TATA TEA

K.V.Meghanathan Parth ShuklaBalchandra TilveRahul ChoudharyNitesh Kedia

TEA INDUSTRY IN INDIA

• COMPANY PROFILE

• TYPE PRIVATE Founded:Calcutta, India (1964) Headquarters: Calcutta, India

• Key people: Ratan Tata (Chairman) • Products: Tea• employees:59000(2006)

Company profile

• Tata Tea Limited, also known as Tata-Tetley, is the world's second largest manufacturer and distributor of tea

• The company has been the star performer in the global tea industry in recent years.

• Tata Tea Limited owns several tea manufacturing companies across the world including Good Earth Teas and JEMČA, Czech Republic's leading tea company

• MARKET SHARE

• Total tea consumption is estimated at 650 million kg, of which the share of packaged tea is 290 million kg, which is growing at 1.7 per cent per annum.

Value Market Share

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Jul - Sept 2003 30.7 19.7 29.1

Oct Dec 2003 28.7 19.3 31.1

Jan - Mar 2004 28.6 19.0 32.0

Sept'04 29.3 19.7 29.9

HINDUSTAN LEVER

TATA TEALOCAL

COMPANIES

International market

• The Tata Tea group’s acquisitions since Tetley, its first mega one in 2000 for $432million, was followed by four acquisitions.

• The tea major has now acquired a 33% stake in South African tea company, Joekels Tea Packers, through Tata Tea Tetley, its subsidiary.

• The acquisition will also pave the way for Tata Tea to sell its Tetley branded products in South Africa, Namibia, Botswana, Lesotho and Swaziland through Joekels.

Black Tea

Country Production (mn/kgs)

January-August

Auction Prices (INR/kg)

August

2004 2003 2004 2003

India 493.1 535.4 72.09 54.42

Sri Lanka 204.1 201.8 84.13 71.37

Kenya 207.4 175.1 72.66 68.94

B’Desh 29.8 31.0 51.69 53.14

Malawi 31.7 30.2 48.50 50.24

Lead Brand Market

Share %

7.68.8

10.4

MAT Mar'03 MAT Mar'04 Sept'04

Market Performance

• US – improved volumes (up 12%) and net sales (up 3%) in local currency.

• Canada sales in local currency flat to 2003/04, EBIT 13% ahead of last year due to cost of sales and overhead savings and some A&P phasing benefits

• Australia – Steady growth in volumes (up 7%) and sales (up 4%) further augmented by cost of sales and overhead savings continue to deliver EBIT at record levels

• International Tea – volumes, net sales and EBIT all still ahead of last year

STRENGTH:

• Tata Tea’s strength blooms on its own plantations: 56 tea gardens in Assam, Kerala and Tamil Nadu. The crop at each of these plantations imbibes the characteristics of the region where it grows. In that respect, tea is much like wine. Having plantations in varied agro-climatic zones enables Tata Tea to cultivate distinct tealeaves.

Threat:

• While Tata Tea is the No 1 branded tea, there has been a significant value erosion in the tea market, with regional players offering mediocre products at low prices or with attractive promotions

• Despite the fact that tea is the most traditional and affordable beverage in India – and probably because of as well - it is perceived as being old fashioned and less functional than some substitute products.

Marketing plan & strategy

• Marketing plan & its strategies makes product race in competitive situation and executes brand image, which gives loyal customers to the company. It helps the product to make its independent identity offer diverse brands after taking local tastes into account. Our products vary in terms of blend, pricing and packaging formats to cater to the unique needs of each segment." strategy is to invest in long-term brand building for sustained growth

• Strengthen our business in existing geographies

• Expansion into new geographies

• New product development and building business in

– Black Tea

– Fruit and Herbal Infusions

– Ready to Drink Teas

– Out of home

• Building operational capability to enable the commercial business to achieve growth

• Management Strength

Competition:

• The competition Tata Tea is faced with operates on two fronts: organized players like Hindustan Lever on the one hand and a plethora of local and regional players on the other. The latter category is able to flourish in a skewed cost and manufacturing paradigm, making it serious cause for concern.

Market segmentation:

• “It consists of a group of customer who share similar set of wants ”

Geographically

• South India, southeast India, southwest India.

Social class:

• Working class, middle class, upper middle class

OBJECTIVES Marketing objectives are to:• Increase market share.• Generate brand awareness within consumer target market and

business target market.• The road ahead promises plenty. The goal is to move the brand

portfolio from its current 19 per cent value share to a 25 per cent value share in the medium term

Product:

• There are three national brands in the company’s basket, Tata Tea, Tetley and Agni, and three regional brands, Kanan Devan, Gemini and Chakra Gold. Apart from building and strengthening brand imagery, the company has significantly increased its focus on delighting the consumer through the superiority of its product delivery.

pricing

• The company is concentrating on building value around its brands to distinguish it from competitors.

• The median price for a 250-gm pack in northern India, Tata Tea’s main market, is approximately Rs 42.50

• Tata Tea plans to wean away these consumers through its branding initiatives. On the basis of prices, the largest segment of the packet tea market is economy at 61 per cent where the average tea price is less than Rs 145 per kg; followed by the popular segment where pricing is in the Rs 145-180 per kg range and then the premium end beyond Rs 180 per kg.

Distribution (place):

• Should be through best known established dealers, retailers.

The following distribution channel would be used for distribution of the products in the neighboring states. For the purpose of – Physical flow of the product – Information flow – Payment flow – Promotion flow

DISTRIBUTION PLAN

MANUFACTURER

WHOLESALER

DEALER

RETAILER CONSUMER

Promotion:

• Create an advertising campaign to build brand awareness and differentiate products quality from competitors through emphasizing trade-sales promotion to support distribution strategy.

• Tata Tea’s brand-building initiatives are focused on taste, quality and imagery

Positioning:

• Each brand endeavors to build a lasting relationship with the buyer and is strongly positioned in its particular segment. Tata Tea thrives on the ‘great leaves, great taste’ platform in the popular category. In the premium segment, Tetley showcases the finest international blend for discerning consumers. Agni, in the economy segment, offers strength and a low price.