Business plan for next 3-5 years of whagbakri

Wagh Bakri Tea Group eyes 12% market share in 3-5 years
Gujarat's leading packaged tea maker, the Wagh Bakri Tea Group, plans to take its national market share from the current 7.5 per cent to 12 per cent in the next three to five years. To achieve that, the company (turnover of Rs 500 crore last years) has lined up new offerings, including 'instant tea' sachets, as well as region-specific blends.

In the process of putting up a new plant near its existing one, close to this city, it is planning to set up another 15 million kg per annum production facility, with an investment of Rs 40 crore. The site is yet to be decided. Wagh Bakri is also open to set up a production facility in Dubai. Hindustan Unilever Ltd (HUL) and Tata Global Beverages have 22 per cent of market share each in the packaged tea segment, said Piyush Desai, chairman and managing director of Wagh Bakri. His company, he said was third, with 7.5 per cent, and was clocking an eight to 10 per cent growth rate, even as the packaged tea market was growing at five per cent yearly. We are aiming to capture close to 12 per cent market share in the next three to five years. We already have presence in Rajasthan, Madhya Pradesh, Maharashtra and Delhi markets, apart from Gujarat," Desai said. In Gujarat, Wagh Bakri enjoys 50 per cent market share in packaged tea and 25 per cent in Rajasthan. In other markets, it only has two to five per cent and it intends to strengthen these. Besides launching new blends to suit regional tastes, the company says it would come up with instant tea sachets within the next three months. The segment is gaining popularity among travelers, Desai said, adding it was still a new segment in the packaged tea industry. HUL and Tata are yet to set foot in it. As for its expansion, Wagh Bakri is already in process of adding a new plant near its existing Dholka site (40 km from Ahmadabad), which will enhance the capacity by around 30 per cent. Wagh Bakri packs and sells around 20 million kg of tea per annum. The new capacity will come on stream by August. Desai said they were looking for a site to put up another new unit, with a capacity of 15 million kg per annum. "We have zeroed in on two or three locations, one in the Gujarat-Rajasthan border and another in South Gujarat. We will take a final call before the year-end. The investment on the new plant would be close to Rs 35-40 crore, he said. In the long run, Wagh Bakri is also open to start a production facility somewhere near Dubai. Currently, exports comprise only two per cent of the company's net sales and the domestic market offers more margins. "At present, Indian tea is more expensive compared to Kenyan or Sri Lankan tea, but going forward, we do plan to accelerate our export plans. We now sell tea under the Wagh Bakri brand in the US, UK and Gulf countries. We can put up a plant somewhere near Dubai later, Desai said In Gujarat, Wagh Bakri enjoys 50 per cent market share in packaged tea and 25 per cent in Rajasthan. In other markets, it only has two to five per cent and it intends to strengthen these. Besides launching new blends to suit regional tastes, the

company says it would come up with instant tea sachets within the next three months. The segment is gaining popularity among travelers, Desai said, adding it was still a new segment in the packaged tea industry. HUL and Tata are yet to set foot in it. As for its expansion, Wagh Bakri is already in process of adding a new plant near its existing Dholka site (40 km from Ahmedabad), which will enhance the capacity by around 30 per cent. Wagh Bakri packs and sells around 20 million kg of tea per annum. The new capacity will come onstream by August. Desai said they were looking for a site to put up another new unit, with a capacity of 15 million kg per annum. "We have zeroed in on two or three locations, one in the Gujarat-Rajasthan border and another in South Gujarat. We will take a final call before the year-end. The investment on the new plant would be close to Rs 35-40 crore, he said. In the long run, Wagh Bakri is also open to start a production facility somewhere near Dubai. Currently, exports comprise only two per cent of the company's net sales and the domestic market offers more margins. "At present, Indian tea is more expensive compared to Kenyan or Sri Lankan tea, but going forward, we do plan to accelerate our export plans. We now sell tea under the Wagh Bakri brand in the US, UK and Gulf countries. We can put up a plant somewhere near Dubai later, Desai said. Gujarat-based packaged tea group ,Wagh Bakri group's world class factory in Nadiad is all set to be fully operational in the next 8-9 months' time. The company is also planning to open a 3000 sq ft office in Delhi in the next three months. According to Parag Desai, director, Wagh Bakri group, "After the Dholka plant, we are commisioning another state-of-the-art factory in Nadiad, which will house hi-tech machines, latest gadgets and the best certification. This plant will be quite hitech and should be operational in the next 8-9 months. The land has already been acquired and we are looking at designs, floating tenders to architects and contractors in the state. We are setting up this plant to increase our production capacity." The group is all set to foray into the Delhi market and plans to rent its office in Delhi for the initial period. Wagh Bakri group's corporate office has recently been voted as one of the 'cleanest' and 'eco-friendly' corporate houses across the city in a recent survey by an English publication house. Besides its 20,000 sq ft Ahmedabad office, the group has corporate offices in Ahmedabad, Kolkata and Mumbai. The group is expecting a growth rate of 15 per cent for the year 2009-10. With the tea exports shrinking in a fiercely competitive market, the Indian tea industry was urged to tap the potential in the domestic market. Speaking about 'Tea situation in South India' at the three-day Tea Carnival organised by the Tea Board, R D Nazeem, executive director of Tea Board, said that it was tough to compete in a fiercely competitive market. Though India was the largest producer of tea, it was no longer the largest exporter, he said. India is the largest market for tea and its is high time we focused on the domestic market, he

said, pointing out that the consumption of tea was increasing in the country. If every Indian drinks one extra cup of tea every week, there will be no crisis in the tea market and all the production could go to meet the domestic requirements. If every Indian drinks one extra cup of tea every day, all the production in the world would come to India, he said. He said that youngsters could be lured to drink more tea as it was natural, fresh, healthy, and far superior to other beverages. He said that the country produced 850 million kg of tea every year, of which 200 million kg was from south India. Half the production in the south was exported. South India was the most ethical producer of tea as the industry in the region pays higher wages and provides educational and health benefits to the workers. "About 65,000 families are dependent on tea estates in Nilgiris," he added. Speaking on challenges in the marketing of tea, Rakesh Koushik, head (Tea Excellence Centre), Hindustan Lever Ltd, urged the industry to think about marketing the product better. "The industry should step out of the traditional focus areas like production and think about delivering the product in a format which connects better with the consumer," he added. Tea Carnival, which concluded in Chennai on Sunday, was organised to project Nilgiris tea as a 'pure, natural and healthy drink'. About 20 tea factories from Nilgiris exhibited their products. Tea Carnival was an initiative of the Tea Board to improve the image, quality and price of Nilgiris tea. Prizes were given away to winners in the competitions held in connection with the carnival.