Herbal Teas – The New Stakeholders

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Amalgamation of Herbal and Tea Industries:

Thanks to internet and various social media platforms, a large segment of society is reasonably aware of the enormous health benefits associated with ancient Indian ayurvedic herbs. Also, they understand that most of the common herbs have no or little side effects, and any little side effects are far outweighed in relation to the potential health benefits. Simultaneously, people are becoming more and more aware of serious side effects associated with long term usage of allopathic medicines.

Green tea existed in China and other countries for centuries. With a long list of health benefits associated with Green tea, one would wonder what took it so long to reach India! Possibly, this awareness had a positive correlation with the growth of Social Media platforms. The other premium varieties like Oolong and White teas are still less known to people.

While the awareness towards Green tea increased significantly over past 3-4 years, the acceptance still remained at a low level due to it’s bitter taste.

The amalgamation of Green tea and herbs offered new opportunities to both herbal and tea industries. Herbal companies didn’t know about tea, and tea companies didn’t know about herbs. Both these sets of companies were slow to innovation and lacked agility. Therefore, a new set of entrepreneurs/start-ups sensed a business opportunity to leverage combined herbal health benefits by blending herbs with teas.

Blending of herbs with tea offered multiple advantage to both tea and herbal industries:

  • These blends are made targeting specific health themes as per the need of society.

  • Bitter taste of Green tea is suppressed by herbal taste. In fact, certain herbs make the tea taste quite pleasant.

  • Herbal medicines in traditional form like capsules, tablets and syrup are typically consumed with a feeling of being patient, and people stop taking these as soon as they recover from the ailment. In the form of herbal tea, provided it is reasonably tasty, people don’t mind accepting these herbal teas as part of their regular life style after recovery.

  • With warm/hot water as the media, the absorption of herbs in the form of herbal tea is better in the body. Also, unlike tablets and capsules, the absorption of herbs starts right from when tea goes from mouth to throat and further down in the body.

Categories of Herbal Teas:

The herbal teas can be divided into two segments:

  • Wellness segment covers basic health themes like detoxification, immunity system, slimming, relaxation, refreshing, digestion, metabolism etc.

  • Illness segment covers chronic issues like diabetes, high BP, Uric acid, Joint Pain, Acidity, Blood purification, Thyroid, Cancer etc.

As part of their first introduction to herbal teas, most of the people look for a tea for detoxification and slimming. While Oolong tea and Garcinia Cambogia are directly associated with weight reduction, detoxification is a generic concept for various body parts, leading to usage of wide range of herbs. Detox teas currently available in the market vary a lot in terms of their formulation. Human psychology also plays a role as people tend to get more convinced about the efficacy of the blend by the number of herbs used in the formulation. Blending 10-20 herbs in a formulation has become a common practice.

Combo packs of detox teas for morning, afternoon and late evening are also becoming popular. In addition to the common theme of detoxification and slimming, these variants have additional themes. For example, Detox-Morning focuses on refreshing/energizing and power. Detox-Afternoon focuses more on digestion, whereas Detox-Evening includes certain herbs for relaxation.

As people graduate to the next level, they look for teas for their specific health needs. This segment is still taking up a shape.

While most people in India related only Green Tea with health, Black orthodox tea without milk is also quite healthy, and tasty too. Black tea based blends are more accepted in countries like USA, Canada etc.

Quality aspects:

As this is a relative new product segment, the customers are not able to understand and appreciate inherent quality aspects! They accept herbal teas as long as teas have aesthetic appeal and acceptable taste. Suppliers are taking advantage of the same, and often compromise of the quality aspects to keep the costs low.

The origin of herbs, production practices, and the process of drying, storage, cutting and sterilization play an important in the quality of herbs. Organically produced herbs in pollution and dust free Himalayan region are far better than the herbs produced in plain regions. Herbs can be sun and/or shade dried or machine dried. As most herbs are seasonal, long term cold storage at appropriate temperature becomes a need. Herbs need to be cut in different size based upon the target product. Conventional teabags require TBC sie(1-2mm), pyramid teabags require 3-6mm and loose tea pack require 5-12 mm cut size. Powdered herbs are not good for consumption, and also spoil aesthetic appeal. Pulverization or multiple rounds of cutting result in loss of aroma.

Sterilization of herbs is also important to stop any bacterial growth. Certain herbs like Chamomile, Mint, Peppermint, Tulsi etc are quite susceptible to catching insects. There are multiple sterilization processes e.g. Steam, Gas (Ethylene Dioxide), Gamma rays, Microwave etc.

On the other hand, tea has it’s own quality factors:

  • Whole leaf teas are better in comparison to broken leaf, fanning and dust. Whole leaf tea leaves require a lot of space for expansion, and therefore come in loose packs, or pyramid shaped teabags. Conventional teabags have tea fanning/dust which is relative poor in quality.

  • Darjeeling teas have best aroma, whereas Assam teas are strong in taste.

  • First Flush teas produced during March-April have best aroma. Second Flush teas produced during May before monsoon are strong in taste, and have good aroma. The quality goes down after monsoon.

  • A good quality of tea would have only top bud and two leaves of the plant, termed as ‘Premium Pluck’.

Herbs and teas have different brewing parameters. Herbs are typically brewed at 99 degree C for 5 minutes, whereas Green tea is brewed at 80 degree C for 2 minutes. Blending experts overcome this issue by managing the ratio of tea and herbal ingredients, and also use some dominating herbs to suppress the bitterness of Green tea.

Selling Channels:

Various selling channels are:

  • E-Retail: Online selling is a big enabler, particularly for specific health solution. Amazon/Flipkart provide relatively large volume at low margin. Promotion of own website takes a long time to capture traffic.

  • Traditional stores/super market keep only limited varieties of wellness teas as their shelf cost is quite high.

  • Multi-Level marketing (MLM) is a good platform for herbal teas as agents have a good story to approach customers.

  • Hotel/Restaurants/Cafes (Horeca) have limited potential for herbal teas. Customers prefer to use herbal teas at home, and experiment with other fruit and flower flavored teas in cafes.

  • Institutional sale is limited to basic varieties of cost effective herbal teabags.

  • Nutritionists, Dieticians offer a good channel as they have readymade customer base.

Constraints faced by Herbal Tea Industry:

As this industry is primarily driven by start-ups, they often face capital constraints. While people prefer the convenience of teabags, it becomes difficult for companies to come up with too many varieties of teabags. Each variety of teabag requires an initial investment in the order of Rs 2 lakh, which becomes a significant amount during experimentation phase.

Managing various sales channels also requires people with different skill set. Attracting and retaining such a talent is often difficult for start-ups.

The regulatory framework by multiple government bodies also overlaps in certain areas causing confusion and overheads.

Future trends:

In order to succeed, a company needs to continuously focus on future trends. The following trends are likely to define the growth of herbal tea segment over next decade:

  1. Herbal-Milk tea: 95% people in India consume milk tea, and are likely to continue to do so. As soon as milk is added to tea, all the health benefits associated with tea are lost. However, herbs could still be added to milk tea to make it a healthier option. Baidyanath (Kapiva) have come up with a set of such teas.

  2. Make your own herbal tea: People are likely to choose herbs for their specific health needs, and request herbal tea manufacturers to make a suitable tasty blend incorporating those herbs.

  3. Use of unique herbs: There are unique herbs produced in remote regions whose knowledge is limited to locals/tribes in those regions. Discovery and production of such herbs would get more and more institutionalized, and incorporated in herbal tea industry.

Author: Sanjay K Gupta, Director, Budwhite Teas Pvt Ltd, Delhi

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