025, we may likely see further loss of crop. The market shall be buoyant in the early season, but thereafter, the production expectations shall drive the market price levels," said Atul Rastogi, director, Luxmi Tea.
Tea Board of India data shows that all India tea production was 1393.60 million kg in calendar year 2023. In calendar year 2024, tea production declined to 1284.80 million kg. This indicates a drop in production of 108.80 million kg on a year-on-year basis.
"The price of commercial tea powder increased by Rs 10-12 per kg and many of our members raised prices by Rs 1-2 per cup last week," said Pramod Wakode, who heads the Tea Coffee Association, which consists of 10,000 small & medium vendors pan India.
Kolkata-based Sumit Shah, executive director, Madhu Jayanti International, who also implemented a price hike for some of their products, said, "Average prices moved up by about Rs 25-30 per kg in retail markets. Bulk of the tea consumed is a lower category variety and prices went up in this segment. Prices moved up in 2024 because of FSSAI crackdown on tea gardens for large use of pesticides. Many tea gardens have now figured out alternatives, but yield is likely to be lower this year."
Bought leaf tea factory owners are facing the heat of FSSAI directive on pesticides. "Since we buy tea leaves from small growers across the state, we really don't have control over which gardens use pesticides or the quantum used. This is why many of the final products are not passing quality checks," said a bought leaf tea factory owner in Siliguri. The crunch in good-quality supply is also pushing up prices, said wholesale tea buyers.
"Owing to decline in production, we sold tea at a 12% higher price in 2024 on a YOY basis. 2024 was also the first year when dust tea was sold more or less 100% in auctions, as mandated by the Tea Board. That helped secure higher prices as well due to funnelling of competition. The export volume also improved owing to dwindling supplies from Sri Lanka and easing of tension in the Middle East. However, we expect tea prices to weaken in 2025 as production levels may improve from season 2024 level," said Gaurav Jalan, director, Doomni Tea Estate, Assam.
Rahul Guha, director, Crisil Ratings, said, pre-Covid prices remained range bound between Rs 150-160 per kg, which increased to 190 per kg during Covid. This time prices crossed Rs 200 per kg mark which is a historic high. "In calendar year 2025, the production is again expected to back to normal levels given players have done capex on irrigation to mitigate the risk of uneven rainfall to a large extent. Global warming is impacting tea production and quality. Hence, a lot will depend on temperature as well. Tea prices are expected to remain elevated on account of low carry forward stock and steady demand," he said.