Wagh Bakri & Lipton Tea

Marketing Analysis
 Table of Contents
1 Executive Summary..........................................................................................................3
2 Tea Industry- An overview...............................................................................................4
.............................................................................................................................................4
History of Tea.................................................................................................................4
World Tea Market...........................................................................................................4
3 Company Profile...............................................................................................................7
Market share of Wagh Bakri and Unilever Lipton.........................................................8
4 Market Segmentation........................................................................................................9
5 Visible elements of marketing .......................................................................................11
6 Branding/Positioning......................................................................................................12
7 Marketing Mix Elements................................................................................................12
8 Conclusion......................................................................................................................13
9 Appendix 1 - References.................................................................................................14
10 Appendix 2 – Statistical Data.......................................................................................15
10.1 Statistical Data – Global Scenario of Tea..............................................................16
11 Appendix 3 – Survey Questionnaire.............................................................................21

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1 Executive Summary
This document analyses the marketing strategy adopted by two companies operating in the
Indian Tea Market. In order to understand the various dynamics of the Indian Tea Market, the
companies chosen are one from Indian origin (Wagh Bakri Group) and the other is a Multinational
company (Uniliver’s Lipton Tea).

A sample survey/research was conducted to assess the market perception about these two
brands with different class of people in India and the survey findings distinctly identifies the key
areas that contribute to each of these brand’s market share as a result of their respective
marketing strategies.

Unilever-Lipton is clearly a market leader and due to its international presence and has been
successful in India with consistently maintaining the market leadership for several years while
Wagh Bakri Group being a proprietary company has held on to its market share by focusing on
certain segment of the market where Lipton is relatively weaker.

The document is broadly split into 2 parts.

Part-A identifies the customer segment by demographic and socio-economic factors. The target
segments of each of these brands have contributed significantly to play by their respective
company strengths.

Part-B Analyzes the visible elements of marketing such as packaging, labeling, advertising, sales
promotions, websites, trade publications, outlets, pricing etc. and compare the marketing mix
elements of the selected two brands

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2 Tea Industry- An overview

History of Tea
The first person to drink tea was a man named Shen Nung from China, who one day took
his family mountain climbing. During the climb Shien Non Shei became thirsty and a leaf
drifted onto his foot. He picked this leaf up and twisted the leaf with his fingers. The juice of
the leaf went on to his fingers and he tasted the juice. The taste of the juice was quite bitter,
so Shien Non Shei felt that this leaf could have medicinal properties and could help quench
thirst, when brewed.

World Tea Market

India is the largest producer and consuming countries in the world. Yet the per capita
consumption of Tea in India is one of the lowest in the top ten consuming countries.

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Manufacture
Tea manufacture is the process of converting young fresh tea shoots into dry black tea.
This involves a number of processes from plucking to packing. At the plucking stage, only
the top leaf tips are picked every 6 to 7 days. The tip leaves are younger and finer which
produce a better quality tea. The fresh green leaves now need to have the moisture
removed from them. This is done by blowing air through the leaves for up to 14 hours,
leaving a soft and pliable leaf. There are then two ways of treating the tea. Tea which is to
be used as loose leaf will normally be rolled gently to create a twisted appearance.

Types of Tea
There are several ways of classifying tea like the country or region of origin. The tea is
divided in three types:

• Black tea
Black teas are produced by withering, cutting, rolling, fermenting and drying the tea leaves.
The infusion can be light or dark in appearance, varying in color from orange to brown and
will usually have a strong taste.
• Green tea
Green teas are teas that have been picked and rolled before firing. This stops the veins on
the leaves breaking, preventing the fermentation process, so that the leaf does not turn
brown. The brewed tea is pale yellow or green in color.
• Oolong tea
Oolong teas are semi-green teas, produced by stopping the fermentation process just as
the leaves start to turn brown. The leaves are then fired or dried and deliver a yellowish
infusion.

Tastes of Tea
There are nine main tastes of tea in the world:
• Original tea (from specific countries or regions)
• Standard teas
• Medicinal teas
• Organic teas
• Hot or cold teas
• Perfumed teas
• Seasoning teas
• Decaffeinated teas
• Exotic teas.

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Indian Tea Industry Background
The decade of Nineties has been quite depressing for the tea industry in India. First, it was the
disintegration of the erstwhile USSR which was solidly a loyal market for the Indian teas. The
USSR lifted huge volumes. In the mid 90s, when the market revived, the Russians were looking
for cheaper teas. There was a scramble in the tea industry, particularly in the South, to meet the
Russian demand at their prices. The South Indian teas deeply destroyed their image while
matching the prices offered by the Russians and in the process totally disregarding the quality, In
the North, and later in South too, the industry was continuously facing labor problems. Some
gardens had even closed and were bought by traders who had money on their hand since their
plywood business had been closed down under orders from the Supreme Court of India. The
traders had expected large profits from the tea gardens and did enjoy that for some time. Later
when the fortunes of the tea industry declined in consequence of the Kenyan bouncing back in
the global markets, the traders simply abandoned the plantations and disappeared to avoid
payments on account of social obligations. They were too new to the industry to understand its
complexities and did not know the plantation business. When the industry saw some light in the
aftermath of a drought in Kenya, the traders wanted to go back to their gardens but were
prevented. In many cases, the laborers had taken over production and were marketing green leaf
harvest to the bought leaf tea factories (BLTF). This gave cause for enormous social tensions.
The labor was only one of the many problems the industry faced. There were difficulties on trade
front, auctions, transportation, sales, taxation etc. On the whole, the situation in the Indian tea
industry was pathetic. Yet, most individual firms were doing fairly well, an issue that requires a
proper understanding of the way the industry is organized and operates

Tea Producing States in India

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3 Company Profile
Wagh Bakri
Wagh Bakri Group is one of the largest privately-held tea producers and sellers in India, making
leading strides in tea exports. The group sells more than 25 million kg of tea annually and retail
consumer packing to countries all over the world. The group has not diversified into other FMCG
products and focuses mainly on the Tea business.

Unilever-Lipton
Lipton is part of the multinational company Unilever from UK. It is one of the leader FMCG
company in the world market. In 1890, Sir Thomas Lipton set sail for Ceylon in search of the
world's finest tea. There he turned the growing of tea into a subtle and noble art, blending teas to
create unique and refreshing flavors that brought him fame and fortune. Under the slogan 'direct
from the tea garden to the tea pot', he made tea a popular and approachable drink for everyone
high quality but reasonably priced.

His passion for perfecting the finest blends of teas took him to the most far flung reaches of the
British Empire. At the end of the 19th century he had 300 clerks in London where he had moved
his business to from Glasgow in 1891/2, 5000 hands in Ceylon and 150 shops all over England.
Unsurprisingly, Lipton produces the world’s number one tea today.

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Market share of Wagh Bakri and Unilever Lipton

Hindustan Lever (Unilever-Lipton) is the market leader with 32.5%1 in the Indian Market while
Wagh Bakri is the fourth largest player in the Indian Tea Market with a share of 2.9%.

This research examines the various factors or the company strategies that explains their market
share in 2 parts.

1
Economic Times dated 24th July 2009.

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 4 Market Segmentation
Market Segmentation Criteria
Demographic Criteria Age: 5+ years onwards will be the
potential customer.
Gender
Income
Education
Socio Economic status
Religion
Psychographic Personality, Lifestyle, Value,
Attitude
Behavioral Benefit sought, Product usage
rate, brand loyalty, product end
use, readiness to buy stage
Geographic Geographic penetration
Wagh Bakri Unilever Lipton
Focuses mainly on the Lipton is more of a luxury
non-working class group brand and focuses on
and hence the pricing is slightly high end working
done to suit this class class as their main
customers
India still remains male Lipton being slightly
dominated working expensive caters to women
group class and this will and men working class.
be their primary target
Low income group High Income group
Less educated Relatively better educated
due to brand awareness
Lowe strata Relatively higher strata
Being a Gujarat based International brand, religion
company, enjoys huge hardly plays a role.
loyalty from the state of
Gujarat
Being a regional player Being an international
with minimum presence player –the main customer
in other states focuses base comes from the
mainly on lower to middle income to higher
middle income group income group lifestyle
level personality class.
/lifestyle category
Successful in Offers standardized
indentifying the products with high quality
individualistic taste products
preference an offers
region specific products
Selectively targeting the Available in all metros-
markets such as Gujarat urban and suburban areas
and now slowly with wide distribution
expanding to other channel.
metros
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5 Visible elements of marketing
Part-B Analyzes the visible elements of marketing such as packaging, labeling, advertising, sales
promotions, websites, trade publications, outlets, pricing etc. and compare the marketing mix
elements of the selected two brands.
Packaging Wagh Bakri
The packaging displays the properties
& flavor of the tea.
It comes in tea bags &, loose leaves.
Tea bags come in 200gms packets of
100 tea bags. Other tea comes in
variable quantity packs. The colors
used on the packaging are very
focused to appeal the lower middle
class.
Advertising Lower brand awareness is the result of
lower advertisement initiatives. National
level advertisements are minimal
Labeling Basic details about the products
Promotions Due to lesser vertical businesses have
limited advertisement budgets and hence
lower promotional events
Unilever Lipton
Lipton has now introduced a
new "AOX" logo on its
products, guaranteeing the
health benefits through a
minimum level of antioxidants
per serving.
It shows fresh green leaves on
their packaging to convey
message that it’s natural.
For lemon iced tea, package
shows lemon, ice along with
fresh green leaves.
In short, their packaging tells
the flavor and purpose of the
tea inside.
Sponsors international events
Print, Media, Digital
advertisements with huge
budgets
Product value,
health/nutritional values
Safety and quality standard
adherence.
Being one of premier FMCG
player offers heavy
promotional offers with its
other products.
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6 Branding/Positioning
Lipton with its huge man power focusing on brand image is constantly inventing new ways and
means to improve the brand image and position its products into the right space. Out of many
such initiates are connecting to the youth who are the expanding class of consumers with good
spending power through FACEBOOK, ORKUT, TWITTER social networking websites. Lipton tea
in different forms such as packaged ice tea has become a fashion statement for the youth in the
budding café’s around India and the take away tea packs are hugely successful. Their focus to
tap the youth market is the step in the right direction. While Wagh Bakri is lagging behind on such
initiatives and remain focused on the lower income group strata who normally do not get access
to these initiatives.

7 Marketing Mix Elements

Wagh Bakri
Product • Meets regional
specific taste
requirements
Place • More of regional
player
Price • Has smallest
pack and smallest price
to cater to the lower
income strata which is
their main focus
Promotion • Limited and
sharp focus on selective
markets drive them to
be conventional in
promotions
Unilever Lipton
• Has wide array
of products
• Product
extensions add value
• Consistent
improvement in
products/ new releases
• Has deep
penetration into the
market regional, national
and international
• Has a big range
of pricing for different
quality of product that is
slightly on the higher
side.
• Being an
international brand has
huge advertisement
budgets.

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8 Conclusion
The different marketing strategies applied by each of these companies analysed above
have led to the belief that to connect to the masses, the regional understanding of the
tastes and preferences with lower income strata coverage has helped Wagh Bakri to
maintain their consistent market share while being an international player with enormous
amount of resources easily available in product development and promotion has clearly
given an edge to Lipton to be the market leader.

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9 Appendix 1 - References
http://beacononline.wordpress.com/2008/03/15/india-largest-tea-producer-
and-consumer/
http://www.domain-b.com/industry/Foods/20090825_good_morning_tea.html
http://www.Wagh Bakritea.com/
http://www.lipton.com/
http://www.scribd.com/doc/21943036/Wagh-Bakri-Products
http://teaboard.gov.in/
http://www.adbrands.net/us/lipton_us.htm
http://www.youtube.com/watch?v=rvVadyEg8hk
http://www.thehindubusinessline.com/catalyst/2005/01/06/stories/200501060
0180300.htm
http://www.unileverusa.com/ourbrands/foods/lipton.asp

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10 Appendix 2 – Statistical Data

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10.1 Statistical Data – Global Scenario of Tea

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11 Appendix 3 – Survey Questionnaire
Attached

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