Luxmi Group, owner of Makaibari, ups branded play with British buyout

Luxmi Group, which owns iconic Makaibari tea estate, has acquired a majority stake in Brew Tea Co, a UK-based retailer, marking a strategic expansion of its branded tea portfolio and global presence

The acquisition of Brew Tea, a British tea brand, would help Luxmi Group -- owner of the iconic Makaibari tea estate in Darjeeling -- expand its branded portfolio and strengthen its presence in the international market.

 

Luxmi Group announced the acquisition of a majority stake in Brew Tea last week. Founded in Manchester by Phil and Aideen Kirby, Brew Tea Co prides itself on using rolled whole-leaf teas, no dust, no mass-market short-cuts. With a digital-first model, it now reaches about 10,000 homes across the UK.

 

Phil and Kirby would retain a 20 per cent stake and continue to lead Brew Tea Co as part of the arrangement, while Luxmi would have 80 per cent.

 

For Luxmi, the Brew Tea deal ticks key boxes in its strategy, mainly, focusing on quality and branding.

 

Brew Tea offers some of the finest Assam, Darjeeling, and African orthodox leaf teas, says Rudra Chatterjee, managing director, Luxmi Group.

 

“These are among the highest quality teas in the black tea category. The premium pricing reflects this, as whole leaf teas command a premium over CTC and broken leaf varieties,” he said.

 

The brand is available in over 200 Waitrose stores, through online subscriptions, and across hundreds of independent cafés in the UK.

 

The partnership aims to create a direct farm-to-cup model.

 

The Luxmi Group has a significant exposure to tea estates, producing about 35 million kg annually across Assam, Darjeeling and Rwanda. 

 

Will Brew Tea source tea from these estates? There is no compulsion to source from Luxmi, Chatterjee notes.

 

“However, Brew Tea sources a significant portion of its teas from Assam, alongside Darjeeling and select African origins. We happen to produce some of the best Assams, Darjeelings, and Rwandan teas. That said, all sourcing will happen at arm’s length and at market pricing.”

 

Over 2018 and 2019, the Luxmi Group scooped up quite a few tea gardens across Rwanda and Assam. Rugabano in Rwanda was a greenfield in 2016, and has emerged as the largest estate in the group.

 

But there is a lot of focus now going into branding and forward integration.

 

“While we acquired estates about five years ago, the current focus is to improve those estates which take years of diligent farm practices while building the front-end of the business,” Chatterjee explained, adding, “both are long term bets on tea.”

 

Luxmi’s B2B will continue to be the core of its operations.

 

“At the same time, strengthening the B2C side helps us understand the consumer better,” Chatterjee added.

 

About 20 per cent of Luxmi Group’s revenues come from branded sales. The Makaibari estate, which came into the Luxmi fold in 2014, is almost completely sold in packet form, apart from the tea that goes for the Honest Tea brand.

 

In 2023, Coca India tied up with Makaibari to launch a ready-to-drink iced green tea under the Honest Tea brand.

 

Stagnating prices, climate change, low yields, the Darjeeling tea is faced with problems galore. For Darjeeling, the only sustainable path forward is through branding, ecologically sensitive high-end tourism similar to Bhutan, and promoting honey and horticulture alongside tea, according to Chatterjee.

 

Through offline and online channels, Makaibari and the Luxmi Group are pushing branded sales. In a B2B model, where most producers sell in bulk form, there are just a handful of companies besides the Luxmi group which are trying to build brands, Goodricke, Jay Shree Tea are among them.