Case Study: 1 Brand Management

Submission Date: 14th Nov, 17 Submission Time: 4:30 PM

Black Out: Green In

"Love might not have been invented in India but it was certainly perfected here," wrote Gregory
David Roberts in Shantaram. One may write the same about our tea-drinking too. The British
may have introduced tea in India, but drinking it became a competitive sport on our watch, with
the copious quantities consumed daily. So much so, that the action for tea brands is gradually
shifting to newer brews.

Tea is among the world's most widely consumed beverages. One of the biggest markets for tea is
the United States where Americans drink 3.6 billion gallons annually Tea is globally one of the
most popular and cheapest beverages with major production center’s in India, China, Kenya, Sri
Lanka, Turkey & Vietnam.

The tea industry is one of the oldest organized industries in India with a large network of tea
producers, retailers, distributors, auctioneers, exporters and packers. Total tea production in the
world has exceeded 4 billion kgs with India producing about 1 billion kg of tea. Tea is one
product which is universally present in Indian households irrespective of rich or poor, nuclear,
joint or single family. The day of most Indians begins with a cup of tea. Tea isn’t simply tea in
India but it is like a staple beverage here and a day without it is impossible and incomplete.
Indians prefer their steaming cup of tea because for them it acts as an energy booster and is
simply indispensable. This popular beverage has a lot of health benefits too as its antioxidants
help to eliminate toxins and free radicals from the blood.
India is the second largest producer of tea in the world and contributes to around 30% of the
global tea production. The market size of tea is estimated to be approx.10,000 Crore with a
penetration of more than 90% in the domestic market.

In India, tea is consumed in two forms: packaged (branded) or loose. While a major share of the
market is of loose tea suppliers, branded tea manufacturers are also fast increasing their market
share. The demand for packet tea is driven by rising consumer incomes, quality of tea and
product diversification with flavored tea production.

CTC (cut, twist and curl) tea is the major contributor in the tea market (80%) segment but with
the increasing consciousness on the health issues, green tea sales are picking up.

Black tea is predominantly produced and exported by Kenya and Sri Lanka. Green tea is mainly
grown and consumed in China.

Different Types of Tea

All the tea that we drink comes from the Camellia Sinensis plant, or the tea plant. Although one
would come across different varieties of tea in the world the three main varieties are the India
tea, the China tea and the hybrid tea. It is from these that the different types of tea like the green
tea, the black tea, the white tea, the herbal tea and oolong tea are prepared.

Green Tea: When tea leaves are picked, they generally whither and dry and when this occurs,
oxidization takes place. When green tea is manufactured, it is not allowed to oxidize. The leaves
are dried very quickly either in a pan or an oven to dehydrate them and then they are stored. This
process retains the polyphenols catechins and the flavanoids which make drinking green tea a
healthy and beneficial option. However green tea possesses a grassy taste and it loses its flavor
within a year.

Some of the benefits of green tea are its antioxidant properties which aids in preventing cancer,
raising metabolism rate and cutting fat and even reducing the probability of heart diseases. Due
to its short brewing time, green tea is stimulating.

Black Tea: This tea is stronger than any other type of tea. The caffeine content is higher in black
tea as compared to the less oxidized varieties. It retains its flavor for many years. Black tea is the
tea that enjoys the maximum sales in the world.

White Tea: This is the rarest variety of tea. The leaves are picked and harvested before they are
fully open and the buds still have a covering of white hairs on them. White tea undergoes the
least processing and is also not fermented. It has a light and sweet flavor and contains less
caffeine and more antioxidants than any other type of tea.

Herbal Tea: Tisane or ptisan is an herbal infusion. Tisane is made with any part of the plant
either dried or fresh flowers, roots, seeds or leaves over which boiling water is poured. There are
different types of herbal tea which can be consumed for medicinal purposes.
Oolong Tea: Being of Chinese origin, this tea is a cross between the popular black and healthy
green varieties and the two styles commonly associated with this tea are green and amber.

Tea market in India: Some characteristics highlighted:

Indian Tea Market can be divided into 2 segments the packaged one and the loose one. The
market has more than 300 brands although the market is dominated by HUL and Tata tea who
have presence along all pack and price points and have a total market share of 40%. The other
players are Duncan’s, Eveready, Goodricke, Wagh Bakri, Mohini etc. Tata tea Agni drives the
economy segment, HUL has other brands like Taj Mahal, Red Label, Taaza, A1 and 3 roses. The
packaged tea segment is very price competitive.

The tea bag consumption in India is in tune of 7000 tons/annum and growing at 20%. Most of
the companies have tea in all pack sizes 2 kg, 1 kg, 500 gm, 250 gms, 100 gm and 50 gm . There
are also sachets which are prices as low as 1 INR. 250 gm is the most preferred size. Branded tea
penetration city wise is as follows:

Tea: Global Market:

The global market is highly concentrated. The worldwide production and share of countries is as
follows:

World Tea Production and Share of Countries

d Tea Productionllion Kg)

2009 2010 2011 2012 % Share

(Changing Preferences & Changing Market Dynamics:
As lifestyle preferences of Indian consumers are changing rapidly, the demand for premium
products in the market has increased. The green tea market in India which is estimated as an
approximately Rs 150 crore market and has been growing upwards 50 per cent year-on-year.
Indians are majorly black tea drinkers. Green tea has been an acquired cultural habit that has
come along with the urban India's urge to stay fit. Seeing potential in the segment, big FMCG
giants like Hindustan Unilever, Tata Global Beverages, Twinings and other brands have either
launched new variants or re-launched their green tea product range. The green tea market has
witnessed lot of action in terms of flavors and celebrities as brand ambassadors. The competition
is expected to become more intense in times to come.
Tata Global Beverages, for instance has upped the ante in the green tea segment by appointing
Bollywood actress Kareena Kapoor to endorse its Tetley range and take the product to Tier II and
Tier III markets. On the other hand, Hindustan Unilever (HUL) has used both Lipton and Taj
Mahal to take on rivals Tetley and Twinings, especially in green tea. Bollywood actress Anushka
Sharma endorses Lipton Green Tea. The prices of green tea is higher as compared to Black Tea,
and is majority of sale is contributed from tea bags.
Value Added Variants of Tea – Tea in value added formats and new exciting variant will
increase its appeal as well as consumption. Promoting more flavours like fruits and herbal tea
into tea like ginger, lemon, elaichee, etc. This will add up a new arena into tea industry.

Health & Wellness – Consumers are becoming increasingly conscious about health issues and it
has been playing a determining role in the choice of food products. With the passage of time and
excellent marketing techniques, consumers are now better aware of the health benefits of
flavoured and green tea.

Emerging Consumer Demands – Drinking habits and lifestyles have changed in the last 15-20
years and people are now willing to pay more for quality tea. However increasing consumer
attention to the quality of products, growing brand loyalty and active promotions by
manufacturers reflect a shift from unbranded to the branded products. A positive sign is that with
rising demand from consumers, tea exports are likely to increase. Green tea, unlike normal tea is
not a family drink and is largely consumed by male members because of its health benefit and
hence tea bags are more popular for this segment.

While green tea is not a brand new segment, it is one that has tea majors, Tata Global
Beverages (Tata) with Tetley and Hindustan Unilever (HUL) with Lipton and Taj Mahal, rooting
for us to go green. In the process, they have beaten the erstwhile leader, London-based Twinings,
and are going neck and neck with each other. The steady rise in competition indicates the
segment's significance.

Tetley Tea, sold across 40 countries, comes in six flavours in its green tea portfolio including
ginger, mint, lemon, honey and lemon, citrus and spice and aloe vera. The company enjoys a
market share of 35-40 per cent.
Arun N. Singh, managing director and chief executive of tea major Goodricke Group, said green
tea consumption in the country is growing by more than 10 percent a year.
"Green tea will have a slow organic growth in India. High consumption growth of it will take
time as it is related to change in tradition," Singh said.

Sangeeta Kichlu, vice president of Jay Shree Tea and Industries, a B.K. Birla Group company,
said although retailers were beginning to stock green tea, its supply was not currently matching
demands. She said there was a lack of marketing for green tea in the country as tea producers
were not sure about how to market it.
"I think there is a future for green tea in India. What is lacking is marketing strategy. Darjeeling
green tea market is yet to be cultivated."

According to Indian Tea Association (ITA) Secretary General Manojit Dasgupta, more and more
brands are adding green tea in their portfolio as its domestic market has shown evidence of
growth.

Dasgupta said people were not replacing black tea with green tea, but adding the latter in their
food habit as an additional choice, driven by health considerations. "Urban, educated, health
conscious and economically strong consumers are experimenting as green tea is more natural as
it is drunk without milk and sugar. It is also light and delicately coloured...it means goodness,
wellness and health," he averred.

Nutritionists said health-conscious tea drinkers are adding green tea in their diet as it is full of
antioxidants which can reduce the risk of cancer and help in weight loss.
"People have started to add green tea as a part of their healthy diet as it is high in antioxidants
which reduces risk of cancer and also helps combat obesity by increasing the metabolism rate,"
said Hena Nafis, a nutritionist.

High metabolism rate increases boiling of calories, helping over-weight people lose fat.

With retail margins that can be 50 per cent more than that of black tea, according to Technopak
consultants, the stir in the green tea market is hardly a surprise
Market share of Green Tea
The variants make distribution a key cog in the green tea wheel. "Unlike black tea, where
preferences are well-entrenched, with green tea the consumer is still experimenting. At the point
of sale, she wants to check the entire product range before making her choice. We, therefore,
have to ensure the availability of the entire range," says Grover of Tata.
A vital piece in green tea's growth is the demand for tea bags, which is still nascent in the
country. Unlike loose, crushed black tea, green tea is mostly consumed in the form of tea bags.
But the largest buyers of tea bags - institutional clients - are yet to be tapped in a big way.
"Airlines and railways are possibly the largest consumers of tea bags.
However, the other segment comprising institutional clients - hotels, restaurants and cafes - holds
more promise for green tea brands. Tata has the advantage of access to its in-house hotels
businesss (the Taj Group), airline-catering operations (TajSATS) and even a cafe chain in the
joint-venture with US-based Starbucks. HUL could look inwards to its own chain of coffee
shops, BRU World Cafes, albeit not on the same scale as Tata.
Create a plan for successful launch of a GREEN TEA Brand in Indian Market. The plan should
cover important aspect which will affect the branding decision of the firm.

Instructions for Submission:

 The assignment may be submitted in group of 2. Not more than 2 students are permissible
in one group, although if the student desires he may submit individually.
 Clearly hand written in not more than FOUR (4), A-4 sheets both sides written.
 In case of any strange similarity of answers between two groups, any instance of copying
will invite a penalty of zero marks to the groups involved. No clarification in this
reference will be seeked or entertained.
 No request for the extension of submission time or date will be considered under any
circumstances
The solution will be evaluated on following parameters:

S.No
1 Completeness of solution 1 2 3 4 5
2 Coverage of issues involved 1 2 3 4 5
3 Inter-linkages of various functions/aspects 1 2 3 4 5
4 Overall written presentation 1 2 3 4 5
5 Application of concepts 1 2 3 4 5
6 Practical relevance of solution 1 2 3 4 5
7 Uniqueness/ novelty/ creativity in 1 2 3 4 5
solution
8 Structure and flow of answer 1 2 3 4 5
1-5 means from poor to excellent.