CASE STUDY

TEA INDUSTRY
Indian tea has virtually lost all global markets because it continues to be
traded as a commodity. The much talked about value addition is limited and
rather late. Only the markets that have consumers with shallow pockets buy
tea as a commodity and that share is fast depleting. The industry needs to be
competitive in production, marketing, logistics and product forms. India,
despite being a large producer of tea, lacks properly organized production
systems in which small tea producers find a respectable place. The industry
must have access to capital at globally competitive rates. The subsidies in any
form are undesirable.

The Indian tea industry must face the market realities, redefine its business
strategies and reposition its products. The first step in that direction is a
complete restructuring of the tea industry, redefining the roles of various
agencies like the Tea Board and Producers’ organizations, and developing a
healthy partnership with the labour. There are the problems of market access
and discriminatory treatments through non-tariff trade barriers such as
maximum residual limits (MRL) and social clause.

FMCG is an acronym for Fast Moving Consumer Goods which refer to things
that we buy from local supermarkets on daily basis, the things that have high
turnover and are relatively cheaper and there cost is relatively low. Some of
the prime activities of FMCG industry are selling, marketing, financing,
purchasing, etc. The industry also engaged in operations, supply
chain, production and general management.

Key Segments:
The FMCG sector consists of four product categories, each with its own hosts
of products that have relatively quick turnover and low costs:
1. Household Care
2. Personal Care
3. Food & Beverage
The list of major FMCG companies:

TOP 10 FMCG FIRMS OFFERING HIGHEST SALARIES IN INDIA

S. No. FIRM BUSINESS

1. Hindustan Unilever Food Beverages and Personal Care
2. Colgate Palmolive Personal Care
3. ITC limited Tobacco, Hotels and Personal Care
4. Nestle ltd. Food Dairy products and coffee
5. Parle Agro Food items and beverages
6. Britannia Industries Food items and dairy products
7. Marico Ltd. Oil and Personal Care
8. Procter & Gamble Food Beverages and Personal Care
9. Godrej Group Personal Care, real estates & engineering
10. Amul Food and dairy products

THE TEA INDUSTRY IN INDIA IS ABOUT 170 YEARS OLD

The tea industry in India is about 170 years old. It occupies an important place
and plays a very useful part in the national economy. India produces 30% of
the total tea supply of world. the total turnover of Indian Tea industry is around
10000 crores. Commercial production of tea in India began after the conquest
of large areas by the British East India Company, at which point large tracts of
land were converted for mass tea production. The widespread popularity of
tea as a recreational drink began in earnest in the 1950’s. after a successful
advertising campaign by the Indian Tea Board.

Today, India is the largest tea producers it the world. Although over 70 per
cent of its Tea is consumed in India itself. A number of renowned teas, such as
Assam and Darjeeling, also grow exclusively in India. The Indian tea industry
has grown to own many global tea brands and has evolved into one of the
most technologically equipped tea industries in the world.

Tea production, certification and exportation, and all other facets of the tea
trade is India is controlled by the Tea Board of India

India was the top producer of tea for nearly a century. but recently China has
overtaken India as the top tea producer due to increased land availability.
Indian tea companies have acquired a number of iconic foreign tea
enterprises including British brands Tetley and Typhoo. India is also the
world’s largest Tea drinking Nation.

As of 2013 the consumption of green tea in India was growing by over 50% a
year.
The major tea producing states is India are: Assam. West Bengal, Tamil
Nadu, Kerala, Tripura Arunachal Pradesh, Himachal Pradesh. Karnataka.
Sikkim, Nagaland, Uttarakhand, Manipur, Mizoram, Meghalaya, Bihar and
Orissa

TOP TEA BRANDS IN INDIA:

Following are the leading tea brands in India:
1. Tata Tea
Tata Tea is a product of Tata Global Beverages Limited. which was set
up during 1962 as a joint venture of James Finlay and Company and
Tata Sons. The company presently operates in all the continents of the
world. Its other brands are: Tetley. Vitax, Good Earth Jemca, Eight O’
Clock Coffee, Tata Coffee. Himalayan Water, Joekiels Grand Society
Tea.

2. Society Tea
Society Tea is a Hansmukhrai & Co product. The company was
incorporated during 1933. The company offers a wide range of tea
products that may be enumerated are Leaf Premium, Dust tea, Ice tea,
Tea bags.

3. Duncan’s Double Diamond Tea

Duncan’s Double Diamond Tea is a product of the Duncan Goenka
Group that started as Play fair Duncan daring 1859. At present the
group has 20 functional companies and 40 thousand workers in all. It
presently earns approximately INR 20 billion, which makes it one of the
leading industrial groups in India.

4. Brooke bond Red Label Tea

Brooke Bond Red Label Tea is a Hindustan Unilever (HUL) Product.
HUL is one of the biggest names among the Indian Companies that deal
in fast moving consumer goods. The company has been operating for
more than 75 years.

5. Taj Mahal Tea

Taj Mahal Tea is also a Hindustan Unilever product Following are the
various products available is this segment: Taj Mahal Tea. Taj Lemon
Flavoured Tea Bags. Taj Ginger Flavoured Tea Bags. Taj Cardamom
Flavoured Tea Bags.

6. Wagh Bakri Tea Group

 Wagh Bakri Tea Group is a product of the Wagh Bakri Tea House that
was incorporated during 1892 in Ahmedabad by Sir Narandas Desai.
Following are the various categories of products on offer, in Wagh
Bakri’s instant Tea Premix, Good Morning, Organic Tea, Tea Bags, WB
Perfect, Milli

7. Lipton Tea
Lipton Tea is a Lipton product. the company was named Thomas J
Lipton Co at its own inception during 1893. Its Factory and head offices
are at Hoboken in New Jersey. Now the company’s products are
available in at least 150 countries across the world. Following are the
major products: Lipton Iced Tea. Lipton Green Tea. Lipton Fresh Brewed
iced Teas. Lipton Tea & Honey. Lipton Iced tea mixes

8. Tetley Tea
Tetley Tea is the most preferred brands of tea in India.

9. Marvel Tea
Marvel Tea is the first and one of the biggest packed teas among the
branded teas that are available in northern India. The Company Marvel
was initiated during 1987 in Uklana. It is ISO 9000:2001 certified
complaint as well. Apart from marvel tea its other major brand is
Maryada tea.

10. Pataka tea

Pataka tea is the main product of the beverages division of the well
known Pataka Group. Pataka tea was setup during the year 2000 so
that the group could venture into the business of packed tea.

INDIAN TEA INDUSTRY

Total Turnover
Since independence tea production has grown over 250%, while land
area has just grown over 40%
Total net foreign exchange earned per annum – Rs. 1847 crores.
Labor intensive Industry
Employs over 1.1 million workers
Generates income for another 10 million people approximately.

MARKET STRUCTURE:
 Monopolistic Competition
 Market leaders: Tata Tea & HUL
 Numerous small players
 Number of Buyers : Large
 Marketers try to differentiate their product by varying marketing mix
 Price is varied
 Catering to regional tastes
  Various promotional campaigns

TATA TEA:
Company Profile:
Tata Tea Limited, also known as Tata-Tetley, is the world's second largest
manufacturer and distributor of tea. Tata Tea is the largest vertically integrated
tea firm in the world, from its plantation activity through to its packaging and
marketing initiatives. Tata Tea Limited, together with its subsidiaries, engages
in processing, producing, marketing, and distributing tea products primarily in
India. It also involves in the cultivation and manufacture of black tea and
instant tea, tea buying/blending, and sale of tea in bulk or value added form.

Tata Tea Limited owns approximately 51 tea estates in the states of Assam,
West Bengal, and Kerala in India. It also has operations in Australia, the
Middle East, west Asia, North Africa, Poland, Russia, and Kazakhstan. The
company was founded in 1964 and is headquartered in Kolkata, India. Set up
in 1964 as a joint venture with UK based James Finlay and Company to
develop value-added tea, the Tata Tea Group has now product and brand
presence in 40 countries. It is one of India's first multinational companies. The
operations of Tata Tea and its subsidiaries focus on branded product offerings
in tea, but with a significant presence in plantation activity in India and Sri
Lanka. The consolidated worldwide branded tea business of the Tata Tea
Group contributes to around 86 per cent profit from branded tea sales while
the remaining 14 per cent coming from bulk tea, coffee and investment
income. Tata tea Brand is ranked the second most trusted beverage brand in
brand equity.

MARKETING STRATEGY:
In spite of a global presence, the brands are distributed differently depending
on the location. As Tata tea is far better known in India and a powerful brand
there, it is pushed on this market and countries with a large Indian population.
Therefore Tetley is the company's global face and the largest markets focus
on the Tetley brand. Where both brands co-exist in one market, Tetley
is positioned as the premium brand Strengths

1. Market Leader
With a value share of 22.6% in November, Tata Tea is now the market
leader in the Rs7000-crore branded teas market, having overtaken peer
Hindustan Unilever (HUL) which has a value share of 21.3% (Source:
AC Nielsen).
 2. Resources & Capabilities
Tata Tea Limited owns approximately 51 tea estates in the states of
Assam, West Bengal, and Kerala in India.. The crop at each of these
plantations imbibes the characteristics of the region where it grows. In
that respect, tea is much like wine. Having plantations in varied agro-
climatic zones enables Tata Tea to cultivate distinct tea leaves.

3. Brand Name
Tata tea Brand is ranked the second most trusted beverage brand in
brand equity. The company's best-selling brand is Agni which caters to
the mass segment and other brands include Tata Tea Gold, Chakra,
Gemini and Kanan Devan.

4. Experience
Tata Tea has been one of the oldest companies in India and has the
advantage of skill and experience on their side.

WEAKNESS

1. No product differentiation:
One of the major problems Tata Tea faces is the lack of much product
differentiation hence loyalty of consumers is a major area of concern.

2. Branding
Due to lack of branding activities by the organized players and low
switching cost of consumers retaining consumers becomes a challenge
as they switchover to cheaper brands.

3. Distribution Network
The distribution network of Tata Tea comprises on 1.25 Lakh distributors
this is not much when you compare to HUL who have the strongest
dealer network in the country.

PROMOTION STRARTEGY
The new campaign “Jaago Re” will migrate Tata Tea from being a physically
and emotionally revitalizing tea experience to one that will challenge the
consumer is intellect to ³awaken´ to what is around them. It will motivate
people to internalize the tea experience and externalize their social
awakening. It is probably the first time that any brand is taking on the mantle
of social responsibility in such a manner. The campaign will also provide a
poignant platform for connection with the youth.
CONCLUSION

As per the case study above following are the recommendations for the Tata
Tea to follow to improve their position in the current scenario of monopolistic
competition:

Increase number of service outlets

In recent times there have been numerous coffee shops springing up in Tier.
Cities like Mumbai, Delhi, Bangalore etc. Tea house should be set up in a
similar fashion and premium quality tea’s should be served at these outlets.

Strategic alliance
Tie up with their own range of five star hotels to supply premium quality tea as
also with lower end three star hotel and also local eateries (Udipi joints etc).

Own Depots
To start own depots of Tata Tea, so that they can sell loose tea thus reducing
cost of packing which will also reduce the GST & additional charges.

Penetration
Deeper penetration in rural markets by using self help women groups for door
to door selling.

Profit margins for retailers

Tata tea should increase profit margins for retailers to achieve higher sales
volume as they are the main influencing factors in lower income group people.