Indian Tea :Product MarketAnalysis : 1 Indian Tea :Product MarketAnalysis Tea Industry : 2 Tea Industry TEA is best had, not written about Classifications and Grades of Tea : 3 Classifications and Grades of Tea Tea differentiated on:
Black and Green tea
Black tea further classified into CTC (cut, tear and curl) and Orthodox tea. Indian Scenario : 4 Indian Scenario India has long held the title of being the largest tea producer and consumer in the world.
It is the only country, which produces both CTC and orthodox teas in sizeable quantities.
It has a share of 15% of the world’s tea exports.
The tea market has declined by 9% in 2002.
Discounts and freebies push the volumes.
Hindustan Lever Ltd with a market share of 45% is the leading player in the packet tea business.
Regional players enjoy the advantage of price differences, because the procurement cost is low when tea prices are depressed. Indian Scenario : 5 Indian Scenario Darjeeling's exclusive taste and quality, as well as the fact that it cannot be replicated anywhere else in the world, makes it one of the most sought after teas in the world.
The Assam region produces more tea than any other region in India. Assam teas are known for their strong, full, rich, full-bodied, pungent and sometimes malty bright liquor flavour.
Branded packaged teas account for 33-35% by volume. Hindustan Lever (HLL) leads with around 43-45% market share of the packaged tea market, while Tata Tea is No. 2 with around 17-18% market share.
Collapse of Soviet market reduced exports. Plantations : 6 Plantations Northeast
Upper Assam – largest production
Northern West Bengal (Darjeeling)
Nilgiri What is the Future? : 7 What is the Future? The Government has decided to fully open the tea industry to foreign investment.
The FDI limit has been raised from 26% to 100%.
This is hardly any incentive for foreigners to pump money into an ailing industry beset with high costs and low realizations. Key Drivers : 8 Key Drivers Value-additions through changes in the product forms:
delivery systems, promotional policies and marketing tie-ups
Tea bags, the most common form of value-addition, dominates the world market
With tea marketing becoming increasingly diffused as compared to other beverages like wine or soft drinks
There have been corporate alliances in the form of co-branding, joint ventures (JVs) and partnerships to draw synergistic benefits Key Drivers (Contd.) : 9 Key Drivers (Contd.) Value – additions across the spectrum
Hot > Cold
Conservative > Flavoured
Cuppage > Convenience
Gourmet tea Pepsi and Lipton JV : 10 Pepsi and Lipton JV Pepsi manufactures and distributes Lipton’s iced tea in glass through its C&G (convenience-stores and gas stations) distribution channel
Revenue Drivers – Packaging, branding, marketing, value-added products, etc.
Cost Drivers – Fixed costs in plantations, processing and distribution expenses, advertising, etc.
Growth Drivers – Marketing of tea as beyond the usual cup – to whole new beverage experience with herbal and exotic teas, ice teas, etc.
Profit Pools – Tea accessories, high quality tea, etc.
Value Addition – Occurs mainly in the processing and packaging of raw tea to a packaged good – i.e. conversion of a commodity into a product. Porter’s Five-Force Analysis : 11 Porter’s Five-Force Analysis Threat of suppliers:
Threat of buyers:
Nature of product Porter’s Five-Force Analysis (Contd.) : 12 Porter’s Five-Force Analysis (Contd.) Threat of substitutes:
The biggest threat to the packaged tea industry is the loose tea industry.
Entry and exit barriers:
Barriers for plantations
Barriers for tea factories
Barriers for distributors and packagers
Barriers for consumers Major Indian Tea Companies : 13 Major Indian Tea Companies Hindustan Lever Limited Brands:
Brooke Bond Taj Mahal Tea
Brooke Bond Red Label
Brooke Bond 3 Roses
Brooke Bond Taaza
Lipton Yellow Label
Eveready Industries (Mcleod Russell)
Assam Company (Assam Gold)
Goodricke Group Limited Outlook of Tea Industry for the Future : 14 Outlook of Tea Industry for the Future New areas for tea cultivation are being sought
New markets are being sought in Iraq, Pakistan and Afghanistan following the end of war conditions and embargoes
The industry is likely to witness a major consolidation with leading players looking to acquire smaller and marginal players
Most analysts predict a decline in overall tea sales, the more optimistic ones peg a growth at around1-2% this year
Major concerns for the industry remain rising costs of production and value-addition