Podcast

Episode: 401 |
Rudra Chatterjee:
The Tea Industry:
Episode
401

HOW TO THRIVE AS AN
INDEPENDENT PROFESSIONAL

Rudra Chatterjee

The Tea Industry

Show Notes

Rudra Chatterjee is a writer, and the chairman and managing director of Luxmi Tea. While he writes predominantly about politics and economics, he is also vastly knowledgeable about tea. In this episode, he talks about various aspects of the tea industry from growth to distribution. 

Rudra can be contacted through LinkedIn, and you can learn more about his company and buy tea at luxmigroup.in or makaibari.com

Key points include:

  • 03:10: The birth of the tea industry in India
  • 07:55: The tea plantation organisation 
  • 14:31: Increasing the long-term value of the plantation
  • 20:11: The relationship between the owners and workers of the plantation
  • 29:27: How to ensure a top-quality cup of tea

 

One weekly email with bonus materials and summaries of each new episode:

Will Bachman 00:01
Hello, and welcome to Unleashed the show that explores how to thrive as an independent professional. I’m your host Will Bachman. And I’m so excited to be here today with my good friend ruder Chatterjee. And who is the chairman of luxmi tea, and we’re going to talk about the tea industry. Rudra Welcome to the show.

Rudra Chatterjee 00:22
Thank you. Well, good to be back.

Will Bachman 00:24
So Rudra thank you so much for coming on today. To give us just an overview of the tea industry, I’m really interested in this, you know, sector of the agricultural industry. Um, maybe you could start by just kind of giving us a broad overview of the entire value chain of tea, and then we can do a bit more of a deep dive on production. But just from from production all the way to my my, my cup of tea. In the United States, let’s say what what are all the different stages of the value chain?

Rudra Chatterjee 00:59
Sure. So tea grows mostly in China, India, Sri Lanka, and Africa. And the two big varieties, it’s green tea and black tea. Both grow from the plant camillia sinensis, which can have an Assam variety, or a Chinese variety. This tea is harvested either in small states or in larger states. And then, depending on the kind of tea you drink, it’s processed into green tea, which is not oxidized. So it’s either steamed or fried, or oxidized, which is black tea. So that TV being produced and goes mostly to the auctions in Calcutta, in Mombasa, in Colombo, by Packaging Companies, the largest art, Lipton and finding and then brought to the supermarket shelves in the United States, that has been the traditional way it has been sold over.

Will Bachman 02:17
Okay, so a few questions here, um, green tea and black tea. So that can come from the same plant picked at the same time, but it’s just different ways that you treat, treat the leaves.

Rudra Chatterjee 02:29
That’s right.

Will Bachman 02:30
Okay. And just so I understand some of the basics here, a psalm and Chinese tea, those are like different sub varieties of the of the tea plants. So those are actually like different plants.

Rudra Chatterjee 02:42
That’s right. Same family, but different plants. Okay.

Will Bachman 02:46
Talk to me about a, what do we mean by a tea estate? You know, talk to me about the actual production process of tea. You know, who is doing the work? What, what’s the annual cycle? Like? Is it harvested all at once or continuously? What just walk me through the life of a TST?

Rudra Chatterjee 03:10
Sure. So the T stage is actually a British concept. When the British were importing tea from China, it costs them so much money that they were going bankrupt. So they had to figure out a way to pay for the tea. So the first thing they tried to do was grow opium in India and get the Chinese hooked onto opium and use the proceeds of that money to buy tea from China. Not obviously, it wasn’t something that the Chinese people like for radon and that caused the Opium War between England and China. That’s how Hong Kong came to Britain. But at that time, there were some people in India, we’re working in the Botanical Gardens, British people. Awful. Robert Bruce was the most famous one who wondered whether since Britain had already colonized India, whether they could grow the tea in India instead of, you know, selling opium and fighting battles, or going bankrupt in the process. So that’s how they started producing tea commercially in India. To do that, they went and annexed the territory, which produces tea and clear out massive forests. They brought what Assam had very few people at that time. So they brought the tea workers from another part of India and stole Chinese tea bushels and planted it in Assam. So along with the SMEs variety, there was the Chinese right. So to do all of that, they basically had to have a big commercial process. And that’s where and estates rather than having small farms in the way the Chinese or the Japanese would go to. So the Indian tea farms tends to be much larger than the Chinese Devam. So usually, you know, 1000, Hector’s or 2000 Hector’s. And the same is true for Africa, where the tea farms in Kenya or Rwanda, Malawi, these are large farms, because these were basically done by Europeans. They weren’t part of the African tradition or the Indian tradition. So they stayed today works with a factory, which processes the tea, and large land, which has roughly 15,000 bushels per hectare, which tend to be locked on a cycle of once a week. If you’re in India, where it’s seasonal, so during the dry season or the winter season, you won’t be getting the tea growing. So the tea growing period starts from March and ends in November. The besties are wrong during the first flush, which is in March, and the second flush, which is towards the end of May or June. But in Africa, because you’re on the equator, there’s no such difference every day is a good day to produce the there, there tends to be even at the equator, some dry months, where the tea production is slightly lower. But big variability that you see in India does not exist in Africa. So that’s the that’s that’s how it is produced. And in this stage, the what comes out of an estate is poorly produced black or green to usually then sent to auction centers. So it is in Assam, and Darjeeling would be sent to Calcutta and t ‘s and Africa would be sent to Mombasa. And that’s where people would send out samples to buyers, you would have in the past, it used to be public outcry. Now it’s your auction. And people would buy lots of things.

Will Bachman 07:33
Talk to me about the organization of a tea estate, so maybe come up with a prototypical example of a tea estate, how many people are there? How are they organized? What are the different divisions or departments or roles and and how is it governed?

Rudra Chatterjee 07:55
So, in terms of the pluckers, in the GST, people who pluck the tea, that tends to be between two to three lacquers per hectare. Depending on which country you’re in. Attackers might be living in the state, and they’re fully employed by the state or they might be villagers to come back on money and go back to their village that differs from place to place. But in the original British territories, like I explained an exam there were very few people in Assam. So pluckers actually had to have housing created for them within the state where they would live. So in a th state which is 1000 hectares, you would typically have 2000 people plucking tea. And they would be also the people who could be planting the tea uprooting the tea planting the shade trees which you know in a tea estate in Assam, because it gets hot. In June, you have trees mainly for shade, so that it doesn’t burn the leaves. So, all of that work done by this massive pool of people. So this because these places are remote even now, you would have to have schools for the workers, you will have hospitals and you would basically have you know everything that they would need you know clubs, worker clubs, they would have rotating work during winter there will be pruning during summer during the rest of the plucking the management of the GSD again, it is a British almost mirrors the army. In fact many of the Teague many of the managers in TST are what used to be people who were in them and so you had manager would be the senior most below who they would be field and factory systems. And to be a manager, you would usually have to spend 20 years on the job out of which 10 years ago as assistant manager, and below assistant manager, they have water, he usually called sardars, or jco. Again, this year was an army term in British Army. And you would, sir, that would actually work directly with the plumbers, or the factory. So the manager would usually start his day at 530 or six o’clock in the morning. And that would continue to, and that will be at the field and usually come later in the afternoon. To see the factory, the factory process starts with the leaves coming in, which usually should be one week old. So leaves are plucked every week. So that seven days growth of leaves will be plucked, and it will come in around three o’clock in the afternoon. And then it will wither. So when you put it on, like large 100 feet long, six feet wide, leave houses, where you would introduce dry air to take away about half the moisture or 60% of the moisture from the leaves. Once the tea is the weather, which takes a few hours, you would first depending on the time of view on either cut leaves, or you know, you would just put the leaves into, you know, to make autopsies which are the holiday tools, and then you will put in a drive. And then sort the things. It’s a simple process that hasn’t changed over the years. But that’s that’s actually the work of the factory.

Will Bachman 12:09
So you’re drawing these leaves, and it sounds like they’re out there, effectively plucking every day. And they kind of rotate around their hectare. And by the end of the week, they’re at the beginning again. So you’re constantly plucking. So these plants are kind of like sort of like evergreen type plants, they just bear leaves year round, it’s not like a deciduous, you know, maple tree or something that loses all its leaves it in North

Rudra Chatterjee 12:38
doesn’t lose its leaves, it stops growing new leaves in winter, if you’re in Assam or Darjeeling. It doesn’t stop doing that in Africa, it goes through the year, Equatorial Africa. And in terms of the quality changes through the year, you know, the kind of tea that you would get get, at different times of the year, depending on the rainfall, depending on the soil. There’s big variation, I don’t think there’s any beverage with the kind of breath that he has. And in terms of the tea bushes are actually in a bonsai plant, because it’s all pruned to be at plucking height. So the tea bushes would usually grow taller than a human being gets you seven feet or higher. But it’s pruned every three years and you keep it at a height, which is perfect. Now,

Will Bachman 13:50
what are some of the degrees of freedom that a manager or an owner of an estate can use to you know, to get increased value from from the estate with a long term perspective. So, I think you and I’ve had conversations before about you know also monetizing the lumber perhaps from the shade trees or are there ways to increase production or are there you know, some states that might you know, pluck too much or not invest in in planting new plants. So, like so, as a manager owner, what are some of the decisions that you make are degrees of freedom to the crew increase the long term value.

Rudra Chatterjee 14:31
So, first is to ensure that the the culture in any organization in a visited state will and you know, both of us used to be management consultants, you know one of the best trainings for managers in the GSD because you first you know create a good culture where the people who are working the states whether they are at the factory who need engineering skills and focus on quality, and at the field, where you have to make sure that so many people are, you know, counting on time with discipline, but they’re well looked after. And their, their, their health and their well being is a priority. No, you have to have people with both discipline and compassion. And then you have to focus on quality, that means that you do pluck the leaves every seven days, because you can let the leaves grow. And actually, you get a much higher crop by leaving the leaves on the bush for nine days attendance, because the bush actually gets into a faster growth spot after this between the seven to 90 day, but it drops the quality. So you have to take a choice make a choice between quality and volume. And then you have to essentially focus on you know, who are you making the tea for one of the historical issues with the tea industry has been that the producer in the TST never know who the buyers so if the if you do not know how to buy likes drinking the tea, so it’s it’s, it’s just the job ends with the product production of the tea, and then it’s auction. So but in in an environment where you know, who the buyers and the buyer knows how the tea is produced, you can actually do a lot more in terms of, you know, making it more customized to buyers needs, like in some ways, wines or olive oils, or you know, people really promote one character of a vineyard, one character of the the season of the growth of the terroir, that is something that he is equally capable of doing. But the business model has been different because, and that’s equally true for coffee, where the producer does not really have an occasion to understand what the buyer wants. And that’s why I’m very excited because you know, it was during the lockdown during COVID, when people want stepping out of home, we innovated and starting selling these days directly from our tea estates online. And we started getting emails and feedback from buyers about how they liked the tea and what they liked about the tea and for the managers in the GSD for the workers in the GSD. This was a revelation because it’s the first time in history that they heard from in final consumers.

Will Bachman 17:52
And let’s just take a moment here. If people are interested in sampling your teas, you want to give some links of where they can go.

Rudra Chatterjee 18:00
Short on I’ll send you the website we have. Lakshmi T is our company. So Lakshmi t.in is the website. Because it’s mostly produced in India, although it also carries our wanderings. And we have a GST, which produces probably the most famous tea in the world called Makaibari. And Mark ibori.com is another website, one can come and buy just one package of tea or package of tea bags. But you can also subscribe to the jis where we would get enough for two people every day of the month. And you can supply per year. So that’s delivered anywhere in the world, including in the United States.

Will Bachman 18:54
Okay, and I’ll just repeat that. So Lux mi group, dot nuluxe mi T dot n, and that’s LUXMIT a dot i n. And we’ll include that link in the show notes as well as MCI bari MAKI, ba, r i.com. So we’ll include those links in the show notes. So one thing that I think you told me in the past that’s kind of interesting or a bit different about the tea industry is his long lines, what you’re saying is how the workers The pluckers will actually be living on the state that the workers may have a truly long term perspective in mind compared to some workers that may be a manufacturing plant, because you know, they were maybe even born, they’re raised there and they’re, you know, their children, they may expect to have their children working on the same estate. So in some ways, they may have a very long term perspective of Wanting to make sure that they’re, you know, planting and really taking care of the tea plants, because it’s their future as well. Could you could you comment on that a little bit about how the owner and the workers

Rudra Chatterjee 20:11
can book? Sure. In fact, there are different formats in Africa, where we have tea estates in Rwanda, the workers actually own the land. So, in in Rwanda, we would have much larger blocks up to a state where the company land is called the industrial block. And that would be 200 acres. And farmers would have their own land, which would be 1000 acres, all of this land comes into the factory, all the all of the tea from this land comes into the factory. But when we make the tea, when we produce the team, we have a revenue share. In, in some places, it’s 60%, in some places, 50%, depending on which country. So in Rwanda, it’s half the revenue goes to the farmer. So if someone is buying tea at $4, occasion, $2 would go to the farmer, and $2 will come to the factory, and to the management. So the farmers on the land in Africa, in that case, it’s actually easier to maintain quality, because they see that every time that they’re making better leave, the tea prices are higher. And we usually get very good quality in, in setup, where the farmer actually owns the land, in areas where it is 100% Industrial block and the farmers don’t own the land there to the farmers are working there for generations. And the best way to involve the farmers is because they actually know enough about de processing themselves, the best way to involve the farmers is to get along with you know, the farmers working in the TST give them a good education, so that you can start having, you know, the sardars, the jcos and eventually, some managers coming from the farmers. That was never the case in the past. It was always you know, ex army people or people who studied into in what used to be called public school education in Britain, they would come from a completely different environment and it was like an, you know, a big difference in the social background of the manager and the farm. But that is changing. And, you know, I think that’s great for politics, as in when you can have the money farmers in demand managers from the same quarter, not all the time, but more and more I think you know, that also gives an opportunity to all the people in the farmers to say that you know, this is a great way for me to develop for my children.

Will Bachman 23:20
Talk to me a little bit about difference in tea consumption and or demand for quality with different countries are there some countries that have like a much higher level of sophistication and demand for the highest quality teas which ones are those? Let’s get it which which which countries are somewhat ignorant and just get the lowest quality you know, bottom of the barrel type stuff.

Rudra Chatterjee 23:46
So the highest quality is personally speaking from Lakshmi, our tip typically bought by Japan and in fact, the first flashed is which are being blocked now 100% of it goes to Japan. Okay. And it’s different times the Japanese Emperor has purchased his from Mark a buddy. Also, good qualities tend to be bought by Germany. Germany often buys very good teas. They also Britain has both very good and very bad cheese. It’s got a big mix of you know, high quality and poor qualities. Unfortunately, so far us doesn’t have a great record of high quality cheese. It’s tends to buy you know, teas from supermarkets, massive packaging, and not great quality but that has changed because more and more people are becoming Much more involved with the beverages that they drink. And we are seeing many, you know, there’s a company called Smith tea. Steve Smith has started it, he started tazo and sold it to Starbucks, you know, many, many teas in us, the Sebastian Beckwith in pursuit of tea in New York. Many hotels have very good tea, Somalia’s. So that’s changing. But traditionally, US used to have you know, many old tea houses, but you know, with good branded teas, but it went away and it’s coming.

Will Bachman 25:40
Give us a sense of the kind of the range of price maybe at the, at the wholesale level of like the best quality teas in the world versus the more commodity level of well arranged,

Rudra Chatterjee 25:53
there are some extreme numbers like Mark ivory sold that $1,850 for one cage, that’s a crazy number of projects, you know, it’s never going to show up in wholesale, an average Mark every produce would be, it would be like $100 $50 $200 a kilogram. Now when that while that sounds very high, I just put this in perspective, that one teaspoon has two grams, two and a half grams of tea. So that’s 500 cups of tea 400 to 500 cups of tea. So if you’re buying teas that are $100, which are more, some of the most expensive tea that you would be buying, it still be 20 cents for one cup of tea. So it’s not a lot of money compared to many other things that you might be buying as is certainly a much better drink, then, you know, many other more expensive beverages that you would be buying

Will Bachman 26:59
compared to the highest, you know, highest end wines for example, we’re talking a much different

Rudra Chatterjee 27:05
product. Are you in a can of coke? Yeah, you know, it’s it’s much cheaper than a can of coke or you know, you know, or a bottle of bottled water.

Will Bachman 27:18
Yeah, that would be 50 to $100 that would be at the wholesale price or at the retail price.

Rudra Chatterjee 27:24
So in if you look at the tees that mark Avery sells online, that’s around the price $50 a kilogram $12 for 250 grams and, and also $7 $8 for the 70s so that that comes to around $30 or so per kilogram. So that would be you know, 15 cents for one cup of tea. So that’s, that’s for us it’s the same from manufacturing to region. But But I think typically what happens is like in every product, if it goes through various categories option and then wholesale then packaging then in a supermarket then customer you might find the price of tea is what gets you know discounted because, you know there’s you know, people I think mistakenly feel that customers don’t appreciate good quality. I’ve always found that to be wrong. What happens is, if you give people good tea, they tend to drink two or three cups. And if you give them a bad cup of tea, they just say okay, I don’t understand tea. They do understand it is bad tea that’s why they say they don’t understand tea and they just don’t finish finish you know that most have one cup of Nanjo

Will Bachman 28:49
so for what would some of your guidelines be if you’re if you’re not really a you know, sophisticated tea drinker and haven’t experienced you’re really good quality tea. What what are some sort of tips like if I you know, I sort of have this impression that kind of tea bags are maybe a lower end tea and you want to be looking for whole leaf tea but I talk about freshness like how you think about tea and you say Oh, it’s dry, it should last forever but how important is freshness what are the things you should look for? How do you know if you’re getting a good quality cup of tea.

Rudra Chatterjee 29:27
So it is true that tea is dry and it should last for a long time but what happens with tea is it’s very hydroscopic which is picks up smells from round around the kitchen or wherever it goes. So it’s important that you store the tea in a dry and you know away from other you know very smelly or spicy things that you might have in the kitchen because it’s it’s happened to me many times that you know when empty Just in case I’m tasting fruits, and I realized that it was in the same truck that the fruits and the tea had come so it’s it’s, it’s it’s it’s in a during mango season in India, the TEAS might start smelling on mangoes. So it’s a, but when you’re buying tea, I think it’s a good investment to buy a T bot. And if you have the time to borrow the T yourself in a teapot, it’s very easy. The teaspoon is called a teaspoon because it makes one cup of tea. So you just put one teaspoon of tea, you can do that with black tea, or green tea, or, you know, if you like tea with some natural flavors, you just put that into the pot. And ideally, the pot should, you should just pour some hot water into the pot, before we pour the tea. Before the day, before we put the tea, you just put it put some hot water, warm the pot, throw away the hot water, and then pour the tea leaves and then the hot water and let it brew for three to five minutes. And it’s very easy. It’s making a cup of tea for yourself. I think for me, it’s a great ritual, it takes 10 minutes maximum, I do it the first thing in the morning. And it’s it’s an also the first thing I do when I come back from work. Yeah, so it’s a very nice social thing to do, you can you know, make two cups of tea, you know if two of you are going to drink it. And it’s, it’s a nice, easy, not very time consuming thing. So I will My first suggestion would be to use a bot. The second would be to you know, buy the T not from a supermarket. But from a T store if you can, in in whichever every city in the world will have T stores. Today, it’s even easier because you can buy it online from the store. But you even in the past, if you could go to a store which specializes in tea, you will already be buying better too. And you don’t have to do that. You don’t have to buy it once a month, you can buy two once in three months, it’s absolutely fine to have two or three months worth of tea. And then, you know, just drink it for the next two, three months out of a pot. And I think it’s a great ritual. And it’s possible to do it at home, especially if you’re working from home part of the time. And hopefully it will become more of India and many other countries in the past when people would visit office you would serve them a pot of tea. And that was a very good ritual. You know, I think far better than, you know drinking water from you know, a bottle plastic bottle is to serve them or potty. And you know, that’s that’s all you need to do. It’s not complicated.

Will Bachman 33:14
Fantastic. Well Rudra thank you for this overview. Again, we’ll include those links in the show notes to to both Maka bari.com, as well as luxmi T dot i n so you can subscribe there to a T subscription. Rudra It was really fun having you on the show. Thanks so much for talking about the tea industry.

Rudra Chatterjee 33:35
Thank you. Thank you

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