Wagh Bakri Tea to enter plantation business

India's third largest packaged tea company, Wagh Bakri Tea, plans to soon venture into tea plantation business and start producing tea to meet demands of its large customer base. The Ahmedabad-based company plans to buy at least five to seven tea gardens in Assam and West Bengal by 2015 and is ready to invest up to Rs 100 crore for the acquisitions.

"When the kitchen is in your command you can surely serve better dishes," said Piyush Desai, chairman and managing director of Wagh Bakri Tea Group. He said quantity of premium quality tea produced in Assam was insufficient to meet the company's customer demands. The tea producers, from whom the company presently sources tea, are unwilling to go the extra mile to produce premium quality tea in Assam. He said the volume of organic tea produced in Assam too has been stagnating despite the demand for such tea growing in the retail market.

"We had in past cajoled many tea growers in Assam to produce premium quality tea but they often shy away from producing such tea. Many producers fear at the end they might not get true value for their produce, so they don't produce. So we now plan to buy tea gardens here and produce good quality tea so that we can serve our customers better," said Desai to Business Standard. Currently, Wagh Bakri sells around 30 million kg of tea annually, of which around 85 per cent is procured from Assam.  The company's annual turnover is around Rs 750 crore.

Desai said the company has already started looking for tea gardens and would be "open" to acquire gardens in Brahmaputra Valley, Barak Valley (both in Assam) and Dooars in West Bengal. Desai said he would like to make the local producers too stakeholders in the tea gardens that he plan to acquire and such a business model is under consideration.

Desai further said that the company plans to open 20 'Wagh Bakri Tea Lounges', 10 each in Delhi and Mumbai in next one year. Presently the company has one 'Tea Lounge' in Mumbai and one in Delhi and is about to one in Mumbai soon. The company had in 2008 opened its first 'Tea Lounge' in Vile Parle in Mumbai and since then entered into the retail franchise retail format.

Wagh Bakri has good market presence in Gujarat, Rajasthan, Madhya Pradesh, Maharashtra, Delhi and Hyderabad and had recently forayed into Chhattisgarh and Goa.