MARKET TRENDS & OPPORTUNITIES

Pakistan imported about 8178.88 metric tonnes (MT) of black tea worth $16.1 mill
ion during March 2009, as compared with 9096.48 metric tonnes in March 2008 wort
h $18.5 million. According to these numbers provided by PTA, imports witnessed a
decline of 10 percent. The apparent reason for the decreasing value of decline
was a hike in the prices of commodities and petrol prices in general; it is sign
ificant to mention over here that the international tea prices also witnessed th
eir peak in the past few months. Probably that is the reason why the existing im
porters in the country could not import the expected quantity of tea. This decli
ne did not really affect the consumption pattern of the population as people con
sumed tea like they did in the past; the change in consumption pattern did not s
how a descending trend because of the existence of smuggled tea. Pakistan’s per
capita consumption of tea is 1 kg per annum, but the country relies almost compl
etely on imported tea. Its import volume is third highest behind Russia and the
United Kingdom. Pakistan imports tea from 21 countries and the major portion is
imported from Kenya. During March, 58.81 percent of the total quantity of import
ed tea was bought from Kenya as compared with 49.63 percent imported in the corr
esponding period last year. According to an interview given to Daily Times by th
e President of Pakistan Tea Association (PTA) Hanif Janoo, legal importers of th
e commodity are facing a critical situation because of increase in smuggling ove
r the past few years. The country’s annual consumption of tea stood at 170-175 m
illion kg, the third highest in the world. Mr. Hanif Janoo also stated that only
100 million kg of tea is brought into the country through legal process while t
he rest is smuggled under the garb of Afghan Transit Trade.
It is to be noted that the government is annually losing Rs 5 billion to Rs 5.5
billion revenue due to smuggling. This loss could easily be neutralized by makin
g the legal trade regime easy and by placing minimum duties on regular imports a
s is the practice in almost all the tea-importing countries. The set of solution
s suggested by Mr. Janoo included the reduction of import duty from 10 percent t
o zero, placing the black tea in negative list or putting a quantity quota like
India-Nepal agreement. Other than the suggestions mentioned above regarding the
steps that could be taken by the government, it is imperative to mention that in
-house production and cultivation of tea leaves would also help us add more mone
y to our local exchequer. If we spend approximately Rs. 20 million just for the
cause of importing tea every month, we can easily calculate the amount we would
save by initiating the local production in the coming few years. The import quan
tity would hence only increase with the increasing population.
PEST ANALYSIS:
The external macro environment in which a firm operates can be expressed in term
s of the following factors Political Economic Social Technological PEST analysis
is used to describe a framework for the analysis of these macro environment fac
tors.
POLITICAL FACTORS:
These factors and government interventions can make or break the industry. The p
olitical factors have played a very benign role for the tea industy. The politic
al arena has a huge influence upon the regulations of the businesses, and spendi
ng power of consumers and other businesses. The political environment of Pakista
n is relatively unstable in the current situation. The
investors are not willing to invest in Pakistan. However, WTO and trade policies
encourage the import of raw materials for Tea industry. Tea Import Quota It is
an important consideration. Each year there is a certain quota on tea import in
total imports of Pakistan. Each player is given quota to import and manufacture
so one can say that it is a very regulated industry. Diplomatic Relations The re
lations with the tea producing nations and Pakistan play a vital role as large p
art of imports comes from Kenya, but now Pakistan is also importing tea from Ind
ia. Unstable Geographic Conditions Pakistan is situated at a very critical and g
eographically strategic location. Due to the uncertainty new investors are not r
eady to invest in Pakistan.
ECONOMIC FACTORS:
Economic conditions of an environment have a direct impact on the development of
any industry. The recent economic recession in the world has had an impact on P
akistan’s economy as well. Pakistan s economy mainly encompasses textiles, chemi
cals, food
processing, agriculture and other industries. In 2005, it was the third fastest
growing economy in Asia. Since the beginning of 2008, Pakistan s economic outloo
k has taken a dramatic downturn. Security concerns stemming from the nation s ro
le in the War on Terror have created great instability and led to a decline in F
DI from a height of approximately $8 bn to $3.5bn for the current fiscal year. C
oncurrently, the insurgency has forced massive capital flight from Pakistan to t
he Gulf. Combined with high global commodity prices, the dual impact has shocked
Pakistan s economy, with gaping trade deficits, high inflation and a crash in t
he value of the Rupee, which has fallen from 60-1 USD to over 80-1 USD in a few
months. For the first time in years, it may have to seek external funding as Bal
ance of Payments support.
Inflation Inflation remains the biggest threat to the economy, jumping to more t
han 9% in 2005 before easing to 7.9% in 2006. In 2008, following the surge in gl
obal petrol prices inflation in Pakistan has reached as high as 25.0%. The centr
al bank is pursuing tighter monetary policy while trying to preserve growth. For
eign exchange reserves are bolstered by steady worker remittances, but a growing
current account deficit - driven by a widening trade gap as import growth outst
rips export expansion - could draw down reserves and dampen GDP growth in the me
dium term. Social Factors The social and cultural influences on business vary fr
om country to country. It is very important that such factors are considered. Pe
ople are socializing more may it be events or casual visits to friends and famil
y. Tea has always been an integral part of Pakistani culture and rituals. It is
understood that tea would be present at all events. Changing Trends As work envi
ronment is becoming more stressful, people require different forms of refreshmen
t and intakes to increase their energy levels. This further increase the intake
of tea at workplaces, tea is not only just available to the employees when neede
d but is also served twice a day in order to keep them going. On the other hand,
media expansion, growth of advertising as a separate industry has resulted in g
reater exposure of all the brands and masses. Hence social factors and changing
mindsets have positively affected this industry Tea has always been acceptable i
n all social classes because of its usage. Green tea has recently gained a lot o
f popularity due to health reasons and is largely consumed. Another factor is th
e emergence of ice tea which is indirectly competing with soft drinks.
TECHNOLOGICAL FACTORS:
Technology is important to gain an edge over competitors and it drives globaliza
tion. Technology helps companies to reduce cost and achieve economies of scale.
Technology also leads to the development of new products and sometimes even segm
ents. Tea manufacturers like Unilever and Tapal already manufacture tea of the h
ighest quality and they achieve it by the state of the art production facility t
hat they have. Lipton has also installed its own plant of Danedar tea production
.
PORTER’S FIVE FORCES:
Micahel Porter provided a framework that models an industry as being influenced
by five factors. The strategic business manager seeking to develop an edge over
rival firms can use this model to better understand the industry in context in w
hich the firm operates
C O TI MPE TIVE
RIVALRY
The intensity of competition in the tea industry is fairly high. There are few e
stablished names like Lipton and Brooke Bond in the market. Now Tetley has also
been introduced in the market. So Tapal is competing with all of these and also
“Khulli Chai” as well. Talking about Lipton and Brooke Bond they are brands of U
nilever which is known to be a giant in the FMCG industry. It seemed impossible
that any local brand would even survive when competing with them but Tapal prove
d them wrong through smart advertising and high quality product it has already g
iven Brooke Bond a run for its money and now facing Lipton. The rivalry can be o
bserved when we look at the ad spend of these companies. All of them advertise h
eavily to gain a competitive advantage over the other.
THREAT OF NEW ENTRANTS
Threat of new entrants is high. This is evident by the immense growth in the ind
ustry and government policies are also encouraging new Tea houses to emerge on t
he scene. The taxes on import of tea are reduced thereby decreasing the cost of
production. It can be taken as positive sign by a prospect player. Initially it
was thought that no company would survive against the giants of Unilever but sin
ce Tapal people have started thinking that local brands can do well and new play
ers might decide to come into this market.
THREAT OF SUBSTITUTES
In this case tea will always remain an integral part of our culture. Having said
that there is a low switching cost associated with the trade off of substitutes
. In case of tea substitute is coffee and even cold drinks in some case. It can
easily be assumed that the demand for tea is nothing but increasing. Currently m
ajority of the consumers have not developed the taste for coffee so it cannot be
seen as a potential threat. Change in patterns can be observed because consumer
s are shifting from normal tea to green tea but again the broad category of the
product remains the same.
BARGAINING POWER OF BUYERS
The bargaining power of buyers is low because of the high demand. Although due t
o increased competition prices remain competitive but buyers have little or no b
argaining power. In case of tea an element of brand loyalty is also associated s
o a consumer would want to use a same brand which gives in his bargaining power.
Also with tea people prefer quality over its price.
BARGAINING POWER OF SUPPLIERS
Bargaining Power of supplier is high because there are few suppliers of tea. The
reason why there are few is because there is a specific taste of tea that consu
mers like so the manufacturers are forced to choose from few options. In Pakista
n tea is imported majorly from Kenya and Srilanka so the supplier is at power to
influence the price due to the limited availability of the raw tea. In Pakistan
recent plantation of tea farms may favor the local manufacturers and foreign su
ppliers may find a reduction in their bargaining power.
BCG MATRIX:
STARS:
Lipton and Tapal have been placed as stars because they not only have higher mar
ket shares as compared to the rest of the brands but also because their business
growth rate is higher and they believe in continuously investing in their busin
esses for expansion purposes.
CASH COW:
Supreme is a cash cow because business growth wise, its progress is pretty slow
but as far as the market share is concerned, it absolutely has a greater market
share than Tetley or Vital for that matter; but at the same time its share is no
t comparable to that of Tapal or Lipton. Therefore the option for them to invest
further in the business is also limited hence limiting their growth opportuniti
es.
QUESTION MARKS:
Tetley and Vital, both have the worst cash nightmares because they have the leas
t market share with demand still existing which could be met. The low market sha
re is an issue at their end and if they do not work on improving it they might e
nd up in the dog category in the near future. It is important for them to furthe
r diversify their businesses if they want to sustain themselves in the current m
arket scenario.
CUSTOMER NEEDS
TARGET MARKET
The broad category of target market for Tapal would be all tea lovers. However t
heir diversified product line caters to various segments of consumer who have va
ried taste preferences. The most generic product can be the Tapal family mixture
and specific would be “Tapal Tez Dum” which is for the consumers who like stron
g color and
flavor. Tapal Danedar provides the finest quality and is for the people who like
quality tea. On the other hand Tapal Green Tea is for the health conscious cons
umers. So we can say that Tapal is catering to almost all categories of Tea drin
kers. Their recent addition is Tapal iced tea which has not been very successful
because the consumers have not developed the taste for it. In order to further
understand the target market and their characteristics below is the AIOD framewo
rk which provides a comprehensive overview:
AIOD FRAMEWORK
NEED/BENEFIT
ACTIVITY
INTEREST
OPINION
DEMOGRAPHICS
COMPETITION
Refreshment
Business , Sports, Shoppin g
TV shows, Magazine s, Communit y TV shows, Family Oriented,
Friends, Relatives
Age 18 onwards
Brooke Bond, and
Gender: Male & Lipton Female Tetley
Health
Sports, Club member s, Job
Health magazin es,
Age
40
and Lipton Tetley
and
onwards Gender: Male & Female Age 16 onwards
Communit friends y Family, y services, Eating out Friends, and magazin es
Energy
College going
Brooke Bond, and
Communit Families
Gender: Male & Lipton Female
Tetley, Vital
Socialization
Social events, Parties, Club member s
Magazine Picnic TV
Relatives, Age 20 onwards Friends, Futuristic
Brooke Bond, and
s, Fashion, Families,
Gender: Male & Lipton Female Tetley
COMPETITIVE LANDSCAPE
COMPETITION:
LIPTON TEA
Lipton is one of the world s best-known and best-selling brands of both hot leaf
and ready-to-drink tea. It is currently owned by Unilever. Being one of the wor
ld s greatest tea brands, making a big splash in the global beverages market; it
is the epitome of international quality. Lipton Yellow Label s assurance of qua
lity has helped it become the world s largest selling tea brand.
Lipton is the global market leader in both leaf and ready-to-drink tea, giving a
global share of all tea-based beverages. In total non-alcoholic beverages, Lipt
on is the global number two brand in terms of volume consumed per annum. Due to
its size, Lipton is also a dominant player in tea expertise in the world. The co
mpany s Lipton Institute of Tea researches tea s various health and mental benef
its, as well as tea growing, processing and tasting. Apart from black leaf teas
(with the long-standing Lipton Yellow Label brand), the company also markets a l
arge range of other varieties, both in leaf tea as well as ready-to-drink format
. These include green teas, black flavoured teas, (herbal) infusions, Lipton Lin
ea ( slimming tea ) in Europe and Lipton Milk Tea in various Asian markets. Apar
t from Lipton Ice Tea, none of their products are available for retail in the Un
ited Kingdom. In a number of markets, including Japan, Russia and Australia, the
company is advertising the benefits of theanine (which is naturally present in
Lipton teas), which is said to have psychoactive properties. LIPTON PRODUCTS: Li
pton s main pillar brands are Lipton Yellow Label and Lipton Iced Tea. Lipton Ye
llow Label has been sold since 1890 and is sold in 150 countries. Lipton Iced Te
a has been sold since 1972 and is available in more than 60 countries. Its ready
to drink canned and bottled varieties are marketed through two joint-ventures w
ith Pepsico International. In 2008 the brand launched Lipton Linea in Western Eu
rope, a green tea variety with a higher level of catechins, which the company cl
aims can help one to lose weight.
Lipton Yellow Label sachet
Lipton Yellow Label pack
Jar
Lipton green tea
VITAL TEA:
Vital tea is a key brand of Eastern products Pvt.ltd. The company was establishe
d in 1991 by Haji Mohammad Yasin. It began with a small tea factory and has deve
loped into a local giant on the bane of a single promise, which is consistent qu
ality. At the core of the group’s success is the sincerity and dedication of its
team of highly qualified technical, financial and marketing expert. Vital Tea i
s increasingly becoming popular among tea-drinkers in Pakistan due to its qualit
y and comparatively lower prices. Its product range only includes black tea. The
mission of the company is to produce the most reliable and valuable products an
d services and to build core competency in the blending and packaging technology
. To increase sales in the existing markets, they are focusing on providing cust
omers with better value and to penetrate new strategic business areas.
BROOKE BOND SUPREME:
Tea drinking is a social occasion in the context of Pakistani culture, tradition
ally enjoyed with family and friends. It is the universal panacea which relaxes
and refreshes at the same time. The success of Brooke Bond Supreme is based on t
his very insight, since tea is a part of the social fabric of Pakistanis. Brooke
Bond Supreme was launched in Pakistan in 1984. The brand was extremely successf
ul from its very inception due to its outstanding blend quality. Since then Broo
ke Bond Supreme has never looked back and today, is the largest selling tea bran
d in Pakistan. On average, 30 million cups of Supreme are consumed daily by peop
le from all walks of life.
TETLEY TEA:
Tetley, a fully-owned subsidiary of Tata Tea Limited, is the world s second larg
est manufacturer and distributor of tea. Owned by India s Tata Group, Tetley s m
anufacturing and distribution business is spread across 40 countries and sells o
ver 60 branded tea bags. It is the largest tea company in the United Kingdom and
Canada and the second largest in the United States by volume. After Tetley was
purchased by the Tata Group in 2000, most of its business in Asia has been integ
rated with Tata Tea and the company plans to completely integrate its worldwide
business with Tata Tea by 2006. The new merged group, Tata Tea Group, is the sec
ond largest tea brand in the world after Unilever. SWOT ANALYSIS:
Strengths
1. Strong brand name 2. Strong distribution network 3. Extensive product line 4.
Consistent quality 5. Loyal customer base Sindh 6. Pioneers soft packaging in i
n
Weaknesses Opportunities 1. 1. Relying 1.Decrease
excessively on sales 2.Neglecting portfolio; “Gulbahar Tea, etc. Chenak some e.g
. Green Dust 3. Overseas Growth through increasing export Tapal many countries S
indh imports their locally own
Threats
in by 1.Competito rs share other provinces gaining in market
cultivating tea on lands
of the brands in the 2. Marketing in areas rural
2. the
Due
to
Tea”, Jasmine Green
black
market, smuggled tea cheaper of in prices is available at
4. Sponsorshi ps
LIPTON
1. Global brand recognition 2. Strong relationship with retailers 3. Economies o
f scale
1.Reduction in R & D 5.
1. Changing consumer preferences 2. Increasing need for products healthy
1.Decrease in revenue
2.Tougher business climate
FINANCIAL REVIEW
COMPANY PERFORMANCE:
During the year 2008, Tapal’s market share has increased. The market share has r
isen as Tapal has won customers due to its strong taste and aroma backed by inno
vative products, for instance, in the same year; Safari was relaunched with the
aim of ‘revolutionizing the taste buds of consumers with a stronger blend of tea
’1. Tapal has engaged in extensive promotion of its products. Another factor dri
ving sales is relatively less prices.
The increase in market share is evident from its increase in sales. Tapal has sh
own an increase of about 29% in sale revenue. This has been primarily
1
Daily News, Tapal tea brand safari launched in Pakistan, Available from www at <
http://www.daily.pk/business/businessnews/3434-tapal-tea-brand-safari-launched-i
npakistan.html>
brought about by the rise in the sales volume. The gross profits will be affecte
d by import duties and taxes. The international increase in tea prices will hit
the cost of production. Similarly, the costs will rise due to higher cost of ele
ctricity and fuel. Since Tapal engages in quite a few marketing campaigns, the o
perating costs will include a higher outlay for advertising and promotion. Apart
from this, Tapal is continuously innovating so the R&D expenditure will jack up
operating expenses. Further, distribution costs will be another major expenditu
re. All this will determine the profits for the year which may be moderate due t
o increased sales revenue and might even show an increase compared to the previo
us year’s profit.
PRODUCT PERFORMANCE:
The performance of Tapal’s products can be gauged from the fact that they are in
dependent and established brands bringing in revenues for the company from their
respective target markets. More than the price, the brands are driven by the qu
ality of tea. Though the prices are comparatively less, there is no compromise o
n quality. After Tapal’s unique Family Mixture became Karachi’s largest selling
brand, the company was encouraged to innovate further. As a result an entirely n
ew category brand called Danedar was created and launched. Tapal Danedar became
the country’s largest selling tea brand with a loyal following, which shows that
Tapal has been successful in creating a strong Brand Image amongst its consumer
s. Tapal’s Iced Tea was, however, not an instant success. People were not inclin
ed towards the taste and concept of iced tea. Still the company continues to inv
est hope in the product line and has recently introduced an iced powder tea. As
opposed to this, Green Tea has been a massive success mainly because people are
getting health conscious. Perhaps this aspect of a
shift towards a healthier lifestyle is what has driven Tapal to invest more reso
urces in the Iced Tea segment. Tapal also ensures that there is greater availabi
lity of its products which will then ensure satisfied customers (due to convenie
nce provided) and smooth sales. Thus the company caters to its customers by prov
iding Tapal Danedar and Family Mixtures to more than 140,000 outlets in Pakistan
, which include superstores, department stores, general stores, medical stores,
paan walas, grocery stores, merchants, etc. grocery stores and merchants. Togeth
er these provide 80% volume of the tea sales2.
CORPORATE STRATEGY
Company Introduction
At the time of partition in 1947, Mr. Adam Ali Tapal bought a tea store in Jodia
Bazar from a Hindu who was then migrating to India. At the time of establishmen
t, Tapal faced furious competition in the industry from Lipton, Brook Bond, M. I
sphany and loose tea available in Jodia Bazar. However Mr. Adam Ali Tapal stood
steadfast against this tough competition and uncertainty (such as change in gove
rnment setup, quota system, tea not grown here, import restrictions etc) in the
market because he saw an opportunity for his company in the market. The shop in
Jodia Bazar existed until the 1970 when the third generation of the Tapal family
, Mr. Aftab Tapal, the current CEO joined the company. After studying abroad, Af
tab Tapal returned to Pakistan to introduce professional management and unique p
roduction ideas to the business. A well trained tea
2
Report on Tapal Tea, Available at <http://doureport.com/index.php?topic=65.msg16
5>
taster and tea specialist himself, Aftab Tapal introduced new tea concepts and d
eveloped a wide range of tea blends catering specifically to the tastes of peopl
e throughout Pakistan. He believed that they should reach out to the customers i
nstead of the customers coming to them. Making a modest beginning over half a ce
ntury back, today Tapal has become the largest, 100%; Pakistani owned Tea Compan
y in the country. It has modern tea blending and packaging factories, warehouses
equipped with state-of-the-art equipment and a team of highly dynamic professio
nals headed by Aftab Tapal himself. He was the first to introduce soft packs in
the country. He developed an entirely new brand and category- Tapal’s Family Mix
ture (the mixture of tea & dust). Mr. Aftab Tapal was the first to invent the hi
ghly successful brand Danedar Leaf Blend. In December 1997, Tapal Tea became the
first Pakistani Tea Company to earn the ISO-9001 certification: a symbol of the
highest international quality standards. Again in December 2000, Tapal acquired
the ISO-9001: 2000 certification, making it one of the first few companies in t
he world to achieve this milestone. In addition to the standard requirements, th
e ISO-9001: 2000 certification system includes requirements for environment impr
ovement, concepts of TQM (continuous improvement) with major emphasis on consume
r requirements and satisfaction. Even today, the company looks out for opportuni
ties prevailing in the market. Very recently, they decided to diversify into col
d beverages and seek to make this a separate business unit of the company. VALUE
S AT TAPAL: As far as creativity is concerned, Tapal has been able to fulfill it
s commitment because of introducing the creative products like Ice Tea and Ice T
ea Powder. By doing so they sure have also diversified into a business that actu
ally compliments their core business: Tea. Quality wise Tapal’s products have
always excelled within their range of competitors and they have been able to sus
tain quite a lot of loyal customers. In pursuit of commitment, there are asset o
f shared values that the employees of Tapal adopt so as to fulfill their commitm
ent to their vision & mission. • • • • • Trust in each other Outstanding quality
Passion for creativity Leadership Together everyone achieves more
A commitment to quality3
"Never compromise on quality" has been the motto at Tapal since the very beginni
ng. This commitment to quality has resulted in a high level of customer satisfac
tion and unflinching brand loyalty. In December 1997, Tapal Tea became the first
Pakistani Tea Company to earn the ISO-9001 certification: a symbol of the highe
st international quality standards. Again in December 2000, Tapal acquired the I
SO9001: 2000 certification, making it one of the first few companies in the worl
d to achieve this milestone. In addition to the standard requirements, the ISO90
01: 2000 certification system includes requirements for environment improvement,
concepts of TQM (continuous improvement) with major emphasis on consumer requir
ements and satisfaction.
TAPAL S QUALITY POLICY
The Management and the employees of Tapal Tea (Pvt.) Ltd. are committed: To prod
uce products that meet the customer s requirements & expectations.
3
http://www.scribd.com/word/full/13768143?access_key=key-2lzsu8nbokcw4cp95tzg
To fulfill the requirements and effectiveness of the quality management system t
hrough continual improvements. By constantly reviewing / updating the relevant q
uality objectives of products & processes. To participate as teams or individual
ly towards the improvement of processes, personnel, environment & ethical values
. Leader in innovation Always on the move, Tapal Tea is honored to have taken th
e lead in a number of areas in the tea industry. Tapal has been: The first to in
troduce soft packs in the country. The first tea company to introduce metal-free
tea bags. The first to develop an entirely new blend and category-Tapal Family
Mixture (the mixture of leaf & dust). The first to invent the highly successful
brand Danedar Leaf Blend. The first to market Kenya teas in Pakistan. The first
tea company to be awarded the ISO 9001/2000 Quality Certification Their commitme
nt to quality and leadership skills can hence be judged from the analysis presen
ted above; Tapal is no doubt a national brand which has been able to come up to
the expectations of not only the consumers but the management as well.
VISION
“To satisfy our stakeholders and as a guiding principle to our business; be a be
nchmark for quality, creativity and ethical values. To achieve leadership in all
categories of our core business and diversify in areas which compliment the cor
e business.” ANALYSIS:
The vision of Tapal clearly states its desire and commitment to innovation and i
mprovement in company practices and also in the way they serve their customers.
The core business of Tapal is manufacturing and selling of tea products. They wa
nt to achieve excellence in all the markets in which their products are competin
g. This shows their commitment to their focused business area in which they want
to achieve fineness and excellence. CONS: The vision of Tapal tea does not stat
e the company’s commitment to satisfy its consumers through the provision of qua
lity products in the market. It does not explicitly explain the company’s missio
n to become the most popular tea brand in the industry. The vision could also ha
ve stated that it is a truly Pakistani company and thus remains committed to its
Pakistani consumers living in the country and abroad as well.
GROWTH PLANS
From its modest beginning as a family-owned retail outlet in Jodia Bazaar Karach
i, the biggest commodities market in the country, Tapal Tea (Private) Limited to
day is the largest wholly-owned Pakistani tea packaging and marketing company. P
HENOMENAL GROWTH Tapal tea company has enjoyed a phenomenal growth rate particul
arly during the last decade to expand its base in the branded market which for l
ong were dominated by multinational competitors. Tapal today enjoys over 17 per
cent or 22 million kilogram share of the total tea market annually up from 10 mi
llion kilogram in 1990. Tapal s envious growth has come at the expense of its mu
ltinational competitors, Brooke Bond and Lipton brands, whose combined market sh
are has shrunk from 60 million kg to 45 million kg during the same period accord
ing to the General Manager Finance and Corporate Services of Tapal Y.H. Thara to
ld PAGE.
Tapal Tea looks forward to even greater progress and innovation in the years to
come. It will remain committed to providing its consumers with the highest quali
ty products and improving their lives in whatever little way possible. INCREASE
IN PRODUCT LINE: Tapal has always been keen on introducing new products (tea) in
the market. The wide variety of teas available under the umbrella of Tapal are
a sure proof of this. Recently Tapal Iced tea in Lemon & lime and peach flavour
was introduced in the market. As the product line of Tapal is wider than any of
its competitors; Lipton, Brooke Bond Tetley and Vital tea; Tapal should be able
to keep up with this pace of innovation in order to stay ahead of competition in
the industry. INCREASE IN PROMOTIONAL ACTIVITIES: Tapal has always been proacti
ve in marketing its products to its consumers and hence the popularity of the br
and. However with the increase in competition and an increase in tea consumption
the promotional activities targeted directly at the consumers should be increas
ed proportionately. Marketing should be increased and the quality should be impr
oved in the form of Sales promotions, sponsorship of events etc. INCREASE IN EXP
ORTS: Tapal is already exporting tea to a number of countries and is recognized
as a quality brand internationally. However expanding its exports to many other
countries would bring substantial revenue to the company as well as bringing glo
bal recognition to the company and its brands. Tapal is already in the process o
f venturing into more foreign markets, particularly those which have a sizeable
population of Pakistani expatriates. UAE and Dubai have proved to be profitable
potential markets for the brand as both these countries have huge numbers of Pak
istan nationals living there. The company is targeting many other markets in Ame
rica and Europe which show great demand for a brand of strong tea as such Tapal.
CULTIVATION PROJECT Tapal leased about 5 acres of land for five years for the pu
rpose of setting up cultivation areas for tea in the year 2000. The land is loca
ted in the vicinity of National Tea Research Institute (NTRI) Shinkiari, Mansehr
a. The company paid the rent and bore the costs of developing these land the tec
hnical support for which was provided by a company known as NTRI. Once the land
is developed, Tapal will hand the land back to the participating farmers and tre
at development costs as interest-free loans to be payable over the next five yea
rs. This project will encourage cultivation of tea locally and will result in su
bstantial cost cutting for the company. At present a huge amount of Rs 10 billio
n is spent in foreign exchange on tea import. The project will certainly help re
duce the tea import bill. Tapal intends to increase the area of tea cultivation
in the future.
PRODUCT STRATEGY
PRODUCT FINANCIAL PLANS
The financial plans for Tapal for the net three quarters of the year 2009 as for
ecasted by the group are given below:
Sales by Tapal in The market shares for both Unilever and Tapal are available fo
r 2007 2007 while the actual sales for Unilever are obtained from its financial
statements of 2008. Sales for Tapal and Unilever are assumed to be in the same p
roportion as their market shares; sales for Tapal in 2007 have been derived by u
sing the market shares of the two companies and the stated sales figure for Unil
ever.
Sales by Tapal in Since the performance of Tapal has picked up, its market share
2008 for 2008 has risen by 2 percent. Contrary to this, the share of Unilever h
as decreased.
Forecasted Quarterly for Tapal in 2009
In order to forecast Tapal’s revenue-based performance for the Sales year 2009,
the quarterly sales are estimated according to the prior data and apt seasonal d
emand. The sales figure for the first quarter of year 2008 for Unilever is 3,130
,276,000 which are 27% of the entire sales for the same year. Accordingly this p
ercentage is applied on the sales revenue of Tapal for the year
2008 and quarterly sales for the first year of the last quarter turn out to be 3
,238,576,329.
The base for quarterly sales is derived from the sales estimated and calculated
for the four quarters of the year 2008. Due to fluctuations in seasonal demand,
it is deduced that the share of sales in the first quarter of year 2008 is 27% w
hile in the second quarter this share is estimated to fall to 25% with the arriv
al of summers. However, as Tapal has iced tea brands, the share does not fall si
gnificantly. During the third quarter, the share of sales is. It is assumed that
the same share of 27% will continue in the last quarter as the consumption of t
ea increases during winters. It has been borne in mind that the habitual trend i
n sales will continue because there are loyal customers of Tapal who consume tea
regardless of the seasonal change.
In order to forecast sales for the first quarter of year 2009, it is assumed tha
t the previous quarter’s sales would increase by 2% due to Tapal’s inherent comp
etencies and the winter season. In the second quarter, it is predicted that the
sales will rise by 4% since Tapal has introduced a new product especially apt fo
r the summer season: Tapal Ice Tea Powder. It is supposedly aimed at health cons
cious individuals who can enjoy a refreshing and nutritional drink. The sales wi
ll experience a greater growth in this quarter as people would purchase the prod
uct unprecedented in the market. The initial purchases will drive sales growth.
In the third quarter the sale percentage of 21% increases by 5%. The sale growth
is not phenomenal as it is assumed that the product will not have consistent an
d increased sales as earlier Iced Drinks have not been readily accepted by custo
mers. The customers have still not developed taste for iced drink as they cannot
relate to tea in that context. In addition to this, tea consumption somewhat de
creases during Ramadan. The
last quarter is predicted to witness a rise of 7% in sales. This will be attribu
ted to the winter season. These increases are added to the proportionate sales o
f the quarters for the year 2008. These quarterly sales for 2008 are obtained fr
om the earlier shares of sales deduced for the same year. The overall increase i
s lower than that of previous year as it is being assumed that with more competi
tion in the form of Tetley, the growth will not continue as had in the past.
ASSUMPTIONS
The above financial plans ave been formulated keeping in mind some assumptions w
hich are h=given as below:
Demand for tea is expected to rise. It is assumed that the prominent change in t
he sales is due to the difference in sales volume rather than sale prices. Unile
ver and Tapal are compared as they take up a major chunk of the market and joint
ly own the biggest share of the branded market. This is evident from published d
ata: 60 million kg out of the 70 million kg of the branded tea market during 200
04. Market share is taken as the basis for predicting sales for the year 2009.
4
A. M. Syed, Tapal Holds Strong Market Position, Available from world wide web at
<http://www.pakistaneconomist.com/issue2000/issue46/i&e1.htm>
UNIQUE SELLING PROPOSITION
The main reason behind tapal’s success is that it has localized its taste. It ma
nufactures its product according to the taste and requirements of the market it
is catering. Another reason behind Tapal’s success in catching the hearts of the
consumers is that, it has always been close to them. This has been possible bec
ause of its strong Brand Activation Activities. These activities have added a ne
w dimension to their marketing activities making them more attractive, exciting
and interactive as possible. These activities not only reinforce Tapal as a nati
onal company but also assist all its other brands in having their desired impact
wherever required. These activities are customized according the brand requirem
ents to achieve maximum results. Not only this, these activities also provide th
e consumer with a 360-degree product experience, which not only helps in educati
ng the consumer but also engages them to the brand. These activities cover Outdo
or Billboards, Event Marketing, Road Shows i.e. floats, mobile kitchens etc, Rur
al Development Programs, Weekly Bazaars, and Merchandizing of the products.
PRODUCTS, THEMES & PRICING
PRODUCT:
Tapal has introduced new tea concepts and developed under its product range, a w
ide range of tea blends catering specifically to the tastes of people throughout
Pakistan. Today Tapal has become the largest, 100% Pakistani owned Tea Company
in the country. The saga of Tapal tea started with its formulation of a unique t
ea blend, which was later named Tapal family mixture, that led to the brand
name of Tapal tea becoming a hot favorite, and eventually the largest selling te
a brand in Pakistan. The current product line of Tapal consists of the following
brands:
TAPAL DANEDAR: As evident by its name the blend consists of well made premium qu
ality Kenyan BP1s (granules). Each component of Danedar blend is carefully selec
ted to provide a lovely looking leaf appearance that is neat, black, grainy and
fairly even. Danedar blend is an excellent combination of lively taste and disti
nct flavor of world’s best high grown teas, which produces satisfying cup of tea
for the consumers who like aromatic/flavor tea. The most important feature of t
his top quality Danedar brand is that the characteristics of a brewed cup remain
intact even after a long time. Simply, Danedar is a powerful brand and a great
value product and there is no real substitute of it. TAPAL FAMILY MIXTURE: Famil
y mixture is a blend of high grown Kenyan primary leaf and dust grades awhich ar
e carefully selected for their rich colour, distinct flavor and a light golden a
ppearance. The leaf and dust grades enhance a faster infusion guaranteeing the c
onsumer a rich flavoury cup within a quick brewing time. Only tea leaves which a
re low in moisture content is selected for Family mixture in order to guarantee
a long shelf life and a longer liveliness period of the brewed tea. CHENAK DUST:
Chenak dust is an economy tea embracing high grown flavoured teas which are pro
portionally blended with medium grown Kenyan golden leaves. This gives an all ro
und cup of tea at a reasonably lower price.
Chenak Dust infuses quickly and gives a strong cup of tea within a very short ti
me. This brand is popular with actual tea lovers who love drinking tea several t
imes a day because of its low price. TAPAL GREEN TEA: Tapal Shades of Green is a
n aromatic combination of the finest carefully selected tea leaves and the tanta
lizing freshness of natural Jasmine, Elaichi and Lemon. •Jasmine Green tea Infus
ed with Jasmine flowers, Jasmine Green Tea opens a new window to your mind. Its
vibrant essence breathes new life into your sense with a distinct soothing effec
t. Jasmine Green Tea is a winning combination of alluring fragrance and health.
•
Elaichi Green tea
The earthy flavour of Elaichi Green Tea has a pulsating nature that lifts your b
ody to a new level of clarity giving you more revitalization.
•
Lemon Green tea
Lemon Green Tea with its rich taste regenerates your soul. It is your perfect so
ul mate to indulge in a rejuvenating experience of its refreshing essence.
TAPAL MEZBAN: Tapal Mezban Dust has an attractive neat, black and grainy appeara
nce. It is the finest quality dust blend which is carefully selected for its qui
ck liquoring characteristics.
Only high grown Kenyan teas are used for this blend due to their high concentrat
ion of flavour and strength. Mezban Dust has a smooth, thick and full cup with a
n irresistible aroma making it a perfect cup at any time of the day. A small qua
ntity of Mezban Dust makes several cups of tea, which makes it both suitable for
domestic use but even more for the hot tea shop consumers who prefer a quick an
d strong cup of tea. TEZDUM: Tapal Tezdum with the fine looking leaf appearance
is specially designed for those consumers who like strong and aromatic and full
of flavour cups. A superior blend of high liquoring premium quality Pekoe Fannin
g Tea that produces quick liquoring, thick and coloury cups. GULBAHAR TEA Tapal
Gulbahar, the Chinese premium quality Green Tea blend is the favorite green tea
among all age group. Due to its numerous health benefits, Gulbahar has become th
e best selling Green Tea brand in Pakistan. Tapal Gulbahar is also the first cho
ice for the popular Kashmiri Tea consumers. TAPAL SPECIAL TEABAGS The unique fla
vor of high grown leaves especially selected from the finest tea gardens in the
world make Tapal Special Teabags a treat at any time. The combination of an extr
a strong blend with the convenience of environmental friendly metal-free tea bag
s has made Tapal Special an instant hit with consumers. TAPAL SAFARI Tapal Safar
i is a tea which has been serving its consumers for almost a decade. It is made
from the finest Kenya leaf teas and provides extra
cuppage of great tasting tea to its consumers. Tapal Safari chai is basically ai
med at adventurous and brave people. TAPAL ICED TEA: The super market culture ha
s changed consumer purchase habits and the youth today has ample choices in fron
t of them, even when compared to 5 years ago. Increasingly they are becoming a h
uge market on their own. Tapal wants to increasingly cater to the youth market a
nd has done so with the launch of Tapal Ice Tea. With Tapal ice tea, Tapal has l
iterally set a new precedent in the market. Tapal Ice Tea is not a new product b
ut it is a first of its kind in Pakistan. Tapal ice tea is made for today s gene
ration which loves to enjoy their life at its fullest and chill out. Thirst-quen
ching and delicious, Ice Tea is pure and satisfying. Made from real tea, it comb
ines the goodness of tea antioxidants with no preservatives, no artificial color
s and only a small percentage of sugar which is less than most regular soft drin
ks. Thus tapal Ice tea is a refreshing addition to TAPAL’s popular product line
of traditional teas.
PRICE:
Tapal never wanted to compromise on its quality so they adopted a value based pr
icing and low price strategy. As Tapal specifically catering to different segmen
ts of the market so its prices are based on its effective value to customers rel
ative to other products. Also the prices are different for different SKU’s. PRIC
ING STRUCTURE: The pricing structure for Tapal products as quoted by local gener
al stores is given below:
PACKAGE SIZE
Hard Package (100gms) Hard Package (200gms) Hard Package (400gms) Hard Package (
500gms) Hard Package (1000gms)
PRICE (RS.)
Rs. 45 Rs. 85 Rs. 180 Rs. 205 Rs. 415
PROMOTIONS
Tapal has been very active in advertising for each of its products in the produc
t-line. It has been using both BTL(Below the line) and ATL(Above the line) for t
he purpose of promotion. Through BTL Tapal is focusing on display racks, sign bo
ards etc. mainly placed to different retailers for heavy promotion against their
competitors. The specific term used by TAPAL is the MODERN TRADE so that they h
ave an eye contact of the product with the customer. In this they are using shel
ves to display their product in big stores like METRO and MAKRO. Through ATL Tap
al is focusing on broadcast and print media promotion by placing ads on T.V and
placing newspapers ads as well. The success of Tapal’s promotion can be gauged b
y the fact that red which was originally associated with Brooke Bond is now asso
ciated with Tapal. Through their packaging and promotion they have simply taken
the color from Brooke Bond.
PLACEMENT:
CHANNELS OF DISTRIBUTION
The channel of distributions according to this brand Tapal Danedar is simply as
shown by the diagram as manufacturer to distributors who vary according to geogr
aphical dispersion and then to retailer to final consumer. Tapal has a great cha
nnel of distribution not only to this brand but also all other brands that vary
geographically according to consumer needs. TAPAL has 5 main warehouses in Pakis
tan which are located in the following cities. Karachi Hyderabad Sukkur Multan R
aiwind From these warehouses the product move to the distributors as only in nor
th they have 207 distribution channels. And from these distributors the product
move to the next, which is retailer and then to the consumer. This is also one o
f their strengths that they have a strong distribution channels. Tapal has a cou
ntrywide sales & distribution network; the company has over 400 distributors fro
m Karachi to Khyber operating nationwide. In the beginning the company sole aim
was to capture the tea market of Karachi, as they were already in tea business h
ere, only and then strategically build there network to other cities of Pakistan
. Tapal caters to its customers by providing Tapal Danedar and Family Mixtures t
o more than 140,000 outlets in Pakistan, which include superstores, department s
tores, general stores, medical stores, paan walas, grocery stores, merchants, et
c. Grocery stores and merchants together provide 80 percent; volume of the tea s
ales.
PRODUCT ROADMAPS & RELEASES
SALES SCHEDULES
The sales for the next three quarters of 2009 have already been discussed in the
product strategy section. The sales schedules for Tapal have been forecasted to
be as follows:
SALES FOR TAPAL DURING 2007-2009
2007 Unilever 43% 9,782,641,000 Tapal 41% 9,327,634,442
2008 Q1 Q2 Unilever 42% 11,715,780,000 Tapal 43% 11,994,727,143
2009 Q3 Tapal 2,644,837,335
Q4
Total
Market Share Sales
3,303,347,855
3,118,629,057
3,465,276,672
12,532,090,919
QUARTERLY SALES FOR TAPAL DURING 2008-2009
Sales in Q1 of 2008 for Unilever Percentage of Total Sales
3130276000 27%
Q1 Q2 Q4 Q3
Quarterly S ales for Tapal in 2008 27% 25% 27% 21%
3,238,576,329 2,998,681,786 2,518,892,700 3,238,576,329
Q1 Q2 Q3 Q4
F orecasted Quarterly S ales for 2009 P ercentag Increases e 2% 4% 5% 7%
3303347855 3118629057 2644837335 3465276672
ASSUMED SALES IN REGIONS
As discussed earlier Tapal has five warehouses in different cities. It is assume
d that majority of their sales come from the area of Sind reason being that it i
s a Karachi based company and the concept of Danedar originated from Sind. This
fact can further be substantiated by the fact that 3 of their 5 warehouses are l
ocated in Sind. So we have assumed the distribution as follows:
http://www.brandsynario.com/webcast/3/qashif-effendi.aspx http://www.scribd.com/
doc/49295/smallholder-tea