METRO LABEL TEA

A PRIVATE LABEL TEA BRAND FOR METRO CASH AND CARRY

RESEARCH SUPERVISOR: PROF. F. A FAREEDY TEACHING ASSOCIATE: MS. HAADIAH QAISER

RESEARCHER: AHMED JAWWAD KALEEM (09P0024)

MBA 2011 LAHORE SCHOOL OF ECONOMICS

Metro Label Tea A Private Label Tea Brand 2011

LETTER OF APPROVAL
To the Project Instructor,

I am submitting herewith a project written by Ahmed Jawwad Kaleem (09P0024) entitled Metro Label Tea A private label tea brand for Metro C&C I have examined the final copy of this project for form and content and recommend that it be accepted in partial fulfillment of the requirement of the degree of Masters in Business Administration, with major in Marketing.

________________________

I have read this report and Recommend its acceptance.

___________________________________________ Prof. F. A. Fareedi

Metro Label Tea A Private Label Tea Brand 2011

TABLE OF CONTENTS
LETTER OF APPROVAL ....................................................................................................................................... 1 TABLE OF CONTENTS ......................................................................................................................................... 2 AKNOWLEDGMENT ............................................................................................................................................. 4 ABSTRACT ............................................................................................................................................................... 5 CHAPTER 1: INTRODUCTION TO THE STUDY .......................................................................................... 6 1.1 INDUSTRY ANALYSIS ................................................................Error! Bookmark not defined. 1.2 PAKISTAN TEA INDUSTRY ......................................................Error! Bookmark not defined. CHAPTER 2: LITERATURE REVIEW ........................................................................................................... 10 CHAPTER 3: RESEARCH METHODOLOGY ................................................................................................ 18 POPULATION: ............................................................................................................................................ 18 SAMPLE SIZE: ............................................................................................................................................. 18 SAMPLING METHOD: .............................................................................................................................. 18 RESEARCH METHOD: ............................................................................................................................. 18 TOOL FOR THE SURVEY: ....................................................................................................................... 18 DATA TABULATION AND ANALYSIS: ............................................................................................... 18 CHAPTER 4: FIRM INTERNAL & EXTERNAL ANALYSIS ..................................................................... 19 Internal Factor Analysis Summary ......................................................................................................... 19 Strengths ...................................................................................................................................................... 19 Weaknesses ................................................................................................................................................ 19 External Factor Analysis Summary ........................................................................................................ 20 Opportunities ............................................................................................................................................. 20 Threats .......................................................................................................................................................... 20 Strategic Factor Analysis Summary ....................................................................................................... 21

Metro Label Tea A Private Label Tea Brand 2011

CHAPTER 5: FINANCIAL ANALYSIS .................................................Error! Bookmark not defined. CHAPTER 6: RESEARCH PROBLEM .................................................Error! Bookmark not defined. CHAPTER 7: QUALITATIVE FINDINGS ...................................................................................................... 22 CHAPTER 8: QUANTITATIVE FINDINGS ........................................Error! Bookmark not defined. CHAPTER 9: ANALYSIS OF THE DATA....................................................................................................... 39 CHAPTER 10: NEW PRODUCT DEVELOPMENT..................................................................................... 40 Business Costing ............................................................................................................................................ 40 Capital Budgeting ..................................................................................................................................... 40 Per Unit COGS............................................................................................................................................. 40 Depreciation & Amortization ............................................................................................................... 41 Sales Assumptions ........................................................................................................................................ 41 CHAPTER 11: RECOMMENDATIONS .......................................................................................................... 42 CHAPTER 12: CONCLUSION........................................................................................................................... 43 REFERENCES ....................................................................................................................................................... 44 APPENDIX ............................................................................................................................................................. 52

Metro Label Tea A Private Label Tea Brand 2011

AKNOWLEDGMENT
I am grateful to Allah Almighty, for enabling me to fulfill this tiring, but interesting job for the completion of my report. I would not be going to do justice in presenting this report without mentioning the people around me who have been inextricably related with the completion of this report. I would like to express my heartfelt thanks to my course instructor Prof. F. A. Fareedi for his support and guidance, which he rendered throughout the study, and provided us with such a wealth led ideas, to peruse and power of writing this report. It could not have been possible to accomplish this report without his thoughtful guidance and expertise. I would also like to acknowledge the efforts of Mr. Salman Tahir who was my mentor for this project and a very dear friend and with whose guidance and efforts, I was able to reach my final report completion. It is because of the above mentioned people and many others that I have been able to complete my project otherwise it would not have been possible. Finally, for any all too fallible errors, omissions and shortcomings in the writing of the report only I m responsible for which I hope that all concerning regards of this report will forgive me.

Metro Label Tea A Private Label Tea Brand 2011

ABSTRACT
This report is about the business feasibility plan of launching a private label brand by Metro cash & carry. Metros are large chain wholesale stores which have been made for the convenience of the retail & bulk buyers to facilitate modern consumption patterns. It is a general practice abroad and in local market that large stores come up with their own private label brands as they have the potential and the customer base to sell them. The Tea industry in Pakistan is a large industry which mainly depends on 2 to 3 large players namely, unilever & tepal and a few small local companies.

Metro Label Tea A Private Label Tea Brand 2011

CHAPTER 1: INTRODUCTION TO THE STUDY

1.1 PURPOSE OF THE STUDY
This report is aimed to study and explore a new business venture plan for Metro who deal in a whole sale business and under their strong brand name, they can start a private label brand of Tea which will further enhance their company image and extend their own brand portfolio. The study will include all the current business model strengths and weaknesses accompanied with the new market opportunities and threats to lead the company to a new horizon.

1.2 TEA MANUFACTURING IN WORLD

There are several big players in the Tea Global market of which India and China are the key players. In year 2004, India was the main source of Tea production followed by China with a 25.2% of the total world Tea production but after 2006, China gained most of the share by 29% which makes it the leader in Tea production and India came on the second with an annual production of 995 Million KGs of Tea. Kenya which is believed to be the superior market production country of Tea and Hub of tea production showed slow growth over the period of last decade and annual production has declined and there has been a switch of suppliers from being Kenyan to Indian and now Chinese. Vietnam, Malawi has shown a descent increase in the Tea production whereas Srilanka and Indonesia, which were having a good percentage of total Tea production, have declined.1

1.3 TEA INDUSTRY OF PAKISTAN

Many attempts have been made in the past to make this Tea industry of Pakistan a flourishing and a profitable sector but in vain. Serious efforts which began in the year 1980s when different studies were conducted to make the economic feasibility of tea production in Pakistan. Soon after the separation of East Pakistan, the Government made

Metro Label Tea A Private Label Tea Brand 2011

serious efforts in studying the requirements of the special crop that had a lot of potential. The growing conditions for such a special crop were only suited in the Northern provinces and specially in the winters when the temperature was cold enough for the proper maintenance of the crop. The Camellia sinensis and Camellia assamica broad leaf were the two or three major leaves required for it and different flavors were a result of different chemical composition of the fresh tea leaves. After 20 years of study & research by PARC, the harvest went up to 5000 KGs of top trend leaves, the cost of which the farmer had to bear was nothing in comparison to the net income per acer per year generated through its cultivation.2 The Global demand for tea exceeds the present supply of tea in the world which creates a gap and this gap is growing as the worlds population is on a run. There are four to five major companies in the business of tea refining of leaves and selling of tea in Pakistan in packed and branded for all over the country. Thou, there are several local companies who import tea and sell on their own private label but yet do not fulfill the requirement of the whole country. These brands like Tepal, Lipton, Brooke Bond, Supreme, Vital & Tetley not only do they compete with one another but they also face a lot of competition from the loose tea local market. Tea is Pakistans cheapest and one of the most popular hot beverages. Tea has become the second most populous drink after water in the whole wide world because of its salient features as it is easy to make and mostly affordable by masses. It is one of the fastest growing beverages at an average of 6.5% over 5 years of time. Tea consumption in Pakistan has crossed over 230 million kilograms per year and has seen a growth in last many years. Most of the rural population consumes tea in abundance. The tea segment is classified into further two segments namely blended and packed & loose. The sales and distribution are lead by the worlds biggest corporate giants not only in the tea business but in general Unilever and followed by the Tepal and then the others smaller companies follow the trend.3

Metro Label Tea A Private Label Tea Brand 2011

1.4 COMPANY OVERVIEW
Organization has been selected for the research purposes. Firm which has been chosen is METRO: CASH & CARRY. Metro is the leading giant in the whole sale and retail business all around the world. Their strategic focus is whole sale business. It was founded in 1964 and rapidly expanded into many countries like Pakistan.4 METRO Cash & Carry announced its operations in Pakistan in January 2006 & since then it has established itself as a potential market leader in self service wholesale.5 With around 700 stores in 30 countries, METRO Cash & Carry is the international leading self-service wholesale operator with sales of around 31 billion in 2010. Each day, our more than 100,000 employees are happy to serve our customers: with a comprehensive assortment of up to 50,000 food and non-food articles, our wholesale stores offer a wide range of high quality products for the needs of our professional customers such as hotels, restaurants, caterers, traders and service companies. Variety, quality, product safety, professional services but also a true international culture, a strong corporate responsibility and entrepreneurial spirit are trademarks of METRO Cash & Carry.6 The Company has opened its first wholesale centre in Lahore in October 2007. METRO Cash & Carry Pakistan is now successfully operating 5 wholesale centers, 2 in Lahore, 1 in Karachi, 1 in Faisalabad & 1 in Islamabad.7 The companys country head office is based in Lahore at Thokar Niaz Baig near motorway. The current Head count of employees is 1176 including Head Office & 5 wholesale centres.8 The company has joined hands with the local head to head competition in the field of wholesalers as Metro AG (MEO), Germanys biggest retailer, combined its wholesale operations in Pakistan with local competitor Makro-Habib Pakistan Ltd. Metro holds a major part of the operational business while Makro have a majority in the real estate. Now the company has a total of 10 wholesale centers of which on is situated in Faisalabad, three in Karachi and four in Lahore. The company has planned to further expand in many large

Metro Label Tea A Private Label Tea Brand 2011

cities of Pakistan. The company now owns a couple of private label brands which were previously owned by Makro under the Brand name of ARO, Q-biz and Savepak. Under the brand name of ARO, the company has its vast variety of edible oils, tissues and daily toiletries. Q-biz is generally for stationary and Savepak includes other office utensils. So the phenomenon of private label branding is not alien to the company or any new idea. It is an idea or a business concept that has been used worldwide and by many large retailers and departmental stores/hypermarkets/wholesale centers. Other major segments and departments are as follows: 1. Dry Food department which basically has all the food items which are not consumed as they are produced but rather have a longer useful life and a longer expiry date. 2. Fresh Food department includes all the fruits vegetables & other meat and poultry which have a smaller useful life and expire rather quickly. 3. Non-Food department which is the biggest department which includes everything else from electronic appliances to toiletries and anything that can be included in a store other than food. Metro has many functions which operate both in and out of the store to help the operations go smooth in the company which include: 1. Commercial department team responsible for procurement. 2. Human Resources both at store and head office. 3. Operations at store include the: a. Good receiving b. Checkout c. Dry/fresh/non-food departments d. Customer Service/Development e. Human resources f. Security g. Administration, Logistic & Control9

Metro Label Tea A Private Label Tea Brand 2011

CHAPTER 2: LITERATURE REVIEW

2.1 TEA HISTORY
The origin of TEA is debated and scholars depict in their discussions as to whether it was originated in the interior of southern China or the border of Assam. Originally Tea has a single species which is called the Camellia Sinosis and it gained popularity in the TSang dynasty that cultivated it and later became a symbol of commerce and trade. The first ever European writer to write about the mysterious Chinese drink was in 1559 A. D. The first ever consignment from China was imported in 1606 A. D. to a trading base at Benton. Later, tea was shipped to the non-tea-conscious people from Holland to France. The discovery of tea in Assam led to the origin of tea in the sub continent but that has been argued for many years that the East India Company brought tea plants in the country in curiosity and grew them in parts of the sub-continent. Sir Joseph bank suggested the cultivation of tea in Coochbehar and Ranpur districts of Bengal in 1788. To control and properly manage this crop of tea which was turning out to be one of the major income sources in north and southern area of the sub-continent a body was made under the name of ITA-Indian Tea Association in 1881. In the four major recessions that took place in the latter half of the 19th century, India, Srilanka, Netherlands and West Indies made a mutual agreement to limit the tea production to avoid disasters that might strike the economies and further disrupt the situation of piling up of tea inventory which was eventually going to waste. Later, an Act was passed which was later on modified in year 1938 and 1943 by the committee called the tea licensing committee.10

2.2 TEA TRENDS

The tea trends have gone through a major life cycle from a very low price to high price. In the previous years i.e. before 1980s, the prices were in a long term decline. This decline was a result of many of the factors which contributed to its price volatility. One is the supply and demand combination of it. More and more countries though tea was a favorable product as it had a growing demand which lead the incentive to produce to be even higher.

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Metro Label Tea A Private Label Tea Brand 2011

This decrease in the prices was because of majorly excess supply and not so growing demand of tea. Stocks were piling up in the supply chain of the countries. No monopoly was being created and the economics of the tea was such that all the countries producing tea were producing in large amounts. The bargaining power of the buyer was high and the buyers could easily switch between the suppliers, as there were a great number of suppliers in every country. Tea has the ability to deteriorate quickly so the suppliers need to get rid of old stock otherwise it will rot. The hit from the low prices by the buyers is transferred in the form of low wages to the lowest level in the supply chain of the product. Tea plantation is not much affected by the weather and disease if compared with the coffee and cocoa leaves. The tea market is relatively more stable than the coffee and cocoa market as it has less destabilizing effects due to speculations. The companies who buy tea also tend to have a rather stable but low price levels as the benefits need to be transferred to the end consumer. Tea is cultivated in around 36 countries of the world and rest of the countries buy from these countries to meet their demand for tea. The five major countries known for their tea production are as follows: a) India b) China c) Srilanka d) Kenya e) Indonesia The world production of tea has been growing and different techniques have been applied to enhance further the tea production capacity from the same area of land. Increase in competition to earn revenues through exports have lead to a vicious cycle of lowering down prices in the past but the prices have started to go up due to increasingly high demand for tea in the recent years.11

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Metro Label Tea A Private Label Tea Brand 2011

2.3 TEA INDUSTRY
In any market the equilibrium is never set only by the buyers or only by the suppliers. It is always the combined effect of supply and demand that makes the point where every buyer and supplier rests. The suppliers need to work closely with the research association to find alternate uses of tea. Thus, after many years of research the uses of tea have been extended beyond the boundaries of just black tea. Now, tea is consumed in many other ways and in many countries.

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Metro Label Tea A Private Label Tea Brand 2011

2.3.1 Production & Consumption
Globally tea is produced around 3.5 million tons . But, mainly it is concentrated in the hands of a few top countries given in the table below.

The production of tea has doubled in the last 3 decades and has increased by 51% over the last 20 years. However, the demand side of it has lagged creating intense competition for it to be sold.15 Around 55-56% of the total production of tea in the highest producing countries is consumed locally and the surplus is exported to other countries, mainly the European market, Asian and the US markets. People in China prefer the green teas over the black one and the black tea is normally exported out to Europe and U.S market.16

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2.3.2 Tea Processing
The tea processing is simple and rather easy process. The engineers have made machines which Cut, tear and curl the leaves and standardized machinery and procedures have been developed to remove the human error part of the process. 85 90 % of the worlds tea production is sold by the multinationals of which the two most famous companies are Tata tea and Unilever trading company. Certain biochemical tests have been advised for the tea manufacturers to be conducted to ensure the quality of tea being produced by checking on its brightness, color, appearance, briskness, aroma and creaming down. Methods have been introduced by modern engineers to increase the number of cups produced per given weight of tea, reduce waste and increase solubility of made tea.14

2.3.3 Supply Chain of Tea export in world

From producing to the consuming countries, tea flows a specific supply chain which can be briefly explain with the help of the following figure taken from SOMO report in June, 2008. The process starts when the tea leaves are plucked and from there it either goes to the small farmer or the plantation/estate. Farmer sells it to the collector who stores it and further sells it to the buying center from where it is sent to the factories and transported to warehouses. From there it goes to broker or auctioned and then goes to the buying agent. From the factory/estate it goes by transportation to traders and buying agents. The buying agent further sends it to the freight handler who transports it to the desired country of import from where the tea is blended and packed by the company and branded. This branded tea follows the same regular pattern of distribution as any other FMCG product goes through which is from the storage to warehouse and from warehouse to distributors and then to retailers and finally it reaches the end consumer. This is a regular route of the product tea and in the process it changes many hands. The person who gets the minimum benefit is the producer itself. Rest of the parties involved as a middle man keeps the profit margin much higher than the farmer does.17

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Metro Label Tea A Private Label Tea Brand 2011

The tea market majorly is controlled by the following tea packers: Tata tea (Tetley) Unilever (Lipton, Supreme & Brooke Bond) R. Twinings (Associated British Foods) Ajeepay Group (Typhoo tea)

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Metro Label Tea A Private Label Tea Brand 2011

Ostfriesche Tee Gesellschaft OTG: major German company which also has activities outside Germany. Teekanne: major German company, one of the oldest German traders. Sara Lee International (Pickwick is the main brand on the Dutch market)18

2.4 TEA INDUSTRY OF PAKISTAN

Pakistan tea association is a dedicated body organized for the promotion of tea in the country. It promotes the fascinating facts about tea, its history, information on tea business, education and about the favorite places to enjoy various tastes of tea. It works with the Food and Drink Federation, Pakistan Food Standards Agency, Department for Environment Food and Rural Affairs, the European Food Standards Agency and a range of international bodies, to ensure that the quality of tea imported into the different courtiers meets the highest possible standards as regulated by law.12 According to the article that Mr. F. S. Hamid wrote in his study of the tea market in Pakistan, tea drinking in Pakistan has become an integral part of the social life of people in Pakistan. In Pakistan, there are not many areas where tea is grown but Pakistan has have great imports of tea in the past and present. Pakistan is the third largest tea importer in the world after Russia and U.K (11% of India tea export is directed to U.K).19 According to the news from the PTA website and also stated in the news about the tea imports in Karachi, it was stated that the import duty on tea has increased. Smugglers pay Rs. 19 20 to import tea into the Karachi port but people who are regular importers bear the consequences of such increase in import duties which are in short non-tariff barriers to the industry growth leading to price hikes and eventually reduce the import of tea.13 Tea ranks on the 8th while looking at the total direct products imported from other countries into Pakistan. Countries from which Pakistan imports black tea are around nineteen different countries and green tea is imported from four different countries. The annual per capita tea consumption of Pakistan is 1 Kg. Various steps have been taken by the government of Pakistan to have a control over such a huge import of tea and make the soil feasibility such that people can grow tea leaves in Pakistan so that the surplus can only be

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traded in the country and hence foreign exchange spent on tea can be conserved. As a result of the study several areas of SWAT and MANSEHRA were identified as soil where tea plants could be cultivated. Around 550 acres of land in Mansehra has been allocated with consultation of Chinese tea experts. On the other hand Unilever also made steps in this regard and started cultivation of tea plants on almost double this area for black tea. Government has taken steps to increase the public private partnership in this area so that more fruitful results can be extracted from areas where tea can be produced.20

2.5 PRIVATE LABEL BRANDING

2.6 PRIVATE LABELS IN PAKISTAN

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CHAPTER 3: RESEARCH METHODOLOGY

3.1 POPULATION:
Target population would be of two types; 1. Retailers: Category B and C retailers 2. Consumers: SEC B & C

3.2 SAMPLE SIZE:

Sample size would be 20 retailers and 40 consumers.

3.3 SAMPLING METHOD:

Sampling technique would be convenient sampling.

3.4 RESEARCH METHOD:

Research method will be both qualitative and quantitative; 1. QUALITATIVE: In the first phase retailers informal visits will be conducted and focus groups will be conducted for consumers. 2. QUANTITATIVE: On the basis of qualitative findings, survey questionnaire will be designed for retailers and consumers.

3.5 TOOL FOR THE SURVEY:

Self administered questionnaires will be used as tool for data collection.

3.6 DATA TABULATION AND ANALYSIS:

Data will be tabulated using either MS Excel or SPSS and later analysis will be done with the help of pictorial representation of data (Graphs).

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Metro Label Tea A Private Label Tea Brand 2011

CHAPTER 4: FIRM INTERNAL ANALYSIS

4.1 Internal Factor Analysis Summary
4.1.1 Strengths

4.1.2 Weaknesses

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Metro Label Tea A Private Label Tea Brand 2011

CHAPTER 5: EXTERNAL ANALYSIS

5.1 External Factor Analysis Summary
5.1.1 Opportunities

5.1.2 Threats

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Metro Label Tea A Private Label Tea Brand 2011

CHAPTER 6: STRATEGIC FACTOR ANALYSIS

6.1 Strategic Factor Analysis Summary
Strengths

Weaknesses

Opportunities

Threats

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Metro Label Tea A Private Label Tea Brand 2011

CHAPTER 7: SURVEY FINDINGS

Do you consume tea?

40 35 30 Respondents 25 20 15 10 5 0 Yes Question No. 1 Series1 40 10 No

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Metro Label Tea A Private Label Tea Brand 2011 How often do you consumer tea?
14 12 10 Respondents 8 6 4 2 0

Occasionally

Once Daily

Twice daily

Thrice Daily

More than three cups daily 7

Series1

Question No. 2 10

14

23

Metro Label Tea A Private Label Tea Brand 2011 What purpose does tea serve you?
25

20 Respondents

15

10

Refreshme nt 21

Pleasure

Pain reliever

Energy

Sleep

Others

Series1

12

Question No. 3 4 0

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Metro Label Tea A Private Label Tea Brand 2011

What is the most likely occasion/event/time in a day for you to have tea?
30

25

20 Respondents

15

10

Breakfast

Lunch

Evening

Dinner

After sports/ex ercise

After work/offi ce 12

Not Fixed, whenever I like 8

Others

Series1

27

13

23

Question No. 5 6 4

25

Metro Label Tea A Private Label Tea Brand 2011 What type of tea do you consume?
35

30

25 Respondents

20

15

10

Black 33

Green Question No. 6 6

Pink 1

Others 0

Series1

26

Metro Label Tea A Private Label Tea Brand 2011 Who makes most of the purchasing decision in your house?
18 16 14 12 Respondents 10 8 6 4 2 0

Father 11

Mother Question No. 7 11

Self 18

Others 0

Series1

27

Metro Label Tea A Private Label Tea Brand 2011 From where do you buy your monthly groceries?
20 18 16 14 Respondents 12 10 8 6 4 2 0 Convenient Store 0 Utility Store Hyper Markets Question No. 8 9 Metros Super stores

Series1

20

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Metro Label Tea A Private Label Tea Brand 2011 What form do you buy tea?
20 18 16 14 Respondents 12 10 8 6 4 2 0 Tea bags Tea leaves (open tea) 2 Sachets Bags Box packing Jar

Series1

Question No. 9 0 9

19

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Metro Label Tea A Private Label Tea Brand 2011 Which available Tea Brand to you use?
14 12 10 Respondents 8 6 4 2 0

Lipton Yellow Label 13

Tepal Danedar

Supreme

Vital tea

Tetley Tea

Unbranded

Series1

14

Question No. 10 10 1

30

Metro Label Tea A Private Label Tea Brand 2011 What packing size do you prefer while buying tea?
18 16 14 12 Respondents 10 8 6 4 2 0

80 gm 0

200 gm 8

450 gm Question No. 11 17

1 Kg 15

1.5 Kg 0

Series1

31

Metro Label Tea A Private Label Tea Brand 2011 What price would you pay for a 1 KG bag of tea?
18 16 14 12 Respondents 10 8 6 4 2 0

Rs. 440-470 0

Rs. 470-500 0

Rs. 500-530

Rs. 530-560

Rs. 560-590 17

Rs. 590-620 8

Series1

Question No. 12 3 12

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Metro Label Tea A Private Label Tea Brand 2011 What is most important while choosing a brand for tea?
12 10 8 6 4 2 0

Respondents

Price

Consistens y in taste 12

Quality

Brand name

Source of production 5

nutritional benefits 0

Others

Series1

Question No. 13 9

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Metro Label Tea A Private Label Tea Brand 2011 if a new brand is launched for tea, would you try it?
14

12

10 Respondents

Yes 12

May be 14

May be not 7

No 7

Question No. 14 Series1

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Metro Label Tea A Private Label Tea Brand 2011 In which packing would you buy the new brand of tea?
18 16 14 Respondents 12 10 8 6 4 2 0 Tea bags Tea leaves (open tea) 0 Sachets Bags Box packing Jar

Series1

Question No. 15 0 5

18

14

35

Metro Label Tea A Private Label Tea Brand 2011 Would you recommend others to buy the new brand of tea after using it?
14 12 10

Respondents

8 6 4 2 0 Yes 9 May be 10 Do not know Question No. 16 14 May be not 3 No 4

Series1

36

Metro Label Tea A Private Label Tea Brand 2011 What packaging color would you prefer for this new brand of tea?
18 16 14 Respondents 12 10 8 6 4 2 0 Red 8 Green 11 Yellow Question No. 17 13 Blue 18 Others 3

Series1

37

Metro Label Tea A Private Label Tea Brand 2011 What is the recommended price for 1 Kg bag of tea?
16 14 12 Respondents 10 8 6 4 2 0 Rs. 440-470 6 Rs. 470-500 16 Rs. 500-530 Rs. 530-560 Rs. 560-590 3 Rs. 590-620 2

Series1

Question No. 18 10 3

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Metro Label Tea A Private Label Tea Brand 2011

CHAPTER 8: ANALYSIS OF THE DATA

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CHAPTER 10: NEW PRODUCT DEVELOPMENT

Business Costing
Capital Budgeting
Capital Budgeting Printing cylinder cost per color Total colors to be used Printing cylinder cost Total Sealing Machine Cost Gluing Machine cost Warehouse Land Cost Structure cost Setup cost Total Capital Expenditure Rs Rs Rs Rs 18,000 3 54,000 500,000 350,000

Rs 3,500,000 Rs 1,500,000 Rs 500,000 Rs 6,404,000

Per Unit COGS

Cost per 1 Kg Box Cost of tea Preservatives cost of carton & hard pack cost of packing foil Sealing & gluing cost Total Cost Cost per 0.5 Kg Box Cost of tea Preservatives cost of carton & hard pack cost of packing foil Sealing & gluing cost Total Cost Rs Rs Rs Rs Rs Rs 220.00 7.50 3.25 1.50 0.40 232.65 Rs Rs Rs Rs Rs Rs 440.00 15.00 4.25 2.50 0.40 462.15

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Depreciation & Amortization
Depreciation Expense Table Items Asset Cost Useful life Depreciable amount depriciation expense per year depriciation expense per quarter depreciation expense per month Rs Rs Rs Rs Sealing Machine Rs 500,000 10 450,000 45,000 11,250 3,750 Rs Rs Rs Rs Gluing Machine Rs 350,000 5 350,000 70,000 17,500 5,833

Depreciation Building Asset Cost Useful life Salvage value Depreciable Amount Depreciation expense per year Depreciation expense per month Setup & startup cost Amortization Printing Cylinder Cost Setup Cost Total startup cost amortization period Amortization per year Amortization per month Rs Rs Rs 3 Rs Rs 184,667 15,389 54,000 500,000 554,000 Rs Rs Rs Rs Rs 1,500,000 15 100,000 1,400,000 93,333 7,778

Sales Assumptions
No. of Customers daily 20% customers buying tea Metro label customers (25% of tea customer) No. of stores total national sales in units 5000 1000 250 9 2250

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CHAPTER 11: RECOMMENDATIONS

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CHAPTER 12: CONCLUSION

Discount rate NPV IRR Payback Period Rs 12.5% 2,408,950 16% 1 Year and 9 months

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REFERENCES
1. Indian Tea Research.pdf; pp. 17-18. 2. An overview of tea plantation in Pakistan; A. Waheed, F. S. Hasid and Mand Khan, National tea research Institute; pp. 1-4. 3. Liptons Cardamom Tea Report; Adeel, Asma, Kashif, Rabia & Afaq, A unilever report. pt. 6. 4. http://www.metro-cc.com/dynasite.cfm?dsmid=102631 5. http://www.metro.pk/servlet/PB/menu/1005221/index.html 6. Ibid 7. Ibid 8. http://www.metro-cc.com/dynasite.cfm?dsmid=102632 9. Ahmed Jawwad, 2008, Makro Pakistan: Internship Report, University of the Punjab, p. 32. 10. The Tea Industry in India: The Survey, Dr. K. G. Karmakar & Dr. G. D. Banjarjee, Occasional Paper 39, 2005. pp. 1-4. 11. The Tea market a background study; World bank Data Friedheim , T. Price Analysis of the World Tea Market, Heidleberg Working Paper. 12. http://www.pakistanteaassociation.com/profile.html 13. http://www.pakistanteaassociation.com/news.html 14. Present status and future needs of tea industry in Bangladesh; Islam, Iqbal, Quddus & Ali, pt. 9-10. 15. Sustainability issues in the tea sector: A comparative analysis of the six leading producing countries; Sanne van der vaal, June 2008, pt. 21-26. 16. Ibid 17. Ibid 18. Oxfam, The tea market, a background study, 2002 19. Tea in Pakistan by F. S. Hamid*, 2003. 20. Ibid

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21. Quality Perceptions of Private Label Brands: Conceptual Framework and Agenda for Research; Abhishek Abraham Koshy, February 2008, 22.

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Questionnaire
Name: Occupation: Age: Gender:

Question No. 1: Do you consume tea? a) Yes b) No Question No. 2: How often do you consumer tea? a) Occasionally b) Once daily c) Twice daily d) Thrice daily e) More than three cups daily Question No. 3: What purpose does tea serve you? a) Refreshment b) Pleasure c) Pain reliever d) Energy e) Sleep f) Others

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Question No. 4: Rate the following according to the level of importance in a good cup of tea. a) Taste b) Smell c) Color d) Nutrition (Least imp.) 1 (Least imp.) 1 (Least imp.) 1 (Least imp.) 1 2 2 2 2 3 3 3 3 3 3 3 3 4 4 4 4 5 5 5 5 (most imp.) (most imp.) (most imp.) (most imp.)

Question No. 5: what is the most likely occasion/event/time in a day for you to have tea? a) Breakfast b) Lunch c) Evening d) Dinner e) After sports/exercise f) After work/office g) Not fixed, whenever I feel like. h) Others Question No. 6: What type of tea do you consume? a) Black tea b) Green tea c) Pink tea d) Others

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Metro Label Tea A Private Label Tea Brand 2011

Question No. 7: Who makes most of the purchasing decision in your house? a) Father b) Mother c) Self d) Others. Question No. 8: From where do you buy your monthly groceries? a) Convenient Store b) Utility store c) Hyper markets d) Metros e) Super stores Question No. 9: What form do you buy tea? a) Tea bags b) Tea leaves (Open tea) c) Sachets d) Bags e) Box packing f) Jar

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Metro Label Tea A Private Label Tea Brand 2011

Question No. 10: Which available Tea Brand to you use? a) Lipton yellow label b) Tepal Danedar c) Supreme d) Vital tea e) Tetley tea f) Unbranded Question No. 11: What packing size do you prefer while buying tea? a) 80 gram b) 200 gram c) 450 gram d) 1 Kg e) 1.5 Kgs Question No. 12: What price would you pay for a 1 KG bag of tea? a) Rs. 440-470 b) Rs. 470-500 c) Rs. 500-530 d) Rs. 530-560 e) Rs. 560-590 f) Rs. 590-620

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Metro Label Tea A Private Label Tea Brand 2011

Question No. 13: What is most important while choosing a brand for tea? a) Price b) Consistency in taste c) Quality d) Brand name e) Source of production f) Nutritional benefits g) Others.. Question No. 14: if a new brand is launched for tea, would you try it? a) Yes b) May be c) May be not d) No Question No. 15: In which packing would you buy the new brand of tea? a) Tea bags b) Tea leaves (Open tea) c) Sachets d) Bags e) Box packing f) Jar

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Metro Label Tea A Private Label Tea Brand 2011

Question No. 16: Would you recommend others to buy the new brand of tea after using it? a) Yes b) May be c) Do not know d) May be not e) No Question No. 17: What packaging color would you prefer for this new brand of tea? a) Red b) Green c) Yellow d) Blue e) Others. (please specify) Question no. 18: What is the recommended price for 1 Kg bag of tea? a) Rs. 440-470 b) Rs. 470-500 c) Rs. 500-530 d) Rs. 530-560 e) Rs. 560-590 f) Rs. 590-620

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Metro Label Tea A Private Label Tea Brand 2011

APPENDIX
Income Statement
Year 1 (complete)

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Year 1 (Quarters)

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Year 2

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Year 3

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Metro Label Tea A Private Label Tea Brand 2011

Cash Flow Statements
Year 1 (complete)

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Year 1 (Quarters)

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Year 2

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Year 3

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Metro Label Tea A Private Label Tea Brand 2011

Balance Sheet Statements
Year 1 (complete)

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Year 1 (Quarters)

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Year 2

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Year 3

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