Starting the day with a hot cup of tea is a well-adopted routine across cultures. It’s a way to rejuvenate the mind and soothe the soul with a refreshing aroma. Call it green tea, which is famous for weight loss, or black tea that stimulates the brain, or tea prepared from pouring boiling water over fresh leaves or cured ones; the taste is mesmerising and brings out the inner happiness in tea lovers.
Tea is the second most popular beverage in the world; hence, tea manufacturing business and marketing is a promising business idea. There are various forms of teas and each has its own technique of processing. It’s a surprisingly tedious process that brings various challenges, starting from harvesting the tea leaves to transforming them into good quality tea powder. The most popular tea in India is the Black Tea, whose biggest producer is the state of Assam.
If we consider a tea business, it adds perfectly to other small-scale manufacturing business ideas. It can also prove to be the most profitable manufacturing business to start for new entrepreneurs.
How to start a tea business?
The first step in making a tea manufacturing business plan is to understand the step-by-step process of manufacturing tea.
Step 1 - Withering
Withering is a process in which leaves are plucked and then dried to reduce the moisture content. Usually, the moisture content in the leaves is 73 to 84%, which must be reduced to 50-70% by weight. The traditional method of drying involves spreading the leaves on a metal mesh in a trough. Alternatively, the leaves are spread on perforated drums for drying - this is called drum withering. Another method is through continuous withering, where the leaves are passed through hot air on moving conveyor belts.
Modern techniques help reduce the withering time but can also reduce the quality. Therefore, careful monitoring and controlled temperature during this process will result in high-quality withered leaves.
Step 2 - Sifting of green leaves
The process of sifting eliminates any waste material that makes its way to the factory with the leaves. This could be sand, gravel, dust, and small stones. Sifting cleans the leaves and makes them ready for the next step.
Step 3 - Conditioning
Conditioning is an essential process before sending the leaves for CTC processing. For this step, the leaf shredder and rotor vane are used in combination. The leaves are shredded into small pieces. The output capacity of the rotor vane and shredder must match that of the dryer and the CTC processor.
Step 4 - Maceration
Maceration is the process of sending the leaves for rolling. This is a key step in tea manufacturing, and there are two ways of doing it:
Traditional process - The leaves are passed through the roller, where they are twisted and broken down into small particles. These particles get oxidized when they come in contact with atmospheric oxygen. This oxidation is essential for the perfect aroma and texture of the final product. A lot of heat is generated due to friction, and this has to be controlled. The next step is the second sifting. This is done to separate the coarsely and finely twisted leaves. The fine leaves are processed further while the coarse ones are sent back to the roller.
CTC tea processing - The CTC machine does all the crushing, breaking, and rolling of curling leaves. Hence, it saves a lot of time and energy. A proper oxidation process is a must for good-quality black tea.
After maceration, the leaves become ready for oxidation and are immediately spread on the continuous fermenting machine. Oxidation takes place under controlled humidity and temperature.
Step 5 - Drying
After oxidation, the leaves are put into the driers to bring down the moisture content to 3%. Hot air is blown through the fan, and oxidation is stopped completely.
Step 6 - Sorting
Once dried, the product is sent to the sifter for sorting. Tea is generally sold in 4 sizes, i.e., whole leaf, broken, fanning, and dust, and their sizes range between 2cm to just 0.5 mm. After sorting, it is packed and sent for distribution.
Capital required for a tea business
Any manufacturing business has a fixed capital and working capital. Especially the tea manufacturing business plan needs a clear understanding of finances.
The fixed capital in a tea business includes the machinery, land, other assets, and operational expenses. Working capital includes raw material (green leaves), salaries and wages, and marketing expenses.
The fixed costs may go up to Rs. 38 lakhs approximately, considering the following factors.
The annual working capital for your tea business plan may go up to Rs. 13 lakhs approximately, considering the following factors.
Costing strategy for purchasing machinery
A tea manufacturing business will require various machinery such as the withering machine, sifter, dryer, and CTC processor. The cost may vary from Rs. 1 lakh to Rs. 10 lakhs, depending on the capacity and size. For purchasing the machinery, you will need finance in cash or a loan. If your plant is registered on the MSME portal, you can avail of the subsidies offered for small-scale industry setup. One can avail of up to 40% subsidy under various schemes, which can make your tea manufacturing business plan a success.
However, for micro-manufacturing, i.e., production of 25-250 kg of production for 200 days working in a year, small machinery like Rotorvane, CTC Machine, humidifier, fiber extractor, and Vibro-sorter can cost up to Rs. 15-20 lakhs in all.
For a small manufacturing business, production of 450-500 kg of product, these machines can cost up to Rs. 35 lakhs in all.
The costing strategies of small-scale manufacturing business ideas should be well-planned as tea businesses can be one of the most profitable manufacturing businesses to start.
Tea distribution business plan
After the initial setup, the next step is distribution. Having the best quality product does not guarantee profits unless it is marketed well. Once your tea business plan is ready, you must focus on the marketing of the product, either digitally or directly. Let’s see a few marketing ideas for your tea manufacturing business.
1. Target audience marketing
The age of tea-lovers ranges between 20 years till 55 years or even more. You will need to research the audience for your product and market your product to aim at the individual group of customers.
College-going students generally enjoy tea with friends during study breaks, or a group of senior citizens may prefer having tea in a park after their evening jog. These types of advertisements and banners not only market the product but also boost sales eventually.
2. Partner with local cafés, tea restaurants, and malls
You can share your tea business plan with other related businesses. Providing free samples initially to local restaurants helps more customers to become aware of your product. Once the demand rises, you can start keeping your samples for sale at these places. Bangalore and many other cities have special restaurants dedicated to serving a variety of tea. You can tie up with such businesses. You can also add your staff in unique aprons serving your tea in the mall’s food court.
3. Digital marketing on social media/newspapers
The power of social media is well known in today’s era. This is an affordable marketing technique for a small manufacturing business. You can run marketing campaigns or promotional events over Facebook under the free or paid marketing option. Other platforms like Instagram and WhatsApp can also be used for sharing brochures. A newspaper is another inexpensive way of marketing your product to a larger audience using leaflets or in a column.
4. Get a website for your tea brand
Having a website helps create a brand of your tea business and adds credibility to your brand. You can get a website designed by a professional to show your online presence. The website can have buying options to boost sales by online selling. Moreover, it should be easy to access and mobile-friendly. You can also hire a content writer for your tea-related blogs and circulate them through various online portals. This will help attract a lot of traffic through the blogs/articles.
5. Direct marketing
Direct marketing can be done by participating in food fairs or exhibitions which allow small businesses to demonstrate their products. Exhibitions are also a place for showcasing your brand. You can offer discounts and make a big sale at these events.
6. Factory outlet
These types of outlets are often seen near many farms. Visitors or tourists are allowed to explore the farm and get an experience of plucking the tea leaves. Having a tea shop nearby which serves your tea can help draw in customers. It is an excellent way of direct marketing and selling, which will contribute to the success of your tea distribution business plan.
The tea manufacturing business is a successful business idea for a country like India, where most people across all age groups prefer tea over coffee. It is a well-loved beverage in other parts of the world too. Some market research must be done before executing the tea manufacturing business ideas. Also, a marketing plan should be ready once you finalise your tea business plan.
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Q. How much money is required to start a tea manufacturing business?
Ans. You can start a tea manufacturing business with a minimum of Rs. 10 lakhs. If you get a government subsidy, about 50% of the cost is saved.
Q. What is the profit margin of the tea manufacturing business plan?
Ans. The cost of raw tea leaves is Rs. 10 per kg (varies from Rs. 8-15). A bag of 4 kg of tea leaves produces 1 kg of tea powder. Black tea is sold at around Rs. 200 per kg (for manufacturers). So, considering Rs. 50 as manufacturing cost (may vary from Rs 30-60 per kg), the profit is good.
Q. How to start a tea business online?
Ans. There are different portals like Amazon and Flipkart where you can start selling. You can also sell on your websites. Indiamart is a portal that connects wholesale buyers with manufacturers so you can sell there too.
Q. Do I need any documents for selling my tea online?
Ans. Yes, you will need a GST, Trade license, and Trademark of your product.