Tapal Tea: How to Lead Value

Growth in Pakistan
Source: https://blog.euromonitor.com/tapal-tea-how-to-lead-value-growth-in-pakistan/

In 2013, the Pakistani tea market ranked third in terms of retail tea consumption, with
only China and India recording higher retail volume sales. Despite the omnipresence of
tea in the country, the transition of consumers from unpackaged to packaged tea has
enabled strong retail value growth with the overall market increasing by US$ 517 million
between 2008 and 2013. Tapal Tea, a local family-owned company, accounted for
nearly 40% of this growth, recording US$ 312 million in sales in 2013 alone. In fact,
within the top ten tea markets in the world, Tapal Tea accounted for the highest
company share in a single market, with 31% value share in 2013. Tapal Tea’s
command of the Pakistani market stems from its stable of brands that are each targeted
to appeal to very specific demographics, its commitment to innovation, and its ability to
adapt its product mix to meet changing consumer demand.

Branding Based on Cultural Preferences

Tapal’s multi-brand portfolio, which includes a variety of black and green tea brands, is
a major contributor to the company’s success. In addition to tailoring its brands and
blends to satisfy the economic constraints of low-, middle- and high-income consumers,
Tapal customizes its offerings to suit Pakistan’s various ethnic groups.  Tea
consumption in Pakistan, like many Asian markets, is not only tied to refreshment, but is
also an integral part of the social fabric.  Tea choices are often personal as they reflect
one’s heritage and culture. As consumers switch to packaged teas, the brands that
appeal to a consumer’s specific tea tradition are likely to be the most attractive.

Each of Tapal’s nine brands caters to a specific ethnic and economic demographic.
Both Tepal Mezban and Tapal Chenak, for example, are economy priced brands of
black tea dust (low-grade tea that is favoured for its inexpensiveness and ability to
produce a strong brew) that are blended to meet the taste preferences of people from
the Sindh province in the south-western part of Pakistan.  Tapal Chenak, however, is
packaged specifically to appeal to the area’s Hindu population, through its use of saffron
– an auspicious colour in Hindu culture – on its packaging. Tapal Tezdum, which
recorded US$ 38 million in retail sales in 2013, is the company’s economy-priced brand
for consumers in the Punjab province. Tezdum is positioned as a strong, powerful
blend, to appeal to the ‘valor and bravery of the Punjabi people.’ For consumers who
live in the northern provinces near Kashmir, where green tea is the traditional beverage
of choice, Tapal markets its Gulbahar Green Tea brand.

Commitment to Innovation

Along with its awareness and sensitivity to cultural tea preferences, Tapal’s dominance
of the Pakistani tea market is derived from the company’s consistent innovation. Indeed,
the company’s flagship brand ‘Tapal Danedar’ first introduced in 1987, was the first
Kenyan tea blend to be launched in Pakistan. The flavour proved so likeable for
Pakistani consumers that Unilever, whose Lipton brand is ranked number two in the
market, launched its own Danedar blend under its Yellow Label brand. Tapal Family
Mixture Tea is another example of Tapal bringing innovation to the Pakistan tea
industry. Launched in 1947, the year of Pakistani Independence, Tapal Chai, later
renamed Tapal Family Mixture tea, marked the first blend of tea leaf and tea dust. The
unique blend combines the full flavour of full leaf tea with the strength of tea dust,
making it a popular household staple.

Tapal Tea is also able to sustain its success by adapting to the changing Pakistani tea
landscape. While green tea consumption has historic roots  north Pakistan, black tea is
the overwhelming tea choice in the country. However, as Pakistani consumers become
more and more aware of the health benefits of green tea, the category is expanding,
increasing by 17% in retail value terms between 2012 and2013. Tapal is well poised to
benefit from the new popularity of green tea. In addition to its Kashmiri green tea brand,
the company launched a brand called Shades of Green, which offers a range of
flavoured green teas available in Jasmine, Lemon, and Elaichi. In 2013, the Jasmine
variant alone recorded US$ 76 million in sales.
Top Tapal Brands, Retail Value, 2008-2013

In addition to the shift in tea types, the format of tea is also changing in Pakistan. Tea
bags, in particular, are growing in popularity thanks to increasing urbanisation and
changing lifestyles, as consuming tea on the go becomes more prevalent. Tapal Tea is
at the forefront of tea bags in Pakistan with its Tapal Special brand available exclusively
in tea bags. In 2013 Tapal also made its popular Tapal Danedar brand available in tea
bags. Tapal’s campaign identified the new offering as the “King of Teabags” as they are
hermetically sealed, microwave-safe and staple-free.

Although Tapal Tea’s reach is limited to Pakistan, its longstanding success offers
important insights into how to drive retail value in tea within developing markets.  China
and India, which are forecasted to record the first and second highest absolute retail
value growth in tea over the next five years, are similar to Pakistan in terms of being
markets where tea consumption is part of the social fabric. Furthermore, China and
India, like Pakistan, are both multi-cultural countries with varying traditions and ethnic
groups. To maximize penetration, companies should look to tailor their products to
appeal more poignantly to individual preferences rather than offering a singular brand or
tea blend at various price points. In addition to staying attuned to cultural traditions, tea
companies should also seek to adapt their products to the evolving tea consumer.
Although the shift from unpackaged to packaged tea is a major component of the tea
evolution in Asia, the change does not stop there, but extends to different tea types and
formats.
Note: The answers will be accepted in printed form only and
due date is 14th March 2020.

Questions

 Question-1)

With reference to the Tapal’s market segmentation, an exclusively powerful strategy is

implemented by the brand by catering the needs of almost all regions of Pakistan. Its
main competitor remains Lipton which has a comparatively larger market share in Urban
markets like Lahore and Islamabad. Keeping the consumption preferences and buying
behaviors in mind, what strategy should Tapal implement to capture the urban markets.
(5 marks)

 Question-2)

Tapal’s segmentation success depend on a lot of factors, including years of

manufacturing experience and strong market research, but one unsuccessful brand
under Tapal’s umbrella is Tapal Ice Tea. In your opinion why has this brand failed. (your
answer should have all the details based on factors like nature of product and
advertising strategy). (5 marks)

 Question-3)

Besides Tapal’s strong sales and loyalty in the niche markets, another reason is high
involvement in events sponsorships like food melas and music shows. How can Tapal
gain sales promotion in its niche markets understanding consumer’s psyche leading to
loyalty. (5 marks)

 Question-4)

Your recommendation to the Tapal group in terms of future growth and expansion into
new markets and segments. (5 marks)