Do you want to start a tea business? Do you want to know the best possible options for starting a profitable tea business? The object of crafting this article is to provide a list of the most profitable tea business ideas for young entrepreneurs along with a start-up guide on the steps to follow to start a tea business.
Tea is an important beverage in India. Simply, we consume tea as a refreshing energy booster. Additionally, the tea comes with several health benefits too. The antioxidants help to eliminate toxins and free radicals from the blood.
According to the tea production process, there are two different types of tea. These are CTC and Orthodox. However, according to the taste and flavor, there are several types of tea available in the Indian market.
These are black tea, green tea, white tea, fermented tea, oolong tea, aroma tea, etc. Also, there are some different varieties of tea according to the origin. These are Darjeeling tea, Assam tea, Dooars & Terai tea, Kangra tea, Nilgiri tea, Annamalai Tea, Wayanad Tea, Karnataka tea, and Munnar tea.
Is Tea Business Profitable?
Globally, India is the largest grower, producer, and exporter of tea. The tea business of our country accounts for 31% of global production. Nowadays, the industry is having 1692 registered tea manufacturers and 2200 registered tea exporters in the country. Additionally, the industry enjoys 5548 registered tea buyers and 9 tea auction centers.
The Indian tea industry is about 170 years old. The Northern and Eastern part of India is the major tea-growing areas. However, Nilgiri in the southern part of the country also produces a significant amount of tea.
Generally, the three prominent tea-growing regions in India are Darjeeling, Assam, and Nilgiri. Additionally, other tea-growing areas are Karnataka, Tripura, Himachal Pradesh, Tamilnadu, Kerala, Meghalaya, Mizoram, and Bihar. Kolkata, Siliguri, Guwahati, Coonoor, Cochin, and Coimbatore are the major tea auction centers.
The tea industry holds an important position in the Indian economy. The industry earns a significant amount of foreign exchange. Therefore, it has a great impact on GDP. Additionally, the industry is the second-largest employer in the country. Because the industry hugely depends on human labor, not on the machine.
Therefore, our country is the best place for starting a tea business for new entrepreneurs. However, starting a tea business demands investment and knowledge. According to your investment capacity and risk-taking ability, you can start a business in this lucrative field.
5 Best Ways to Start a Tea Business
#1. Online Tea Business
Online tea selling is a low-cost tea business you can start from home also. The business is simply setting up an eCommerce site for selling tea. However, the overall operation contains maintaining the site, procuring tea, sending the product through courier, and getting the payment.
Promotion plays an important role in this business. Additionally, you must know the different varieties of tea and flavors. Nowadays, several companies offer eCommerce platforms for small sellers or beginners in exchange for reasonable monthly fees.
Related: How To Setup An eCommerce Shop
#2. Tea Export
The tea export business demands moderate capital investment. Additionally, location plays an important role in this business. If you live nearby the tea auction centers, you can start this business. These days, the major tea importing countries are Russia, Pakistan, Iran, the UK, and the USA.
First of all, you have to obtain the IEC code for starting tea export. The business demands sound knowledge about the international market demand for tea.
#3. Tea Plantation
The tea plantation business demands substantial capital investment and long-term strategic planning. However, the business is highly lucrative and it ensures a great net profit yearly. If you want to start a tea plantation, then having a tea garden is a must. And you can have a garden in two ways. Either you can purchase an old tea garden or you can get into a lease agreement with an existing garden owner.
Tea plantation is a high management-intensive work. You need experienced manpower for the overall operations of the garden. Additionally, you have to have a full-proof financial plan. You must be ready for the upfront investments in procurement, staffing, etc.
#4. Tea Processing
Tea processing is another great tea business that ensures great profit and revenue. Generally, big gardens have their processing centers. On the other hand, small gardens depend on the other tea processing centers. Usually, they sell the green fresh leaves to the processing centers.
Therefore, the success of the tea processing business hugely depends on the location. Additionally, the raw material input directly depends on local tea production. In starting a tea processing unit, you have to put the investment in land & building, machinery, raw material purchase, utility, and manpower.
#5. Tea Stall
A tea stall is a highly lucrative retail tea business you can start with any type of investment capacity. Do you know the brand Tea Junction? the brand operates shop-in-shop style. A tea stall with comfortable sitting accommodation and a wide range of tea is a very lucrative space for any age group of people.
You can open a tea stall as a franchise also. However, starting your brand will give you the opportunity for future expansion. Additionally, the business is highly self-rewarding. You can open a tea stall in both the metro cities and small towns.
How to Start a Tea Business in 7 Steps
Step 1. Do Market Research
It is without saying that you are going to face competition in any kind of tea business both locally and globally. It is therefore essential to conduct detailed market research and know more about the local tea business trends and market volume. If your budget permits hire a professional market research organization and collect the market feasibility report for starting a tea business.
Step 2. Decide on the Type of Tea Business to Start
The next most important step before actually starting a tea company is to decide the business model and the type. Check out our list of the best tea business ideas for your ready reference.
Step 3. Create a Business Plan
You must have a business project plan if you are planning to run a successful tea business. A business plan document will work as a road map for your future company activities. It will be mandatory to create a plan document if you are looking for funding for the organization.
Step 4. Make your Tea Business Legally Compliant
For a hassle-free running of business activities, making your tea company legally compliant is a must. Firstly, select a proper business structure under which you are going to run the tea business. After selection, register your business. There are various types of business structures that you can choose from depending on the scale of operation. It can be a sole proprietorship, partnership, or a private limited company.
Additionally, you will need to obtain a wide range of licenses and permits to start a tea business. It is advised to talk to local authorities or a lawyer and procure the required licenses.
Step 5. Arrange Funds
If your investment capacity is less than the required amount needed to launch the tea business, additional funding from external resources will be needed. Here, your business plan document will come in handy. There are various financial institutions that provide business assistance as a term or working capital loan.
Step 6. Calculate the Profit Margin
If you want to consider starting a tea business you must be thinking about how much profit you can expect from the business. In this article, we accumulate 5 tea business models that need different amounts of startup investment and profit.
Generally, a tea plantation with a processing business ensures a better profit margin. Also, tea exporters earn a good amount of profit. Also, the online tea business ensures a 100% gross profit margin in any case.
A tea stall is a great opportunity for self-employment. So, it demands a very small investment and ensures small returns too.
Step 7. Have a Marketing Plan
Promoting your tea business is an extremely critical aspect of the overall success of the tea business. There are many marketing strategies one can apply even with a small budget. Check out our article on low-cost marketing ideas for small businesses to learn more.
We hope, this list of tea business ideas will help you in starting a profitable and right business. If you have any other tea-based business ideas in your mind, do share them on our Facebook page.
Editorial Staff at NextWhatBusiness is a team of Business Consultants having years of experience in small and medium scale businesses.