MY IA Presentation

8/6/2019 MY IA Presentation

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TEA INDUSTRYTEA INDUSTRY


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INTRODUCTION OF THE INDUSTRYINTRODUCTION OF THE INDUSTRY

y Tea Industry is a part of FMCG industry.

y Tea accounts for 90.6% for India'sconsumption of stimulants (tea, coffee,

and cocoa beans), followed by coffee(7.7%), and cocoa beans (1.7%).

y Tea is a part of Food and Beveragessegment of FMCG Industry whichaccounts for 53% of total sector andcharacterized by high degree ofcompetition and high level of penetration.


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INTRODUCTION OF THE FIRMSINTRODUCTION OF THE FIRMS

y The major players in the Indian detergentmarket are HUL, Tata, Goodricke, Duncanand Wagh Bakri.

y

Where HUL shares the largest portion ofthe market with wide range of varieties andpricing.

y WaghBakri most successful in rural market

with lowest price offerings.y Tata, Goodricke and Duncan also share

major portion of market together with


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MARKET SHARE OF EACH FIRMMARKET SHARE OF EACH FIRM

y Market Share of each firm can be well

understood by the following Pie Chart:


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COMPETITIVE PROFILE MATRIXCOMPETITIVE PROFILE MATRIX

NO

CRITICAL

SUCCESS

FACTORS WHT HUL

TATA

TEA WB

GOOD

RICKE

DUNCA

N

RT SCR RT SCR RT SCR RT SCR RT SCR

1

PRODUCT

PORTFOLIO 0.1 3 0.3 4 0.4 4.5 0.45 4 0.4 2 0.2

2

PRICE

SENSITIVITY 0.17 4 0.68 4 0.68 3 0.51 2 0.34 2 0.34

3

DISTRIBUTIO

N NETWORK 0.18 4 0.72 3.5 0.63 3 0.54 2 0.36 2 0.36

4

MARKET

SHARE 0.07 4.5 0.315 4 0.28 2 0.14 2 0.14 3 0.21

5

FINANCIAL

POSITION 0.05 4 0.2 4 0.2 3 0.15 2 0.1 1.5 0.075

6

ADVERTISEM

ENT 0.2 4 0.8 4.5 0.9 3.5 0.7 3 0.6 2 0.4

7 PACKAGING 0.16 4 0.64 4 0.64 3 0.48 2 0.32 3 0.48

8

BRANDING &

POSTIONING 0.07 4 0.28 3.5 0.245 3 0.21 2 0.14 3 0.21

TOTAL

SCORE 1 31.5 3.935 31.5 3.975 25 31.8 19 2.4 18.5 2.275


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EXTERNAL FACTOR EVALUATION MATRIXEXTERNAL FACTOR EVALUATION MATRIXN

O. KEY EXTERNAL FACTORS WHT HUL TATA TEA DUNCAN

GOODRICK

E WB

RT SCR RT SCR RT SCR RT SCR RT SCR

OPPORTUNITIES

1

EXPORT POTENTIAL IF INDIA CAN INCREASE ITS

0.11 4 0.44 3.5 0.385 2 0.22 3 0. 33 2 .5 0 .2 75PRODUCTION

2

TO MAKE TEA MORE ACCEPTABLE AND

0.12 3 0.36 4 0.48 2 0.24 2 0.24 2 0.24FASHIONABLE LIKE COFFEE

3

INCREASE IN DISPOSABLE

0.15 4 0.6 3.5 0.525 3 0.45 3 0. 45 2 .5 0 .3 75INCOME OF CONSUMERS

4

LARGE UNTAPPED RURAL MARKET FOR BRANDED

TEA COMPANIES 0.11 4 0.44 3 0.33 2.5 0.275 2 0.22 3 0.33

5 POSITIONING TEA AS A HEALTH DRINK 0.09 3 0.27 4 0.36 2 0.18 2 0.18 2 0.18

THREATS

5 TAX AND REGULATORY STRUCTURE 0.1 3.5 0.35 4 0.4 3 0.3 2.5 0.25 2 0.2

6 REMOVAL OF IMPORT RESTRICTIONS 0.08 3 0.24 4 0.32 3 0.24 3 0.24 2.5 0.2

7 CHANCES FOR THE PRICE WAR 0.15 4 0.6 3.5 0.525 2 0.3 2.5 0.375 3 0.45

8

CHANGES IN THE LIFESTYLE

0.09 3 0.27 4 0.36 2 0.33 3 0. 27 2 .5 0 .2 25OF PEOPLETOTAL 1 31.5 3.57 33.5 3.685 21.5 2.535 23 2.555 22 2.475


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PORTERS FIVE FORCES MODELPORTERS FIVE FORCES MODEL

NEW ENTRANTS

Barriers to new entrants is high due to highcapital investment

HUL takes complete advantage of theeconomies of scale.

The new entrants generally cater to smallmarkets, there are large no. of players

operating at local level Switching cost for the consumers is not very

high.


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SUPPLIERS

There are large number of producers of

tea in India. Most of the firms manufacture

their own tea through their tea estates.

Others purchase tea from Tea Auctions.

There are substitutes like coffee available.

Suppliers product creates low switching

cost.


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BUYERS Tea is a very price sensitive market. Manufacturers are forced to offer temporary

discounts to attract more and morecustomers to make purchases. Switching cost is very low, this has resulted

in price war. The buyers, even in the rural area are

subjected to the media invasion and are wellinformed about the basket of productsavailable in the market and thus take rationaldecision.


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SUBSTITUTES

The main substitute to Tea is the Coffee

available in the market.

Coffee is considered more acceptable and

fashionable product than Tea. Tea faces a high

threat from coffee in terms of positioning.

The second threat is from down trading i.e.the consumers from the premium category

opting for the premium category Tea Brands.


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INDUSTRIAL RIVALRY

As India has a low per capita consumption

of Tea the growth in this sector has been

stagnant.

The market is littered over with several,

leading national and global brands and a

large number of small brands, which havelimited markets.


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SIXTH FORCE ANALYSISSIXTH FORCE ANALYSIS

COMPLEMENTARY PRODUCTS

A complementary product is a product

with a negative cross elasticity of demand.

Complementary products for Tea are: -

1. Water

2. Milk

3. Sugar

4. Tea Masala


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CONCLUSIONCONCLUSION

y Competition amongst the MNCs hasintensified, leading to shrinkage of margins.

y Low margins and high volumes characterizethe industry.

y While the level of disposable incomesdetermines the overall sector growth, themarket has already been segmented and sub-segmented.

y Key factors to success are distribution (inrural markets) and advertising (in urbanmarkets).


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CONTINUECONTINUE

y Product innovation, smart merchandising anddistribution would be of key importance forFMCG products to become a success in thecoming years.

y Price offs and consumer offers will bepredominant, this will put tremendous pressureon companies to make their products morevisible on the retail shelves.

y The manner in which marketers tap this growthpotential in the years to come - be it throughadvertising or creating awareness through below-the-line activities - will be worth watching.


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THANK YOUTHANK YOU

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