Tea and biscuits: A divorce of complements

I am teaching a class of Microeconomics to undergraduate students. We often talk about complements in the class. That is the goods which are used together. Now all of us know that tea and biscuits are complements. No guest in India is given tea without a plate of biscuits accompanying it like a middle-class wife accompanying a husband to a park. And in many houses, the guests are even allowed to dip in the biscuit in the tea just like the wife may dip into the husband's bank accounts. Or they may be into each other in the bed, you can think whatever way you like to think.

A fundamental lesson we learn is that if the demand for one good in the economy decreases, the demand for its complement is also going to decrease. We have all heard of the state of the biscuit industry in India. Parle G, the most loved biscuit brand in India is seeing a loss of sales. People are being laid off the biscuit industry. Theoretically, the same should happen to the tea industry. But for some reason, we don’t hear it about them. In fact, if some figures are to be believed the production and export of tea in India are increasing. So what is happening?

Have we decided to stop dipping biscuits in tea? And just provide the guest with hot tea along with the gossip of the society. Are Parle G biscuits too costly for the middle class? Even at the road tea stalls, you could find an uncle who rides a rickshaw dipping biscuit in tea. Has that man been earning so less so as to not be able to afford a packet of Parle G biscuit that can be eaten with the tea?

We may be witnessing a divorce here. A divorce of complements. Tea and biscuits are separating from each other. Men and women alike are tilting more towards tea and getting rid of biscuits, for some reason which behavioral economics has to explain. If I was the finance minister, I would say that millennials have started dieting and hence they have decided to give biscuits a let go. They just sip tea.

Something of a cultural shift may be happening as well. The practice of serving biscuits with tea may not be preferred by the Millennials anymore. Maybe it is getting old fashioned just like Orkut did. As for the uncle in the tea shop, his real incomes may have decreased so as to shift to another good which could be lesser priced than a packet of biscuits.

Will the biscuit industry bounce back? For the Millennials, it would have to come up with some marketing gimmick so that this class could find a new way of consuming this good. One can marry again after a divorce. The biscuit industry needs a remarriage. Maybe they could come up with ads which make biscuit a favored commodity while browsing your mobile. Or biscuits with Netflix! Something of that sort, a marriage that the Millennials like.

For the lower class, when the economy does bounce back, the uncle could get back to the Parle G biscuits in the tea stall. But how will the economy bounce back? The demand can only increase if the real incomes increase at a good pace. Greater employment generation is needed. This is a complex problem which I would leave to the macroeconomists to ponder about.

So for those of us who had in our childhood, dipped a biscuit in tea, watching some of it melt inside while we savor the rest, it could be a sad ending. An end of an era, I would say. Let's see how the biscuits bounce back.