Wagh Bakri to diversify into tea plantations, coffee

Company is on the lookout for gardens in Assam

After 35 years, Gujarat-based Wagh Bakri group, one of the established regional packet tea players, is looking to diversify into coffee and tea plantations. “The board has cleared this diversification,” said Piyush Desai, chairman and managing director of Wagh Bakri. The extension into coffee, however, would be under a new brand name and not Wagh Bakri.

“The distribution channel would be the same for packet tea and coffee. The total investment is likely to be Rs 30-50 crore,” said Desai. In plantations, Wagh Bakri is on the lookout for gardens in Assam.

“We are interested in a clutch of gardens and not a single garden,” he explained. Together, the gardens are likely to produce  three to five million kg.

What has prompted Wagh Bakri to consider entering the plantations business is that sourcing quality has become difficult. “In many cases, even when you buy from big gardens, the tea is mixed with tea from bought leaf factories and there is no distinction in the garden mark,” said Desai.

Wagh Bakri packets around 40 million kg of tea. “Of this, 25 million kg is sourced from Assam gardens,” said Desai. A small portion is also sourced from Sri Lanka and Kenya. If the import duty is brought down, Wagh Bakri could increase sourcing from Sri Lanka and Kenya.

At present, the duty on Sri Lankan tea is around 15 per cent and Kenyan at 100 per cent. “A small amount of Kenyan tea, when blended, gives great colouring which doesn't happen with Indian tea,” Desai added.

Kenyan tea is used in Wagh Bakri's premium brand, Good Morning. The group has a turnover of Rs 900 crore and is hoping to close the year with Rs 1,000 crore.

WAGH BAKRI AT A GLANCE

Volume:
40 mn kg in packet tea

Annual turnover:
Rs 950 cr
Market presence: Gujarat, Madhya Pradesh, Maharashtra, Delhi, Hyderabad, Chhattisgarh and Goa