Will the pandemic induced pivot to selling tea direct to consumers be the catalyst the farm-to-cup movement needed? 2020 accelerated a shift to digital media, one that many tea producers embraced. Did this bring more customers? Do online stores increase sales? Tea Biz posed these questions to Rudra Chatterjee, Managing Director of century-old Luxmi Group, a tea industry vertical that auctions millions of kilos annually. Last year the Kolkata-based Luxmi quickly adapted to selling 250-gram packets of tea directly to thousands of consumers, a pivot that Chatterjee says brings significant benefits.
Will the Pandemic and Pivot Online be the Catalyst the Farm-to-cup Movement Needed?
Aravinda Anantharaman discusses a pandemic pivot with Rudra Chatterjee, Managing Director of the Luxmi Group, which owns tea estates in West Bengal, Assam and Tripura in India, and Rwanda in Africa producing collectively 20 million kilos of tea annually.
Tea Biz: How has 2020 been for you? Did you shift to selling online?
Rudra Chatterjee: This was the first time that we sold tea directly to consumers. And the reaction is amazing because, after all as growers of tea, it’s great to hear from someone who’s drinking that tea at home. Also, for us to get feedback one week or two weeks after we produce the tea. Because tea growing is, in some ways, quite a remote occupation because … you make the tea, it goes into the auction, you get a date which is a few weeks or usually a few months away. And then you just see a price and the name of a customer. Nothing more. But here you are getting emails, questions on how to brew the tea, pictures of how they are drinking their tea … It’s fascinating for us. We are getting more and more customers from around the world but also from within West Bengal, who are reaching out to us and actually subscribing to our teas – not just buying our teas but asking for delivery once a month or once in fifteen days. Which we love. It’s been energizing for me and my colleagues who are growing the tea in the estate.
We are getting more and more customers from around the world but also from within West Bengal, who are reaching out to us and actually subscribing to our teas – not just buying our teas but asking for delivery once a month or once in fifteen days.
Do you think selling direct to customers online is here to stay?
Chatterjee: It is not still the dominant way we sell. The dominant way we sell is the auction. We depend on the auctions. We depend on the large companies coming and buying tea from the auctions. This is a very small part. Each sale online is for 250g or 500g. It’s difficult or inconceivable for us at this point to imagine we are going to sell a lot of tea like that. But one thing I have learnt through the pandemic is that whatever I thought was inconceivable happened. So I don’t know what the future holds. Even if this doesn’t become a major source of revenue for the company, it is certainly a major source of conversation. Tea planters are always great at that from who bought their tea from different parts to actually googling the place the tea order came from. It’s great fun for us. I don’t know if it will be a major part but I sure hope people see that the tea is great and they continue ordering at least at the level they are ordering now.
Are there any consumer favorites from the various Luxmi teas?
Chatterjee: So our most successful has been Makaibari, Darjeeling, which is not a surprise. Makaibari has a name that people recognize, especially people who have lived in Darjeeling at some point, they may have been to Makaibari. And so that is popular. We are seeing quite a bit of demand for green tea, and also within India, which I am quite surprised by because green tea was never sold to the domestic market – it was always sold to Amritsar and from there, exported.
In general there has been interest in all our teas, whether it is the Rwandan teas … and the comments are very knowledgeable. There was one about how the Rwandan tea was very bright in colour which is exactly the right description for it, that is a tasters description, it’s a brisk and bright tea. And the discussion of the first flush vs second flush in Darjeeling. How the first flush is mellow. Also, I think people being at home, they probably had more time to brew the tea in the right way. People are much more curious when they buy from estates, what kinds of teas are being grown and produced this time of the year, so those kinds of conversations are very encouraging.
What are the advantages of selling direct to customers?
Chatterjee: I think one of the really interesting outcomes of being able to sell the tea is that there is a better margin for producers when they sell directly. There can be much more fair trade and what percentage of the revenue of these tea packets can go to the people who are working. Because we don’t see the front end of the business as producers and the front end who are the retailers don’t see the issues we are dealing with either. Even if we do very little of the whole gamut, even if it’s 5% of our business, we understand the whole issue and the challenges which are very difficult to solve. The workers, their wages, their education, their health, in an environment where there is no margin in the business as a producer. Yet there is significant prices that the final consumer pays. How much of it goes into packaging, on advertising and other things. And how much of it should come to developing healthier environment at the production site. All these conversations are things that will become more relevant, more discussed as we run the whole gamut even for a small part of the business.
Has it been challenging to get online and adopt to this new way of business?
Chatterjee: It hasn’t been challenging at all. Tea estates are designed for sending samples and we are sending samples to buyers around the world regularly. It just happens to be B2B buyers and we just happen to have a courier system that works. Someone who knows how to make that work. Doing a B2C sale – I guess the volumes are so small so it’s okay. If the volumes were to get bigger, we need to train some people in the estate which would be a fantastic thing for the people, to train workers to become logistics guys. That will be a great opportunity for the workers. I am quite excited overall.
I have set up an alarm when there’s a sale – it happens 4-5 times a day but when it happens I WhatsApp it to the manager who has produced the tea. Any email is immediately answered because people are very excited. It’s just the knowledge of what the customer says about the product, what they think about the brewing. There was one comment where someone said, I know you are not supposed to have Darjeeling with milk but I love my Darjeeling with milk, and the manager says, if you want it with milk, maybe I will make a stronger brew and send you something. As a consumer I am very excited as well, to be an individual customer and asking for your own processed product, in a product like tea. For many consumers, tea is like sugar and milk and you never thought you could get it changed based on your preferences. But you can. It’s cooking. So if you want your tea with milk you have to make sure you have a stronger leaf which holds your milk. And so all of these things are, I think it’s a good move, and combined with the fact that I have also seen – we have a hotel in the estate that we started a few months ago – I have actually seen people visit the tea estates. The combination of hearing from customers and seeing customers in tea estates is – the first time for more than 100 years in the history of Luxmi tea, this is happening. It’s quite amazing.
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