Do you want to start a tea processing business with little money? Find here a comprehensive tea processing business plan guide for your ready reference.
Tea production and processing plant are financially very lucrative businesses for entrepreneurs. In addition, the business opens up huge possibilities for expansion. However, you must start the unit in a tea-growing area. Simply, there must be a number of tea gardens to supply the raw tea leaf to your plant for further processing.
Generally, a tea processing unit purchases the raw tea leaves, processes the tea to form a consumable item, and sells the tea after packaging. From a tea production unit, you can produce six different types of tea. These are green tea, yellow tea, white tea, oolong tea, black tea, and post-fermented tea.
Is Tea Processing Business Profitable?
The global tea market is growing rapidly. Tea sales have increased 165% over the last fifteen years. In addition, it is the most preferred beverage next to water, available at a low price. The tea market has experienced diversified trends across different regions including North America, Europe, and Asia-Pacific. The online tea market has also expanded considerably in the last few years.
Geographically, the Asia Pacific region held the largest market share in 2013. And industry experts are expecting the continuation of its dominance throughout the forecast period. However, some of the major markets are India, China, the U.K., Germany, the U.S., and Brazil. These countries among others are expected to witness robust demand for tea in the coming years. Therefore, tea production is a profitable opportunity for new entrepreneurs.
Here are the 7 Steps to Start a Tea Processing Business
1. Identify The Factory Location
The location plays the most crucial role in the success of a tea production unit. If you already have a tea garden, then obviously you can initiate a processing unit. However, if you don’t have your own tea-growing farm, then check the demand for a tea processing unit in that particular location. Because according to the capacity of the plant, you have to ensure a regular supply of tea leaves in the factory.
2. Create a Business Plan
Crafting a tea processing business plan is the first step in starting the business. According to your investment capacity, create a detailed business plan. Determine, what type of processed tea you will produce. What distribution channels you will establish? How you will compete with the other brands.
Apart from distribution, whether you will market the product in other ways or not. These are the important considerations, you need to put in the business plan. In addition, craft a financial plan also. Determine the fixed cost and working capital cost for starting the unit.
In addition, craft a projected balance sheet with expected ROI and break even. Generally, a business includes several considerations. These are executive summary, objective, mission, vision, keys to success, and startup summary with financial projections.
3. Company Ownership & Tax Liabilities
According to the investment pattern, you have to choose the right form of business. However, it hugely depends on the location where you are starting the business. It is advisable to register your business according to federal laws.
In addition, talk to a local small business consultant. As you are starting a business in the agro-processing industry, you must obtain the appropriate licenses and permissions. Furthermore, check the yearly tax liabilities and compliance liabilities.
4. Startup Cost & Investment
A tea processing unit demands substantial startup capital investment. Generally, there are two different types of costs involved. These are fixed capital and working capital.
Basically, the fixed capital investment includes the cost of land, building, plant establishment, machinery, and initial licensing and registration costs. On the other hand, the working capital investment includes Raw material costs, staffing expenses, transportation, distribution, administrative cost, and other marketing expenses. If you are taking a loan or arranging finance from investors, then you must be careful about the repayment schedule with the interest.
5. Plant & Machinery For Tea Processing Unit
According to the tea quality you want to produce, you have to procure the machinery. In addition, it depends on the desired production output. Some of the major required machines are:
- SS Rotorvane 8″
- CTC Machine (3CUT) 3 Pair 8” Roller (8-10-8 TPI)
- DF Furnace
- Drier (Conventional)
- Mydellton Sorter
- Fibre Extractor.
- Vibro Sorter
6. Learn the Tea Production Process
There are certain steps that need to be followed in producing tea. Some of the steps are mentioned below:
First of all, you will need to procure raw tea leaves. Then lay out the fresh tea leaves in thin layers on tats stacked one above another and dry them in the fresh air for at least 20 hours. However, there is another way. You can lay out the leaves in layers of up to 20cm. thick on a mesh. Then, place the meshes in a tunnel; through which warm air mixed with fresh air is forced. This considerably reduces the total withering time. Around 60-62% residual moisture is suitable for tea processing of the withered green leaves.
A circular table fitted in the center with a cone and across the surface with slats called battens. A jacket, or bottomless circular box with a pressure cap, stands at the top of the table. The table and jacket rotate eccentrically in opposite directions, and the leaf placed in the jacket is twisted and rolled over the cone and battens in a fashion similar to land rolling.
During fermentation, the oxidation process which had begun during rolling is continued. Fermentation takes place in separate fermentation rooms. However, you have to keep it extremely clean to avoid bacterial infection of the tea. Place the tea leaves in 3.5 – 7.5 cm. Layers on aluminum trays. The thickness of the layers depends on the room temperature. As soon as the tea has acquired a copper-red color, the correct degree of fermentation has been reached, and the process must be halted by drying.
You can carry on the drying process on a Conventional drier. Blow the hot air up to 90° C against the leaves. And it should have reached 80- degrees C. by the time drying has been completed, in order for the polyphenol oxidize enzyme to be properly inactivated. The moisture content should be reduced to 3.5% whereby the aroma becomes established and the leaves take on their typical black coloration.
7. Tea Processing Unit Marketing Strategy & Promotion
First of all, you will need to determine the marketing strategy. The marketing strategy needs to accomplish two things: first, to make potential customers aware of brands, and second to educate potential customers as to why this tea is so healthy and tasty. Additionally, you can explore several opportunities. Such as print advertisements, flyers, advertisements in local magazines, and reviews by food writers.
Suggested Read: How to Start Tea Plantation Farming Business
You must establish a well-penetrated distribution channel. Generally, big eCommerce companies and supermarkets are great options for domestic selling. Apart from the domestic market, you can also consider tapping the international market for expansion.
About the Author: 99businessideas.com led by Rupak Chakrabarty is committed to helping beginners, entrepreneurs, and small business owners in starting, managing, and growing their businesses.