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Young Men's Christian Association

UG DIPLOMA IN DIGITAL MARKETING AND MEDIA MANAGEMENT

2021-2022

SUBMITTED BY -
TANYA CHAUHAN

PROJECT TITLE
“STUDY INTO THE FMCG SECTOR IN INDIA
(TEA INDUSTRY)”

TEACHER :- Mr.B.Tekchandani

Signature :

___________________________
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CERTIFICATE

This is to certify that this research titled “STUDY INTO THE FMCG
SECTOR IN INDIA (TEA INDUSTRY)” is academic work done by tanya
chauhan ,under my supervision and guidance . To the best of my knowledge
and belief the date and information presented by
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ACKNOWLEDGEMENT

It is my pleasure and honor to present this report and say a few heartfelt words
for the people who were part of this report in numerous ways, people who gave
a lot of support right from the stage of conceiving the project.
I am extremely grateful to my guided by Mr.B.Tekchandani , who has been a
motivator and source of inspiration. His uninhibited guidance and valuable tips
have been responsible to put in my best efforts in working on this project. My
special thanks to him for giving me a direction for the project.
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Content

PARTICULARS PAGE No.

1. 1. INTRODUCTION 7

Policies and food Laws 10

Key players in India 11

2. 2. History Of tea 12

Global tea industry 16

Global competition 20
21
Characteristics of tea Industry
23
SWOT Analysis of Indian Tea industry
3. Top 2 Players in tea industry and their SWOT 31
analysis
Recommendation to improve their market 41
share
4. References 43

5. Conclusion 45
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CHAPTER 1
FAST MOVING CONSUMER GOODS (FMCG)

We regularly talk about things like tea, butter, potato chips, toothpastes, razors,
household care products, packaged food and beverages, etc. But do we know under
which category these things come? They are called FMCGs. FMCG is an acronym
for Fast Moving Consumer Goods, which refer to things that we buy from local
supermarkets on daily basis, the things that have high turnover and are relatively
cheaper and their cost is relatively low.
FMCG industry, alternatively called as CPG (Consumer packaged goods) industry
primarily deals with the production, distribution and marketing of consumer-
packaged goods. The Fast-Moving Consumer Goods (FMCG) is those consumables
which are normally consumed by the consumers at a regular interval. Some of the
prime activities of FMCG industry are selling, marketing, financing, purchasing, etc.
The industry also engaged in operations, supply chain, production and general
management. This project helps us understand the Tea Markets as part of the
FMCG industry.
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Key Segments:

The FMCG sector consists of four product categories, each with its own hosts of
products that have relatively quick turnover and low costs:

Fabric wash (laundry soaps and

synthetic detergents);
Household Care Household Cleaners (dish/utensil
cleaners, floor cleaners, toilet
cleaners, air fresheners,
insecticides and mosquito
repellents, metal polish and
furniture polish)

Oral care, hair care, skin

care, personal wash
Personal Care (soaps); cosmetics and
toiletries; deodorants;
perfumes; feminine
hygiene; paper products.

Health beverages; Tea; soft

Food & Beverage drinks; products (biscuits,
bread, cakes); snack food;
chocolates; ice cream; coffee;
soft drinks; processed fruits,
vegetables; dairy products;
bottled water; branded
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POLICIES:
India has enacted policies aimed at attaining international competitiveness through
lifting of the quantitative restrictions, reduced excise duties, automatic foreign
investment and food laws resulting in an environment that fosters growth. 100 per
cent export-oriented units can be set up by government approval and use of foreign
brand names is now freely permitted.
Food laws:
Consumer protection against adulterated food has been brought to the fore by "The
Prevention of Food Adulteration Act (PFA), 1954", which applies to domestic and
imported food commodities, encompassing food color and preservatives, pesticide
residues, packaging, labeling and Regulation of sales

KEY PLAYERS IN THE INDIAN FMCG INDUSTRY IN INDIA:

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)
3. Nestlé India
4. GCMMF (AMUL)
5. Dabur India Ltd
6. Asian Paints (India)
7. Cadbury India
8. Britannia Industries Ltd.
9. Procter & Gamble Hygiene and Health Care
10. Marico Industries Ltd
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CHAPTER 2
HISTORY OF TEA

Little did Chinese Emperor Shen Nung realize that in 2737 B.C., when dried leaves
blew into his cup of hot water, the beverage he discovered would cause sensations
around the world. During this time, water was always boiled for hygienic reasons.
The pleasant aroma and refreshing taste enchanted him and soon everyone in the
realm was drinking tea.
Japan was introduced to tea by Yensei, a returning Buddhist priest residing in China
at the time of the discovery. Tea was immediately embraced by Japanese society and
resulted in the creation of the intricate Japanese Tea Ceremony, elevating tea to an
art form.
Tea continued to travel throughout the Orient and it was during the time of the
Europe annex plorers tea made its cultural broad jump. The East India Tea Company
brought tea into Holland but its prohibitive cost of $100 per pound kept tea as a rich
man's beverage until so much was imported that tea prices fell and was sold in small
food shops. In 1650, Peter Stuyvesant brought tea to the American colonists in New
Amsterdam, later called New York. Soon the colonists were drinking more tea than
all England. In England, tea gardens, ornate outdoor events with fancy food and tea,
fireworks and gambling, seemed to sprout up overnight as entertainment centers of
the day and many British enjoyed the festivities offered there.
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Russia discovered tea when ornate chests of the dried leaves were sent to Czar Alexis
by the Chinese Embassy in Moscow in 1618. It became Russian custom to sip
heavily sweetened tea from a glass in a silver holder. Russians also enjoyed honey
or strawberry jam stirred into tea as their ethnic contribution. Even today, vodka and
tea are the national beverages of Russia. To recover extensive expenses from the
French and Indian War, England levied a huge tax on tea Imported to the colonies,
mistakenly believing the colonists were so hooked on it they'd pay anything to keep
their supply coming in. One night the men of Boston dressed as Indians, reminiscent
of the French and Indian War stole aboard the ships docked in the Boston harbor and
threw the expensive tea cargo overboard and into the harbor. England reacted by
having a raging fit, closing Boston's port and sending Royal troops into occupation
of Boston. Because of this, colonists met to discuss these events and declared a
revolution. At one point, England even gave The John Company the power to not
only import tea but to coin its own money, make peace, declare war and other
privileges previously only held by countries.
In the 1880's, America came to the forefront as the biggest importer of tea due to
faster clipper ships and the ability to pay its debts in gold. To recover extensive
expenses from the French and Indian War, England levied a huge tax on tea money
for even coming to the Fair, headed ice to the vats of liquid hot tea and in the process
made it one of the highlights of the 1904World's Fair.
The tea bag came along as a surprise. Samples of tea at the turn of the twentieth
century were given out in small silk bags and instead of opening the bags, the tea
bag in its entirety was being dropped into hot water by consumers. Quickly, a tea
company sprang into action and patented the tea bag. Thomas J. Lipton was
responsible for designing a four-sided tea he dubbed the 'flo-thru' tea bag, which
allowed tea to steep more quickly in the cup than the customary two-sided bag.
Today tea is grown on tea estates and70% of the tea we drink is grown in Sri Lanka,
India, Indonesia, Kenya, Argentina and China.
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The best climates for growing tea are those that are tropical or semi-tropical and tea
can be grown on soil that is not fit for growing much of anything else. Today there
are three basic types of tea: black, oolong and green and from these three types spring
over 3,000 cultivated varieties. The leaves are picked at just the right moment
designated by the tea estate manager, then crushed to start the oxidation process.
GLOBAL TEA INDUSTRY

The global tea industry is largely dominated by India ± the second largest producer
and the largest consumer of tea. India is succeeded China and followed by Kenya
Sri Lanka, Vietnam and Indonesia in the production hierarchy of countries.
The tea industry is peculiar, the soil characteristics, the climate and the rainfall
determine the character of the tea and its taste. Tea affects the taste buds; therefore,
it is difficult to replace a particular variety with a substitute. This explains why
certain types are favored by certain countries: for example, the CIS (commonwealth
of independent states i.e., Russia) countries favor Indian and Sri Lankan teas. UK
and Pakistan favor Kenyan teas.
India accounts for 26 per cent of world's production. While Sri Lanka, Kenya and
Indonesia are the other leading producers; their combined production is lower than
that of India. What makes India an interesting object of study is that its size is no
millstone around its neck; its production growth between 1996 and 1998 at 5.63 per
cent was way ahead of the increase in world production of one per cent only.
In 2008, world tea production reached over 4.73 million tones. Producing 1.16
billion kilos (2.56billion pounds) of tea per year, China is the number one source for
tea on the planet. At 980million kilos (2.16 billion pounds), India stands at number
two. Kenya and Sri Lanka follow. When it comes to exports, China ships out 297
million kilos (654.78 million pounds) of all types of tea whereas India, with
primarily black tea, moves 203 million kilos (429.9 million pounds).
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This ranking is fairly recent. Prior to the 1960s, India was the top producer and
exporter. For example, in 1955, India shipped out 165 million kilos (363.77 million
pounds) of her total production of 301 million kilos (663.59 million pounds). The
fierce rivalry with Sri Lanka sawthe two jockeying back and forth for top exporter
position from the 1960s through the 80s. Butin 1991, Sri Lanka surpassed India for
good with 211 million kilos (465.12 million pounds).
China caught up in 1993 with 201 million kilos (443.13 million pounds) to India’s
175 (385.81million pounds). Kenya’s exports exceeded India’s that same year with
188 million kilos (414.47million pounds). For total production, India has taken
second place to China since 2006. (All figures come from respective countries' tea
boards.) So, while other sources are ever more aggressive in their outputs, India
seems to be lagging. It is no surprise that China has made fast gains on the rest of
the pack, given the increases the country has made in its other industries. But why is
this happening in tea, specifically?
What is the fundamental reason, if there is one, for India’s slip in tea supremacy? In
my presentation and during the lively question-and-answer that followed, I offered
a few ideas that seemed to catch the audience’s attention.
The follow table shows the amount of tea production (in tons) by leading countries
in recent year.
INDIA TEA HISTORY:

The tea industry in India is about 172 years old. It occupies an important place and
plays a very useful part in the national economy. Robert Bruce in 1823 discovered
tea plants growing wild in upper Brahmaputra Valley. In 1838 the first Indian tea
from Assam was sent to United Kingdom for public sale. Thereafter, it was extended
to other parts of the country between 50's and 60's of the last century. However,
owing to certain specific soil and climatic requirements its cultivation was confined
to only certain parts of the country.Tea is an agro-based commodity and is subjected
to vagaries of nature. Despite adverse agro climatic condition experienced in tea
growing areas in many years, Indian Tea Plantation Industry is able to maintain
substantial growth in relation to volume of Indian tea production during the last one
decade. Tea is an essential item of domestic consumption and is the major beverage
in India. Tea is also considered as the cheapest beverage
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amongst the beverages available in India. Tea Industry provides gainful direct
employment to more than a million workers mainly drawn from the backward and
socially weaker section of the society. It is also a substantial foreign exchange earner
and provides sizeable amount of revenue to the State and Central Exchequer. The
total turnover of the Indian tea industry is in the vicinity of Rs.9000 Crs. Presently,
Indian tea industry is having (as on 18.12.2009)1692 registered Tea Manufacturers,
2200 registered Tea Exporters, 5848 number of registered tea buyers, Nine tea
Auction centers.
The tea industry in India is about 172 years old. It occupies an important place and
plays a very useful part in the national economy. Robert Bruce in 1823 discovered
tea plants growing wild in upper Brahmaputra Valley. In 1838 the first Indian tea
from Assam was sent to United Kingdom for public sale. Thereafter, it was extended
to other parts of the country between 50's and 60's of the last centuries. However,
owing to certain specific soil and climatic requirements its cultivation was confined
to only certain parts of the country.

Major Tea Growing Regions:

Tea plantations in India are mainly located in rural hills and backward areas of
North-eastern and Southern States. Major tea growing areas of the country are
concentrated in Assam, West Bengal, Tamil Nadu and Kerala. The other areas where
tea is grown to a small extent are Karnataka, Tripura, Himachal Pradesh,
Uttaranchal, Arunachal Pradesh, Manipur, Sikkim, Nagaland, Meghalaya, Mizoram,
Bihar and Orissa. Unlike most other tea producing and exporting countries, India
has dual manufacturing base. India produces both CTC (Crush, Tear, Curl) and
Orthodox teas in addition to green tea. The weight age lies with the former due to
domestic consumers preference. Orthodox tea production is balanced basically with
the export demand. Production of green tea in India is small. The competitors to
India in tea export are Sri Lanka, Kenya, China, Indonesia and Vietnam.
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Global competition

The major competitive countries in tea in the world are Sri Lanka, Kenya, China and
Indonesia. China is the major producer of green tea while Sri Lanka and Indonesia
are producing mainly orthodox varieties of tea. Kenya is basically a CTC tea
producing country. While India is facing competition from Sri Lanka and Indonesia
with regard to export of orthodox teas and from China with regard to green tea
export, it is facing competition from Kenya and from other African countries in
exporting CTC teas. Because of absence of large domestic base and due to
comparatively small range of exportable items, Sri Lanka and Kenya have an edge
over India to offload their teas in any international markets. This is one of the reasons
of higher volume of export by Sri Lanka and Kenya compared to India. Another
important point is that, U.K has substantial interest in tea cultivation in Kenya. Most
of the sterling companies, after Indianization due to implementation of FERA Act
started tea cultivation in Kenya. So, it makes business sense for U.K. to buy tea from
Kenya and Kenya became the largest supplier of tea to U.K

CHARACTERISTICS OF THE INDIA TEA INDUSTRY:

1) Productivity and quality: The art of plucking, fine-tuned over the last 200 years,
requires two fresh leaves and a bud to
be plucked manually. Tea productivity can be measured as per unit of labor (man
year) and per unit of land (hectare). Mechanized plucking (when labor is in short
supply or expensive) enhances productivity, but with compromise on quality, as
coarse leaves also get plucked. When tea is in short supply, some producers increase
productivity by allowing plucking of coarse leaves with fresh ones. When premium
for quality rises, producers improve the quality by compromising on productivity.
The productivity also depends on the age of tea bushes, genetic material, irrigation,
fertilizer, cultivation techniques, etc. Replantation (typically 2% of crop pa) to
replace old bushes is done to improve productivity.
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2) Labor intensity: This industry is very labor intensive. Labor cost is generally
fixed and therefore lower production would result in higher unit cost of production.
The proportion of variable elements in labor cost depends on labor legislation and
extent of casual and temporary workers employed. If the production suffers on
account of bad weather or pests, the per unit cost of production goes up
significantly
3) Long gestation: Tea bushes mature for commercial exploitation in 5-7 years
and remain productive for an average 50 to 60 years. Major part of capital
expenditure is to be incurred in first five years, which then yields return over the
next 100 years.
4) Commodity nature: Tea prices fluctuate widely with demand supply imbalances.
The commodity is perishable and demand is relatively inelastic to price. While
demand has a secular growth rate, supply can vary depending on climatic conditions
in the major tea growing countries. Unlike other commodities, tea price cycles have
no linkage with the general economic cycles, but with agro-climatic conditions.
5) Inconvenient but healthy drink: Tea is a very inconvenient drink to brew. The
tendency to form a creamy layer of caffeine -tannin adds to the inconvenience. Tea
besides having properties of fatigue amelioration has chemicals, which help in
maintaining cholesterol levels and in preventing cancer. However, research work on
the subject is not conclusive.
6) Organized industry: Tea industry is an organized agro industry. This implies
that labor laws exist and since the dominant mode of tea trade is through auctions, a
large number of small producers get fair prices.
7) Domestic Competition: The major share of tea market is dominated by
unorganized players. There are about 1000 of tea brands in India, of which 90% of
the brands are represented by regional players while the balance of the 10% is
dominated by Tata Tea, Hul, Wag Bakri Chai, Godrej, Sapata International and
others. With the growing shift from loose to branded tea, regional players are now
expanding their reach and also getting premium with their offerings
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Special Features of India Tea Industry:
♦ Production dependent of agro-climatic conditions.
♦ Same plant and same agro-practices give variations in quality in different
regions
♦ Product Life is for limited period
♦ Labor intensive
♦ High Cost due to high input cost
♦ No priority for Scientific Cost Management
♦ Huge proportion old tea & Low Productivity
SWOT ANALYSIS OF TEA INDUSTRY OF INDIA:
Strength:
♦ Demand for tea has been growing at some 2% per annum and should
accelerate further
♦ Technical & Manpower Skill: Due to a huge population base in India
Technical & Manpower Skill is available in abundant.
♦ Good Research Support by tea growers has will help industry grow further.
Weaknesses:
♦ Labor intensive industry: The second-generation labors are reluctant to join
this industry hence it could pose a problem of skilled labor in the near future.
♦ No Effective Cost Management system adopted by companies and other
regulatory bodies.
♦ Supply from more efficient players like Kenya, China, Sri Lanka
♦ Declining Export of India over the years.
Opportunities:
♦ Export Potential if India can increase its production capacity
♦ To make tea more acceptable and fashionable like coffee
♦ To come up with new flavors/formulation of the tea, tea houses etc. to
popularize the concept of tea in India.
♦ Large untapped rural market for branded tea companies Lile Hul and Tata
Tea
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Threats:
♦ Global competition
♦ Low Cost in some countries like China, Sri Lanka and Kenya.
♦ Import of Tea from other countries.
♦ Cost escalation on account of increase in the cost of production

INDIA Vs OTHER TOP TEA PRODUCING COUNTRIES:

Major tea exporting countries of the world are Kenya, Sri Lanka, China, India and
Indonesia. However, prior to evaluation of export performance of major tea
exporting countries of the world, it is necessary to analyze the production and
domestic demand of tea in these countries. On the production front India is the
second major producer of the tea in the world. Other countries include China, Sri
Lanka, Kenya and Indonesia. During 1951-60, India around 40 percent of world
production, declined to 26 per cent in 2008.The declining trend can be observed in
case of Sri Lanka as well. Only China and Kenya are able to increase their share in
world production considerably. The share of China and Kenya during 1951-60
was13.59 per cent and 2.67 per cent respectively, increased to 31 per cent and 9 per
cent in 2008.Inrecent years China emerged as major tea producer in the world. Fig-
1 shows, during 2004 and2005, China became number one tea producer in the world
pushing India into number two position. India had doubted China’s emergence as a
top raking producer, citing limitations infield level statistics and under reporting of
the tea production in India. Tea board of India was then engaged in revising the
production.
Since 1985, even though China’s area under tea cultivation is lower than earlier
period due to improvement in yield, production increased by 3.28 per cent per annum
during 1984-94, by 4.13 per cent per annum during 1995-05. In India production
increased by 1.83 percent per annum and 1.07 per cent per annum respectively
during the same period. In Kenya, production increased by 5.53 per cent per annum
and 3.12 per cent per annum respectively during the same period.
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Production in Sri Lanka and Indonesia also increased during this period with
improvement in supply conditions in Kenya, China and Indonesia, India’s share in
world production declined even though its total production increased. Domestic
consumption is calculated by deducting export from production. In case of India,
there is continuous increase in share of domestic consumption in production, it
increased from 32.06 per cent during 1951-60 to 66.92 per cent in 1981-90, further
increased to78.26 per cent in 2001-04. We can observe that, whatever additional
production is taking place, it is almost entirely consumed internally leaving export
surplus to remain stagnant and sometimes export even shows declining trend. In
contrast, Kenya’s domestic consumption share in production is very low and
declined over a period of time shows that except for a few years, the increase in
production of tea in Kenya is almost entirely used for export. In Sri Lanka, domestic
consumption in production is very low and is declining. In 2001-04,
around 94 per cent of tea production in Sri Lanka is used for export. In recent years,
tea export and production are almost same in Sri Lanka. In China, share of export in
production of tea increased over a period of time. From Fig .1 one can observe that
in China, production, export and consumption shown increasing trend. In Indonesia,
share of consumption in production increased, but it is lower than India.
Reasons for decline in exports:
1) Fall of Soviet Union, main trading partner of India. Tea exports have come down
by70 percent from 44 Mn/Kg in 2000 to 12.5 Mn/Kg in 2003.
2) Exports to trading ally Iraq, Iran and Afghanistan was affected during the same
period due to tension and war in middle-east. Exports came down by roughly70
percent between 2000 and 2003.
3) Quality has always been the biggest consideration in tea exports. Other emerging
countries like Sri Lanka and Kenya are scoring high due to modern methods of
production and branding. Whereas, India is on continuous slippage in terms of
quality and branding thereby giving share of exports.
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4) Concern over quality has resulted in exports of high margins value added tea (Tea
Bags and Branded Tea) come down from 45 percent of total tea exports in 1999 to
33 percent in 2003 (value terms). In volume terms, came down from86.8 Mn/Kg in
1999 to 39.8 Mn/Kg in 2003.
Global tea industry has witnessed a paradigm shift with emergence of stronger
countries like Sri Lanka and Kenya. These countries captured large shares in global
tea exports at the cost of older players like India. In fact, these countries are eating
away the premium grade tea export market and value-added tea export market on
platform of superior quality and aggressive branding. Impact on India is evident
from Sri Lanka’s tea exports which increased from 262.9 Mn/Kg in 1999 to 298.8
Mn / Kg in 2008 whereas India’s reduced from 191.7 Mn/Kg to 196 Mn/Kg during
the same period. Sri Lanka and Kenya are able to increase their productivity at
constant pace which helped it divert higher produce in the export markets. Higher
exports were achieved by these economies as a result of persistent efforts towards
quality betterment and brand building. This exercise actually helped economies
towards driving high margin value-added tea exports.
It is witnessed, Indian tea is increasingly been displaced by tea of other Asian and
African countries. Trend indicates that although land under cultivation in India has
increased at CAGR of1 percent in last 3 years, yield has actually come down from
1679 Kg/Hectare in 206 to 1614Kg/Hectare in 2009. Sri Lanka witnessed a complete
reversal to India with yield increasing by 40Kg/Hectare between 2006 and 2009 with
no increase in land under cultivation. Even in Kenya yield increased more than 10
percent or 242 Kg/Hectare in the same time period. Although, Indiais regarded as
µGoliath of tea industry its position is slipping to smaller countries like Sri Lanka
and Kenya on quality and productivity parameters.
Middle-east countries like Iran, Iraq, Afghanistan and UAE were India’s main
trading ally and contributed 35 percent (volume-based) of total Indian tea exports.
But, 9/11 terrorist attacks and war in Afghanistan and Iraq led to sharp decline in tea
exports to these nations.
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CHAPTER 3
TOP 2 PLAYERS IN INDIAN TEA INDUSTRY

TATA TEA
Company Profile
Tata Tea Limited, also known as Tata-Tetley, is the world's second largest
manufacturer and distributor of tea. Tata Tea is the largest vertically integrated tea
firm in the world, from its plantation activity through to its packaging and marketing
initiatives.
Tata Tea Limited, together with its subsidiaries, engages in processing, producing,
marketing, and distributing tea products primarily in India. It also involves in the
cultivation and manufacture of black tea and instant tea, tea buying/blending, and
sale of tea in bulk or value-added form. It offers tea primarily under the following
brand names:
TATA TEA
1. Tata Tea
2. Tetley
3. Kanan
4. Chakra Gold
5. Premium
6. Gold
7. Agni
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Tata Tea Limited owns approximately 51 tea estates in the states of Assam, West
Bengal, and Kerala in India. It also has operations in Australia, the Middle East, west
Asia, North Africa, Poland, Russia, and Kazakhstan. The company was founded in
1964 and is headquartered in Kolkata, India.
Set up in 1964 as a joint venture with UK based James Finlay and Company to
develop value-added tea, the Tata Tea Group has now product and brand presence
in 40 countries. It is one of India's first multinational companies.
The operations of Tata Tea and its subsidiaries focus on branded product offerings
in tea, but with a significant presence in plantation activity in India and Sri Lanka.
The consolidated worldwide branded tea business of the Tata Tea Group contributes
to around 86 per cent profit from branded tea sales while the remaining 14 per cent
coming from bulk tea, coffee and investment income. Tata tea Brand is ranked the
second most trusted beverage brand in brand equity

SWOT Analysis Tata Tea

Market Leader: With a value share of 22.6% in November, Tata Tea is now the
market leader in the Rs7,000-crore branded teas market, having overtaken peer
Hindustan Unilever (HUL) which has a value share of 21.3% (Source: AC Nielsen).
Resources & Capabilities: Tata Tea Limited owns approximately 51 tea estates in
the states of Assam, West Bengal, and Kerala in India. The crop at each of this
plantation imbibes the characteristics of the region where it grows. In that respect,
tea is much likewise. Having plantations in varied agro-climatic zones enables Tata
Tea to cultivate distinct tea leaves.
Brand Name: Tata tea Brand is ranked the second most trusted beverage brand in
brand equity. The company's best-selling brand is Agni which caters to the mass
segment and other brands include Tata Tea Gold, Chakra, Gemini and Kanan Devan.
Experience: Tata Tea has been one of the oldest companies in India and has the
advantage of skill and experience on their side.
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Weakness:
No product differentiation: One of the major problems Tata Tea faces is the lack
of much product differentiation hence loyalty of consumers is a major area of
concern.
Branding: Due to lack of branding activities by the organized players mallow
switching cost of consumers retaining consumers becomes a challenge as they
switch over to cheaper brands.
Distribution Network: The distribution network of Tata Tea comprises on 1.25 lakh
distributers this is not much when you compare to HUL who have the strongest
dealer network in the country
Opportunities:
New Product Development: The Company can integrate into fruit & herbal teas.
This segment has not yet been tapped by any of the tea companies yet and this could
give Tata tea the first mover’s advantage if they decide to enter this segment.
Rural Market: There is a large untapped rural market which needs to be exploited.
Although Tata Tea has made its presence felt in the rural markets this sector is
characterized by a large un organized sector and local players rule the rusts of the
day in these markets.
Export Potential: Tata tea is present in 40 countries around the world. There are a
lot more opportunities it can exploit if they can increase their production capacity to
exploit these untapped world markets all over the world.
Mergers and Acquisitions: There are more than 1000 tea companies in India. Tata
tea can increase its market share and penetration by acquiring these small companies
and also forming mergers with other big MNC’s like it did for Tetley Tea, Good
Earth etc.
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Threats:
Low Barriers: There are not too many entry barriers put by policy makers this
makes the Indian Tea market extremely fragmented and unorganized. There are
many regional players who hold small chunks of markets. By imposing Entry
barriers, the existing players will be in a better position to exploit the existing
situation.
Globalization: India is opening its doors to MNC s and with that comes the threat
of globalization of the economy. The small and regional players will face intense
competitions from big MNC s.
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INTERNAL ENVIORNMENT ANALYSIS:

1)Resources:
• 51 tea estates in states of Assam, West Bengal, Tamil Nadu, Kerela.
• Area of 26,500 hectares under tea cultivation.
• Produces about 60 million kg of black tea annually.
• Subsidiaries & Associated companies' Overseas business
2) Capabilities
• Distribution system.
• Strong and trusted management.
• Research and development.
• Marketing.

BUSINESS LEVEL STRATEGIES:

♦ Bought leaf factories & co-operatives to change the structure of green leaf
production
♦ Identified branded tea as its thrust area
♦ To exit the beverage retailing business to focus on branded products
♦ Tata Coffee sold off its stake in Barista, no plans of re-entering the business
♦ Introducing drinks like Tion, all over India
♦ µJaago Re¶ campaign followed by the 'Aaj Se Khilana Bandh, Pilana Shuru
'campaign to
♦ target the youth for voting and work against corruption
♦ Focus on brands like Chakra Gold, Gemini and Kanan Devan in regions where
they are strong.
MARKETING STRATEGY:
In spite of a global presence, the brands are distributed differently depending on the
location. As Tata tea is far better known in India and a powerful brand there, it is
pushed on this market and countries with a large Indian population. Therefore,
Tetley is the company's global face and the largest markets focus on the Tetley
brand. Where both brands co-exist in one market, Tetley is positioned as the
premium brand
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PROMOTIONAL STRATEGY:
The new campaign will migrate Tata Tea from being a physically and emotionally
revitalizing tea experience to one that will challenge the consumer’s intellect to
³awaken´ to what is around them. It will motivate people to internalize the tea
experience and externalize their social awakening. It is probably the first time that
any brand is taking on the mantle of social responsibility in such a manner. The
campaign will also provide a poignant platform for connection with the youth. ´ The
campaign in keeping with the magnitude of the strategy also plans to deploy a mega
approach to connect with the consumer at all possible touch points. Television will
be the lynchpin of the campaign. There will be one main
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commercial and six short duration commercials. Each of the commercials will touch
upon one relevant social issue. As part of the campaign Tata Tea brand has also tied
up with the Jaago India foundation. The foundation and Tata Tea have launched a
website that each month will cover a socially relevant issue. The site will provide
all the required information on the issue, will allow consumers to interact and
provide solutions. To generate interest and create empathy the site will feature four
short films on the topic of the month. Other than television and the website the
campaign will also use radio, press, shop level visibility and the new outdoor
medium of malls and multiplexes to drive home the message of Jaago Re. Many of
the communication tools being planned at the malls and multiplexes will be used for
the first time in the country.
HINDUSTAN UNILEVER LIMITED:
Company Profile:
Unilever owns two of the most widely recognized product lines Lipton and Brooke
Bond. The major competition facing Lever at present is from Wagh Bakri Chai Tea,
who is truly a market challenger.
Lipton comprises of Yellow Label which is designed for upper middle, upper lower
and upper middle class, which is a market leader in the industry, it comes in all the
packages including hard packs, jars, and teabags. Lipton yellow label although the
direct competitor of Brooke Bond Supreme comes in the family of Unilever so it is
prone to its competing attacks. Lipton follows a massive promotion scheme to hold
its share. Rich bru is designed for middle and lower upper classes, and Pearl dust is
designed for rural areas, mostly districts of Sindh where consumption of dust is
extensive.
Brooke Bond comprises of:
Brooke Bond
Supreme
Taj Mahel
3 Roses
Red Label
A1 Karak Tea
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SWOT Analysis for (HUL):
Strength:
Brand Name: According to Brand Equity, HUL has the largest number of brands
in the Most Trusted Brands List. HUL has a very strong Brand name in the Indian
market. Its brands are strength for the company.
Strong Distribution Network: Hindustan Unilever's distribution covers over 1
million retails outlets across India directly and its products are available in over 6.3
million outlets in India, i.e., nearly80% of the retail outlets in India. It has 39
factories in the country. Two out of three Indians use the company’s products and
HUL products have the largest consumer reach being available in over80 per cent of
consumer homes across India.
Unique sizes have been introduced for various segments including teabags, stir
ready.
Product Range: Wider product range with technological superiority, e.g., Brooke
Bond’s hot tea can
Weakness:
It is a product being introduced in an already existing tea market with established
brands. No competitive advantage can be brought in this industry. Only massive
advertising and promotional activities may entice consumer for trial.
Brand Dilution: Having too many brand extensions can dilute and confuse
consumer perception and give fresh and new competitors to seize market share.
Opportunities:
Alliance with Pepsi to access massive distribution network. Presence of big, well-
known partners drives demand further. Declining markets for other beverages such
as soft drinks
Rural Market: There is a large untapped rural market which needs to be exploited.
Although Tata Tea has made its presence felt in the rural markets this sector is
characterized by a large un organized sector and local players rule the rusts of the
day in these markets. Greater awareness of health benefits of tea.
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Threats:
A rigorous threat is the increasing number of branded and unbranded tea in the
market with ample price difference. For that, established companies need to increase
their advertising and promotional budget. There is a need to get a better shelf space
and more retailer patronization for the company's brand.
Unilever presently pays80% as taxes on imported tea. This rise in import duty on tea
by government is intended to discourage it's consumption, which possess to be a
threat as it has resulted in higher prices for the consumers.
Low Barriers: There are not too many entry barriers put my policy makers this
makes the Indian Tea market extremely fragmented and unorganized. There are
many regional players who hold small chunks of markets. By imposing Entry
barriers, the existing players will be in a better position to exploit the existing
situation. Presence of other major players such as Coca-Cola and Nestle leading to
tough competition
PRESENT STRATEGY:
Ownership:
The owner of the premium Brooke Bond and Lipton tea brands in India, Hindustan
Unilever Ltd (HUL), has taken a decisive step towards regaining absolute market
leadership from Tata Tea Ltd by entering the so-called economy segment of the
market as well.
Value Leadership:
HUL already leads the domestic tea market in terms of value and has been narrowing
the gap in volume sales, where Tata Tea's economy brand Agni, priced at around
Rsl50 per kg, gives it the edge.
New Variants:
HUL launched its Brooke Bond Sehat and tea in Madhya Pradesh, Chhattisgarh and
Bihar in late January, using non-governmental organizations among other channels
in a low-profile promotional campaign. The new tea, priced at Rs. l70-180 per kg,
includes folic acid, calcium and other vitamins as part of its ingredients. HUL
expects Brooke Bond Sehat and to create a new segment in the 850 million tones
(mt) a year tea industry. Of this, packaged tea accounts for less than 350mt.
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RECOMMENDATIONS TO TOP 2 PLAYERS TO INCREASE MARKET

SHARE:
Increase number of service outlets: In recent times there have been numerous
coffee shops springing up in Tier A cities like Mumbai, Delhi, Bangalore etc Tea
house shul be set up in a similar fashion and premium quality teas should be served
at these outlets.
Strategic alliance: Tie up with their own range of five-star hotels to supply
premium quality tea and coffee as also with lower end three-star hotel n also local
eateries (Udipi joints etc.). Tie-up with airlines, Rajdhani, Shatabdi, caterers etc. to
promote their tea coffee also mineral water brands
Own Depots: To start own depots of Tata Tea and HUL tea so that they can sell
loose tea thus reducing cost of packing which will also reduce the Vat & additional
charges. Thus, masses from lower income group would be effectively targeted.
Penetration: Deeper penetration in rural markets by using self-help women groups
for door to door selling.
Profit margins for retailers: Increase profit margins for retailers to achieve higher
sales volume as they are the main influencing factors in lower income group people.
Promotional activities: More number of ads which are equally effective as middle-
class people from towns get influenced by ads to a large extent g) Jago Re campaign.
Product Innovation: Enter new market segment with product innovation like tea
flavored ice-creams, tea wine, tea chewing gums etc.
Flavors: Launching of flavored teas bamboo cups in China bring it to India too.
Launching of more flavors in India. (Lemon tea, black tea).
Related Diversification: Future strategy of entering children’s drinks like Complin,
Bourn Vita, Horlicks.
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Bundling: Providing a bundle pack like a small tea sachet free with 100 Gms pack
of biscuits.
New Markets: Explore new and untapped markets not only in India but also in
different countries.
Branding: The top 2 players i.e., Tata Tea & HUL should focus their attention on
proper branding of their products and should try to create a brand loyalty among the
consumers of their products
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