Raw tea leaf prices crash 50% amid surging imports and weak export demand

Prices of raw tea leaves produced by small tea growers crashed nearly 50% year-on-year in August to Rs 14 per kg due to rising imports of comparatively lower-priced tea from Kenya and Nepal, and uncertainty over Trump’s tariffs impacting export demand from the US.Consequently, retail prices of processed tea, already on a downward spiral, are likely to ease further, industry executives and consumer goods companies Hindustan Unilever (HUL) and Tata Consumer Products (TCPL) said recently. Retail price of tea is currently trending 10-15% lower from the levels seen in last July-August period.The sharp fall in raw tea prices is impacting an estimated 24-million small tea growers in Assam, West Bengal, Himachal Pradesh, and South India, who grow teas in small parcels of 1-5 acres. These growers contributed 54% to the country’s total tea production in 2024, according to Tea Board of India data. To be sure, prices of raw tea have been under pressure since April-May, selling at Rs 22 per kg. “Black tea tea imports have shot up as Kenya’s production is more and they exported to India at a lower price, bringing down overall prices,” said Bijoy Gopal Chakraborty, president of Confederation of Indian Small Tea Growers Association (CISTA). As per government data, India’s tea imports doubled to 50.14 million kg in FY25 from 25.21 million kg in FY24.India exported around 17 million kg tea to the US, comprising around 7% of its total tea exports of 255 million kg—the highest in a decade.Tea prices have also fallen due to over production, pointed out Viren Shah, managing director at Gujarat-based Jivraj Tea. “At the retail end, we do not see an immediate recovery in prices,” he said.India produced 359.32 million kg tea in the first half of 2025, a 4% rise from a year earlier.Average auction price of common variety or CTC black leaf tea fell to Rs 236 per kg from Rs 267 per kg between April and mid-August, according to the Calcutta Tea Traders Association which tracks tea prices auctioned in Kolkata. Dust variety tea dropped to Rs 269 per kg from Rs 277 per kg in the period under review. Locally, retail prices of processed tea have fallen 10-15% year-on-year during July- August.Tea prices are about 13-15% less than last year as per recent auctions, and the trend is expected to stay weak for the rest of the year, Sunil D’Souza, managing director at TCPL told analysts in July.HUL too has adopted a pricing strategy for tea based on replacement cost instead of consumption cost. In its earnings call on July 31, chief financial officer Ritesh Tiwari said a substantial portion of the company’s tea was procured seasonally between June and September last year, when commodity prices were at its peak.“Over December and March quarter, tea prices have sequentially softened. Consequently, while the cost of the tea consumed during the quarter was higher, we decided not to pass on the full cost to consumers,” he said. Tiwari also noted that consumers have downgraded their tea, making it a very price-sensitive category, leading HUL to price it at replacement cost. “The (new) crop is a good production crop and all things point now that sequentially prices will come off,” he said.