Business India ×

Published on: July 31, 2020, 1:49 p.m.
Tiger meets goat
  • A river of blended tea is checked visually as it flows on a conveyor belt

By Sekhar Seshan. Consulting Editor, Business India

A framed, enlarged facsimile of a handwritten note has pride of place on the wall of the conference room at the Rs1,100 crore Wagh Bakri Tea’s corporate headquarters in Ahmedabad. The note, with a printed heading that says Servants of India Society, Poona City, reads: “I knew Mr Narandas Desai in South Africa where he was for a number of years a successful tea planter.” It is dated 12th February 1915 and signed M.K. Gandhi.

Devout Gandhian, Narandas Desai was one of a group of Gujarati tea planters in South Africa who took a ship in 1892 to come to India to help in the fight for India’s Independence from British rule. “They thought the struggle would be over in five years or so, they would achieve for their native land, and they could go back to their plantations,” says his great-grandson Parag Desai, executive director of Wagh Bakri. “Little did they know that they would be fighting for more than 50 years, and they would settle down in Ahmedabad!”

Narandas, who knew almost nobody in the city of his ancestors, went to Gandhi, whom he had got to know during the latter’s South Africa sojourn, and asked him for an introduction letter to prominent local businessmen who could help him set up something on his own. He knew nothing other than tea from which he could make a living – so that’s what he decided to do: he opened a small shop from which he supplied tea to the workers of what was then Ahmedabad’s biggest industry, textile mills.

Business grew, and he opened more shops; then he began sourcing better varieties of tea from the plantations across the country in West Bengal and Assam, and selling good blends to better- off clientele too. That’s where the brand name came from: the concept of a middle class had not yet emerged in those days, so the rich, symbolised by the tiger (WAGH), and the poor, the goat (bakri), were his only customers. His Gujarat Tea Depot, which he launched in 1919, grew to seven outlets, through which his three sons Ramdas, Ochavlal and Desai, followed by their sons, continued to sell tea in the wholesale and retail markets till 1980. It was then that they became the first to recognise the need for packaged teas, and launched Gujarat Tea Processors and Packers Ltd (GTPPL). The company also started an office in Kolkata to oversee and check the purchase of tea at auction centres there.

How has Wagh Bakri weathered the markets and stayed on top for 100 years? Says Piyush Desai, the founder’s grandson and currently chairman and managing director: “The company has gone through various trade and industry upheavals and has also seen challenging times and significant industry disruptions. But we have successfully managed to keep our distribution, new products and quality standards very high for our discerning consumers.”

For this, he explains, the group has created a robust supply chain to get quality teas, tasting facilities in various locations including a new-age tea tasting laboratory, which has been approved by the Department of Science and Technology’s National Accreditation Board for Testing and Calibration Laboratories (NABL) – which, he says, is probably the first of its kind for a tea company. Along the way, it has also invested in distribution, packaging and marketing.

The actual growth, however, has come only in the past half-century or less, Parag says. “The first 50-60 years were a little weird: no-one was really interested in tea – only in freedom! I remember sitting with my uncle on his swing, listening to the slow-speed news bulletin on his radio. It was only after my father and his generation, all born around 1945, got into the business that things started to pick up. My father, a B.E (mechanical), got into something else: distribution for Kirloskar Pumps; my uncles decided to expand in tea.”

But the 1980 decision to switch totally from loose tea to packages was a total disaster, as people didn’t want to switch from something they had used to touching, feeling and smelling to an unknown product in a sealed packet. Most of the network that had been built up till then was wiped out. “My father and uncles used to sit in one cabin, and hold their meetings over lunch – there was never any formal meeting,” Parag says.

Things picked up again only after the 1985 Gujarat riots, and the company began living up to its current slogan, Born in India, Celebrated across the World. “We developed special packs for the international markets and started selling in almost 30 countries,” says Subodh Shah, president – exports for GTPPL. In the US , Europe, Australia and some other regions, we launched a 100-per-cent organic tea, endorsed as such by the German certifying agency Lacon GmbH.

The opening of the US market is a story Parag likes to tell: on a family holiday there in 1990, he learnt that many Indians living in that country, from petrol pump owners to NASA employees, were buying Indian tea for their own consumption. The 20 kg baggage limit was a problem, because they needed to earmark five kg of that for tea. “I met a Gujarati gentleman, who was an engineer in a US company and ran a grocery store in the evening, and persuaded him to import a container- load from us,” he recalls.

There has been no looking back since then!” The UK was next: the country had a large number of Gujarati immigrants from Uganda, who had never visited the country of their origin, but liked Indian tea. Parag met a man who ran a chain of stores with his four brothers, and they hit it off immediately. “Their business is called VB & Sons, we are WB – a fact that intrigued him a lot!” he grins.

Blending well

Continuing to grow only with the same partners all over, the company believes in long-term relationships. “Our distributors in Ahmedabad, Surat and Maharashtra have been with us since we launched,” he says. “We worked mainly with members of the extended family till the 2000s; then began recruiting professionals. We don’t set targets, and don’t have a system of variable pay though our consultants keep advising us to introduce this.”

The latest addition to its retail marketing is a chain of ‘tea lounges’ in Delhi, Mumbai, Pune, Goa and, of course, Ahmedabad, where it serves different blends for consumption on the premises and sells packets. With nine such big-format outlets now, the company plans to grow the number to cover more cities.

Wagh Bakri does not subscribe to the modern format of deep discounting. “That business doesn’t work,” Parag says. Wishing that his competitors would stop offering schemes which sometimes makes it necessary to follow suit, he says his company’s ‘simple formula’ is to charge the right price. “We have a good relationship with online retailers like Amazon, but we have told them clearly not to discount our brands,” he points out. “We have a reputation, which we need to maintain!”

The company doesn’t tom-tom its CSR initiatives, but the Wagh Bakri Foundation runs a kidney hospital at Nadiad, has built a training hospital in the backward Bharuch district in a tie-up with SEWA (Self-Employed Women’s Association) and supports a school for poor girls being run by a 90-year-old couple near Himmatnagar. IIM-A, where chairman Piyush Desai studied, is a trustee of the institution; the Foundation has a unique partnership model where it pays IIM volunteers to provide vocational education to slum children who have dropped out of school.

 “Our current and next generations are a potent mix of the best professionals and owners,” Piyush Desai adds. “They are also among the best tea tasters – Parag himself tastes about 700 cups every day – and marketeers in the industry, making them more than qualified to carry our legacy forward.” With a current volume of 40 million kg of tea that it processes, blends, packages and markets every year, Wagh Bakri Tea is all set to march into its next century, with a cup of tea.

 (This is reproduced from Business India magazine. This was first published in our issue dated November 18-December 1, 2019)

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