• Tea Biz Podcast | Episode 24

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    Hear the Headlines

    | Logistics Companies Invest to Right the Ship
    | Kenya’s Newly Elected KTDA Board Ousts Executives
    | Hain Celestial Streamlines its Tea Selections

    Seven-minute Tea News Recap
    Tea Price Report

    A special auction conducted by the Tea Board of India across auction centers featured a carefully curated catalogue of teas, plucked on the International Tea Day on 21st May. This special sale saw record prices that brought welcome energy and excitement to the industry. Read more…

    Features

    Tea Biz this week travels to Darjeeling, India where Dorje Tea, an innovative new tea venture is taking root at the Agarwal family’s ancestral farm at Selim Hill Tea Garden … and then to the Jersey Isles off the coast of France where Alicia Gentili, project manager and tea maker at Jersey Fine Tea, discusses the challenges and rewards of establishing a new tea garden in the English Channel.

    Dorje Tea co-founders Sparsh Agarwal and Ishaan Kanoria, right.

    Reviving Darjeeling

    By Aravinda Anantharaman

    Sparsh Agarwal is the fourth generation in his family to cultivate tea in the Himalayas but, as you will hear, he is not bound by tradition. Agarwal and Dorje Tea co-founder Ishaan Kanoria are targeting India’s domestic market, offering a subscription model that delivers Darjeeling tea from all four plucking seasons that will improve profitability and give Selim Hill Tea Garden a second chance.  Read more…

    Sparsh Agarwal on marketing Darjeeling’s seasonality domestically
    Alicia Gentili, project manager and tea maker at Jersey Fine Teas

    Splendid Tea from the Isle of Jersey

    By Dananjaya Silva | PMD Silva

    Camellia sinensis is a versatile plant that is grown in many parts of the world, observes Tea Biz correspondent Dananjaya Silva. At 49 degrees latitude, Jersey, the largest of the Channel Islands situated between England and France, is much further north than traditional tea lands, yet the island is proving to be fertile ground to produce fine loose-leaf tea. Silva talks about the challenges of growing tea outside its comfort zone with project manager and tea maker Alicia Gentili from Jersey Fine Tea. Read more…

    Alicia Gentili on growing tea on the English Channel Island of Jersey
    MSC Ship
    MSC operates the world’s second largest container fleet by TEU

    Logistics Companies Invest to Right the Ship

    By Dan Bolton

    Shortages of raw ingredients for beverages and higher shipping costs continue the saga of supply chain woes into summer. Last week Starbucks’ customers found green tea in short supply along with chai tea bags and oat milk. No single item has disappeared from the menu, but Reuters found temporary shortages at nine major fast-service chains are widespread.

    Less obvious are the costs passed along due to more expensive air and sea transport and a shortage of truckers. Reserving a 40-foot container to ship tea from Shanghai to Los Angeles cost $6,368 in June, according to the Drewry Freight Rate Index. Delivery to Chicago from Shanghai normally takes 35 days (including 33 at sea) but shippers now estimate 73 days for delivery as port-to-destination times have doubled. When premiums are added to secure equipment and vessel space is included, the effective West Coast rate for landing tea from China ends up being about $8,000 to $11,000 per FEU (forty-foot equivalent unit), according to the Journal of Commerce.

    At the consumer level, this means online orders for tea must now meet $50 and $75 thresholds to qualify for free shipping and that four-week delays are common. Observers predict that the kinks in the supply chain will persist through 2022.

    Biz Insight – Global container fleets are consolidating as shipping companies put new-found money to work acquiring vessels and ordering containers. Swiss-owned MSC (Mediterranean Shipping Company) has acquired 70 ships since August and has an orderbook of 800,000 TEU for new ships. The buildup in demand shows no sign of abating as consumers spend pandemic savings and economies emerge from lockdowns.

    Kenya surge
    Kenya is home to 658,000 tea smallholders

    Newly Elected KTDA Board Ousts Executives

    Newly elected Kenya Tea Development Agency (KTDA) directors and chairman David Muni Ichoho on June 22 were escorted by police to their offices in the KTDA headquarters in Nairobi.

    KTDA’s Peter Kanyago, who had been at the helm of the tea agency for 26 years, was forced to relinquish his position after he was unseated in a local election April 25. KTDA CEO Lerionka Tiampati and other senior staff were given compulsory leave. Ichoho announced an internal investigation to determine culpability for potential malpractice and possible abuse of office.

    Kenya’s tea farmers collectively own 66 of the nation’s tea factories. They contract with the Kenya Tea Development Agency (KTDA) to pay for what they produce and to market their tea.

    During the past two years local concerns about a ‘tea cartel’ and a new administration in Nairobi led to legislative reforms that permit factories to replace directors by conducting special elections. The previous system awarded votes by share. Board members found they only had to please the largest farmers. Now it’s one man, one vote. Ousted board members challenged the Tea Act, 2021 in court and consider any special elections conducted between March and May invalid.

    Ichoho’s first official act was to notify the organization to accord full recognition and cooperation to the new board as it takes over factory management, “We wish to assure all stakeholders that the operations of the group are running smoothly without any interruptions.”

    He told the Kenya News Agency that “Procurement contracts will also be reviewed to ascertain value for money and determine if the services and goods were obtained within the market benchmarks.”

    “The reform journey began in earnest on 14th January 2020, with the directives by His Excellency the President of the Republic of Kenya, following outcry by over 658,000 farmers over dwindling fortunes as it became clear that the tea value chain governance structures had been captured by some individuals and groups of persons for their own selfish interests at the expense of the principal stakeholders – the tea farmers,” said Ichoho.

    He said KTDA abdicated their core responsibility of serving the best interests of the farmers.

    “It is against this background that shareholders made a decision to exercise their rights to make leadership changes with a view to charting a new direction towards a sustainable and profitable farming in tea sub-sector for smallholders. The farmers, towards this objective undertook to elect new leaders from the shareholders as Factory Directors and Board members for the KTDA Holdings,” Ichoho said.

    A spokesperson at a non-violent late-night protest predicted that a case before Kenya’s Constitutional Court would find the government’s actions unconstitutional and reinstate the old board.

    Ichoho said that all cases brought by or that have been filed by KTDA challenging the Crops Industry Regulations, 2020, and the Tea Act, 2021 will be discontinued with immediate effect.

    “The Company will support full implementation of the Tea Act 2020 and will no longer pursue avenues that are against the interest of over 600,000 small holder farmers,” according to the Kenya News Agency report.

    On June 18, 2021 KTDA elected the following: David Muni Ichoho as chairperson with board members, Michael Kamau Ngatia, Paul Mwangi Kagema, Enos Njiru Njeru, John Mithamo Wasusana, Geoffrey Chege Kirundi, Abungana Khasiani, Erick Kipeyegon Chepkwony, Thaddeus Mose Mangenya, James Ombasa Omweno, Wesley Cheruiyot Koech and Baptista Muriki Kanyaru.

    Patrick Ngunjiri was appointed Acting Company Secretary.

    Celestial Seasonings
    Celestial Seasonings offers 105 varieties of tea.

    Hain Celestial Simplifies Tea Selections

    US grocery stores enjoyed a strong 2020 and in 2021 pandemic stickiness is apparent for e-commerce convenience and at-home meals, according to Coresite Research which reports that as of June US retail store closures are down year-over-year for the first time since the initial lockdowns.

    Half of Americans now say they would feel “very comfortable” shopping in a physical store during the next three months, compared to 29% in the year-ago period according to SafetyCulture. When they return, consumers will discover that higher ingredient costs, packaging, shipping expense and eroding brand loyalty convinced food manufacturers to simplify their offerings.

    General Mills anticipates raising its prices 7% globally over the next year. “We are ending one period of significant consumer disruption only to start another,” Chief Executive Jeff Harmening told the Wall Street Journal. “The next few months will be especially critical for our brands as the world transitions to a new normal.”

    Tea manufacturer Hain Celestial has a big footprint in grocery with thousands of SKU (stock-keeping units) – far too many according to Mark L. Schiller, president and chief executive officer. Schiller told investors that shedding 20 brands, discontinuing 1,000 SKUs proactively before the pandemic and really simplifying the way we operate …” were the cornerstones of a simplification strategy that has increased margins.

    He told Food Business News that he is transitioning the $2 billion Hain Celestial Group from a holding company to an operating company. The new focus is on innovation vs. additional flavor varieties, he said.

    “So, instead of ‘here’s the 37th flavor of Sleepytime tea,’ ” he said, “we’re bringing tea with energy, tea with melatonin, tea with probiotics and gut health and immunity and things that are much more incremental in the category, cold brew tea, K-cups, things that really are going to help the retailer grow their category and therefore, earn their space.”

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    Dan Bolton

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  • Reviving Darjeeling

    Selim Hill
    Selim Hill gets a second chance. Photo courtesy Dorje Tea.

    Brand Appeals to Domestic Consumers to Revive Darjeeling

    Dorje Teas, a Darjeeling brand launched in June, takes its name from the region’s Tibetan origins: Dorje Ling or Land of the Thunderbolt.

    Founders Sparsh Agarwal and Ishaan Kanoria are targeting India’s domestic market and offer a subscription model. The brand’s origins lie in Selim Hill, one of Darjeeling’s tea gardens that belong to the Agarwal family. Alongside the launch of Dorje Teas, Selim Hill is also reviving the Selim Hill Collective. Among other things, it has brought Rajah Banerjee, the man who built Makaibari tea gardens, back as chairperson of the collective and as a mentor to Ishaan and Sparsh.

    The Agarwals’ connection with tea spans four generations to a time when Sparsh’s great grandfather sold tea chests to gardens and became a garden owner himself. About 30 years ago, the family acquired Selim Hill, a tea estate located right below Kurseong. The estate cover 1,000 acres, rising in altitude from 1000 to 4000 ft. The lower division is forest cover, with a rich bio-diversity. “We have a lot of elephants here. Hornbills are spotted regularly. Leopards too,” says Sparsh. The factory is in the upper-division with a bungalow restored and rechristened as the Second Chance Home because Dorje Teas is about second chances.

    Sparsh Agarwal
    Sparsh Agarwal

    Listen to the interview

    Sparsh Agarwal on reviving Darjeeling’s tea gardens.

    Like many of Darjeeling’s tea gardens, Selim Hill has not been profitable for a long time now. The irony of Darjeeling is that despite being a producer of fine teas, its 87 gardens constantly struggle against a barrage of problems, from climate change to socio-political turmoil and, now, the pandemic. Darjeeling’s dependence on exports further compounds this. Sparsh explains that the gardens are run mainly by absentee landlords — referring to the fact that most garden owners do not reside on the estate — which he cites as a problem.

    When the pandemic arrived in 2020, the Agarwal family thought it was time to sell Selim Hill. The loss of the first flush, following the lockdown announcement, seemed like the final straw. “But Selim Hill also occupies a very special place in the hearts of a lot of family members, and also friends of family,” says Sparsh. He had just graduated from Ashoka University with a degree in political science and international relations. He was starting work as a Research Associate at The Centre for Policy Research when he asked his parents if they would be open to exploring ways to keep the garden and not sell it. They agreed.

    When the lockdown was lifted, he drove up to Selim Hill from the family home in Kolkata. From then on, he began spending every other week at Selim Hill.  These trips brought the realization that it needed a structural makeover if he needed to save the garden. He was joined by Ishaan Kanoria, “who also has an intimate connection with the garden,” and they began brainstorming.

    • Selim Hill

    During the next six months, they restored and repaired the assistant manager’s bungalow at the garden, “We needed to live in the tea garden itself if we wanted to revive it. We needed to live with the local community, understand what the problems are. Only then could those problems get solved. So we renovated the house. It’s a heritage structure, built in 1871. We were in contact with the former owners, to keep fidelity to the structure,” he adds. Sparsh’s mother renamed it “Second Chance,” symbolic of what they were trying to achieve when the building was completed.

    During these months, the Agarwals also reached out to Rajah Banerjee, who formerly owned the Makaibari tea estate in Darjeeling. Since sold to Luxmi Tea, the garden is legendary for its teas and for bringing bio-dynamic farming practices into mainstream conversation. Among other things, Banerjee built Makaibari as a formidable brand, one that still works in its favor today.

    Conversations ensued. As they began to articulate the problems that troubled Selim Hill – and indeed, most of Darjeeling’s tea gardens — a business plan for Dorje teas took shape.

    Darjeeling has been “inaccessible, unaffordable, or just unavailable,” to the Indian consumer, says Sparsh. Yet, his research showed that India has been a significant market for Darjeeling tea and that only half of the 10,000 metric tons of Darjeeling is exported. Kolkata has always been a market, but what about the rest of India? was a question that came up. Along with, ‘Why were gardens making losses despite producing excellent and rather expensive teas?’

    “The problem was in the four flush system that exists in Darjeeling,” says Sparsh. “The first and the second flush that gets exported sells for fancy prices. And yet, tea gardens are not able to break even. So obviously the problem lies with the monsoon and the autumn flush, maybe the monsoon more, and the autumn less.”

    Seasonal tea from Darjeeling
    Seasonal Teas from Darjeeling

    The other problem, they found, lay in the complex grading system of tea as whole leaf, brokens, fannings, and dust. The tea that comes out of the dryer or the Dryer Mouth Tea, continues Sparsh, is ready for consumption. But to create a uniform tea favored by the export market, this tea is cut and then graded. “To make the uniform whole leaf grade, we create the residue of the brokens, fannings and dust. Only 30% of the tea is sorted into the whole leaf grade and sold at a profit. So, we are not trying to cover the losses of the monsoon or autumn flush, but we are trying to cover the losses of the residue of the first and second flush themselves.”

    More research showed that this step of breaking the whole leaf tea was a recent addition – no older than 30-40 years, and not how Darjeeling tea has been made traditionally.

    Sparsh’s other dilemma was the hierarchy between the flushes, where the first flush is considered the best flush while the monsoon has suffered as the least preferred. He finds a high-fired monsoon flush tea with its smokey flavor “almost like a lapsang souchong” while friends and family in the tea business pronounced it a defect. Where he thought the tea worked well with a drop of milk, he was told you can’t add milk to a Darjeeling.

    The duo was determined to give every flush its rightful due, celebrating the unique flavour, aroma, and story they carried. They sought inspiration in how vineyards in the 80s created a model that allowed them to showcase every season’s produce but have a ready market for it, with a subscription model. “We don’t have to be dependent on the export market, which requires us to break and cut the teas. The customer gets a better product. The garden gets a better deal. And the best thing about this is that we’re able to make Darjeeling tea affordable,” says Sparsh.

    The pricing has been critical — the subscription costs INRs 2,300 ($31 per year), with four deliveries offered, one every season. Subscribers get 250g of whole leaf tea packed in a custom-sized bag, designed not to break the leaves. This pricing puts them closer to the most affordable Darjeeling in the market, which are Lipton Green Label and Makaibari’s Apoorva tea. At present, Dorje offers a black tea plan and a green tea plan, two tea types that have a ready market in India.

    Sparsh recalls that “many years ago I had the good fortune of working at the Islamic Arts Gallery at the Metropolitan Museum in New York. One of our projects was on a Persian carpet. And I remember Navina Haidar, the person I worked under, explaining to me the concept of tawheed and the oneness of God and how that is represented in the Persian carpet. And how the Persian carpet is supposed to be imperfect.” He draws this analogy to talk about the inconsistency of the tea leaves that go into the Dorje packets, insisting that in this inconsistency lies the charm of a fresh farm product.

    Dorje Teas is a new generation tea brand that takes the consumer even closer to the place of origin, recognizing the new-age Indian consumer as its audience while resetting the tea business to place value and quality at its center for both producer and consumer.

    Says Sparsh, “If Darjeeling is to survive, if there is to be a Darjeeling tea Renaissance, it has to be with Indians. Indians need to understand the handicraft of this industry and they need to want to support it, because this is one of the most phenomenal products that India has ever made.” 

    His vision may prove to be a new narrative for Darjeeling tea.

    The view from Selim Hill
    View of the Himalayas from Selim Hill

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    Aravinda Anantharaman

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