Industry Analysis: Tea Industry

Tea drinking in Bangladesh which started during the last century is now getting momentum with the pace of urbanization and improvement in the standard of living. Now it’s became very popular as a non-alcoholic drink and we cannot pass our day without taking tea. Bangladesh Tea Board is a statutory body constituted under the Tea Ordinance 1977 to regulate, control and promote the cultivation and sale of Tea in Bangladesh. Tea industry in this part of the sub-continent was controlled by the Indian Tea Cess Act, 1903 till partition in 1947.

An eleven member Pakistan Tea Board with a five member Pakistan Tea Licensing Committee was constituted in 1951 under the Pakistan Tea Act, 1950. This Act was repealed by the Tea Ordinance 1959 and an eleven member Tea Board with the provision of a five member Tea Development Committee was constituted. After the independence of Bangladesh, Tea Ordinance, 1977 was promulgate- ed constituting Bangladesh Tea Board of three whole time members with the provision of an Advisory Committee to be formed by the Government with not more than twenty five members.

Later the members of the Board were raised to eleven by the Tea (Amendment) Ordinance, 1986. The Head Office of the Board was in Dhaka till it had been transferred to Chittagong in 1984. | | Tea is also one of the major exportable commodities of the country. In the form of employment generation, earning foreign exchange and balancing trade deficit it plays an important role in the economy. The total export earning is around 20 million US dollars.

While the share of total foreign currency earnings from tea has dropped substantially in recent years, the demand for tea in the local market has gone up significantly in the same time period. In last 10 years demand of tea had been increased quite sharply in local market taking the tea consumption to 48 million kg per year. 1. Industry’s dominant economic traits < Market size and growth rate < Scope of competitive rivalry < Number of competitors and their relative sizes < Prevalence of backward/forward integration

< Entry/exit barriers < Nature and pace of technological change < Product and customer characteristics < Scale economies and experience curve effects < Capacity utilization and resource requirements < Industry profitability Here we analysis Bangladesh tea industry’s economic traits: < Market size A total of 163 tea gardens produce approximately 60 million kg of tea annually. Total export earning is 20 million us dollar and the local market consumption is 48 million kg per year. < Growth rate: [pic]

This graph illustrate the trend of domestic consumption of tea from 2000-2005 respectively the charts show an upward trend which indicate that the consumption of tea in domestic market has been increasing which consecutively. < Number of companies in industry Approximately 20 companies are there in the in the industry. 18 of them buy through the auction system and the rest two companies have their own garden and they collect tea from their according to their local and export demand. The names of the companies are listed below: Company name