detailed report

1. “You can never get a cup of tea large enough or a book long enough to suit me.”
C.S. Lewis
EXECUTIVE SUMMARY
India has close to six lakh hectares of area under tea cultivation. The tea industry in India is
growing at a compounded annual growth rate of 15%. India is the world’s largest consumer,
second largest producer and fourth largest exporter of tea. It accounts for nearly 30% of
global output and 25% of it is consumed in India itself. Branded tea and allied products are
consistently clocking double digit growth in India. Tea has universal appeal and is
undoubtedly the beverage of choice in India. The instant food and beverage sector is finding a
lot of takers in the rapidly growing urban population.
The Indian tea market is vibrantand changing at a rapid pace. New innovations are entering
the market for example green tea, herbal tea, pre-mixed tea, ice tea etc. All these products are
catering to different segments and tastes. Market is clearly defined by pricing, age, quality,
product usage or income.
The tea market in India is set for a boom according to the Associated Chambers of Commerce
and Industry (ASSOCHAM). They are forecasting a huge leap from the current market size
of around $3.7 billion to $6.3 billion by 2015. Most of it has been attributed to the emergence
of tea as a health product. The growth will also mark the rapid growth of non traditional tea
products such as tea bags, pre mixes, herbal, organic and ice tea. All the players are betting
on such products for further increasing their market share.
Keeping this in mind we are launching a new product called INSTA-tea. This product will
have all the features of a conventional tea without the hassles. We will try to woo the
potential consumers on the product’s instant and hassle free experience.

2. MARKET SUMMARY
At one hand the tea market at the national level is showing inclination towards branded
segment,on the other hand the local market of Anand town shows an entirely different
picture. The market is dominated by market leader Wagh-Bakri. Such is the domination that
it commands a lion’s share of approximately 50% of the total market. It is by far the leader
not only in Anand but in whole Gujarat.
The distributor of Wagh- Bakri tea in Anand sells approximately 20,000 - 25,000 kg tea per
month in Anand city alone. This works out to be around 250,000 - 300,000 kg sales per
annum. Based on these figures we can clearly assume that the total market size in Anand is
500,000 – 600,000 kg per annum. The total population of Anand is around 300,000. And per
person consumption of tea roughly comes to around 2 kg per annum. The other major players
in the market are Jivraj, Tata Tea, HUL etc.Tata tea which is a dominant player on the
national level has paltry sales of 700 kg per month on an average. This works out to be
around 3 – 3.5% of the market leader and 1.5 – 1.75% of the total market.
Though the unbranded loose tea market is showing a market growth of 10% every year, it
lags behind the growth of branded tea. But in Anand the trends are quite the opposite. Loose
tea is quite popular and clocks sizable sales every year. We delved deeper into this issue and
probed the reasons. The reason turned out to be the increased margins. In India a lot of retail
sales for consumer goods is through kiranastores. These stores give a lot of their goods on
credit. The proprietors exert a considerable influence on their customers and at times also
direct them what to consume and what not depending on their margins.
Tea bag is a rapidly growing market and research shows that it will be the next big thing in
the tea market. All the players including national, regional and local players are churning out
different variants and flavours. The players are betting big but the distributors and retailers of
Anand seem not convinced with the idea. They have sales figures to prove their point. Wagh-
Bakri the market leader sells a meagre 15 kg on tea bags in the market. Every tea bag weighs
2 grams. This works up to around 7500 tea bags. We asked the retailers for the reason for
such a dismal response to tea bag. The answer was clear. First the tea bags were considered
expensive and secondly not everyone agreed upon the taste. Most of the people found it too
mild for consumption. The tea bags are available at select stores in Anand and mostly cater to
the upper class, growing number of non resident Indian (NRI) population, travelling people
and the ‘officer class’ as told by the retailers.
Another product available in the tea market of Anand is the pre-mix powder. These powders
are used to prepare tea in vending machines and instant versions. Wagh-Bakri has total sales
of around 60 kg per annum in this category. The pre mix powders are sold at a premium and a
sachet for single cuppa can cost you around 10 Rs. The pre mix has tea, milk solids (powder)
and sugar.

3. MARKET DEMOGRAPHICS
India is a vast country of 1.2 billion populations spread out in 5000 plus towns and
6 lakh villages. It not only has a wide geographical spread but also has complex
demographics, which lead to varied regional taste preferences creating challenges for any tea
marketer.
The demographics for Anand Metropolitan area is as follows :-
TABLE
Anand UA Total Male Female
Population 286,921 148,801 138,120
Literates 240,028 128,241 111,787
Children (0-6) 28,745 15,363 13,382
Average Literacy (%) 92.97 96.11 89.62
Sexratio 928
Child Sexratio 871
CENSUS 2011
MARKET GROWTH
The tea market has shown tremendous growth over the years. And surprisingly the consumers
are showing more inclination towards branded tea. The branded tea segment has shown a
growth rate of around 20% and unbranded tea has shown a growth of around 10%. The below
mentioned table accurately depicts the shift and preferences for branded tea in the urban
areas.
State No. of Household
(in millions)
Branded Tea
penetration per cent

4. Delhi 2.6 m 91 per cent
Ahmedabad 1.0 m 90 per cent
Bangalore 1.4 m 69 per cent
Chennai 1.4 m 72 per cent
Kolkata 2.9 m 20 per cent
Mumbai 3.7 m 72 per cent
Hyderabad 1.2 m 59 per cent
Pune 0.9 m 64 per cent
SOURCE of INFORMATION – Indian Brand Equity Foundation, Tea Board, Times of India, Daily Times, The Age
and Tocklai Experimental Station (TES).
PRODUCT CHARACTERISTICS
INSTA-teahas tea extracts from the finest CTC leaves of Darjeeling. It is in the form of a
pellet. It has all the advantages of conventional tea sans the hassles of making one. The
conventional tea products are loose tea and tea bags. Brewing a cup of tea requires a lot of
effort and equipment.We need a utensil for boiling water, a sieve to remove residue and lots
of time so that the tea can impart its colour and aroma to the liquid. Similar is the case with a
tea bag. We have to dip the tea bag in the liquid again and again to get the desired colour,
strength and aroma. In the process the liquid may not remain piping hot as preferred by some.
And after that we still have to dispose the tea bag.

5. INSTA-tea’s unique characteristic is that it dissolves completely in hot, warm and normal
water without leaving a residue. The pellets give the same taste, colour, aroma and strength of
a normal hard-boiled tea. This means your experience becomes enriching, time saving and
hassle free. Just mix a pellet with boiling water and savour the taste of a refreshing cup of
tea.You can practically prepare a cup or for that matter several cups of tea in just a minute.
Since the pellet dissolves even in normal water, tea connoisseurs can also savour the flavour
of ice tea by adding ice to the water.
There are several points of parity that INSTA-tea shares with the traditional tea. It gives the
same strong taste, colour and aroma as a traditionally brewed cuppa.The points of difference
being that the process of tea making hardly takes a minute and leaves no residue.
ANALYSING ENVIRONMENT
The environment resembles a turbulent field. It is the most dynamic and has highest
uncertainty. Change is ever present and elements in the environment are increasingly inter-
related. The market is extremely price sensitive and small changes result in dramatic change
in volumes.
ANALYSING COMPETITION
There are ‘n’ number of players in the market. These players can be classified on the basis of
their presence in the geographic length and breadth of the country.
Branded tea market of India: not everybody’s cup of tea
India is a vast country of 1.2 billion populations spread out in 5000 plus towns and 6 lakh villages. It
not only has a wide geographical spread but also has complex demographics, which lead to varied
regional taste preferences creating challenges for any tea marketer. At least 6 months understanding
and planning of the markets from a macro perspective is required to plan the market of any branded
tea across India. Things are more difficult with most of the branded tea retail market in India being
highly unorganized and being catered through 2.5 million grocery/kirana outlets.
Industry segmentation and players
Packet tea market is highly proliferated, matured market with more than 300 brands in the country
dominated by HLL and Tata tea. They have presence in all packs, sizes and price variants. and jointly
control a market share of 40 per cent of the packet tea industry. The next major players – Duncan’s,
Eveready, Goodricke, GPI, Waghbakri, Girnar, Sapat, Dhunseri,Mohini, Society, Marvel etc. have
strong regional presence. In this segment there are 40 mid-size players having 80 brands among
them. The remaining market is far more fragmented and shared between numerous small players.
Tata Tea has Agni brand as key growth driver in the economy segment within packaged tea.
Hindustan Lever has brands such as Taj Mahal, Red Label,Taaza, A1 and 3 Roses, which are all
popular.

6. While packet tea segment has more than 300 brands and is characterized by severe price
competition, the teabag segment is a product category, which is not a mass product yet. The largest
tea bag manufacturer in India which packs several of the leading tea bag brands – Lipton, Taj Mahal,
Tetley, Nestle, Double diamond etc estimates 7000 tons/annum as the tea bag consumption in the
Indian with an annual growth rate of 20 per cent of which majority comes from the out of home
segment. The current Indian tea bag market is similar to Russia in mid nineties when it was in nascent
state and then showed a meteoric rise. It is estimated that by 2015 the Indian teabag market shall
touch the figure of 15000 tons/annum.
Market leaders of the packaged teas viz. HLL and Tatas hitherto had not shown much interest in
teabags but both of them have become aggressive in last three years, as they have realized the
potential of this category.
Regional preferences in branded tea
Major players are offering different types of tea in different parts of the country with a focus on the
quality perception of the particular demography. For example, in most cases the tea available in the
south of India is mainly dust, whereas the norths Indians prefer leaf tea. On the other hand, western
market of Gujarat and Maharashtra prefer good quality packet and loose tea while in MP and
Rajasthan CTC fanning is the choice. States like West Bengal and Assam do not hold packet tea as a
value for money and mostly go for loose tea.
Pack sizes
Most of the companies have tea in all pack size - 2kg, 1kg, 500gm, 250gm, 100gm, 50gm and 25gm
packaging. There are also sachets, which are priced as low as Re.1. Various regions have distinctive
packaging preference for poly pack and box pack (mono cartons). 250 gm size is the most preferred
size. However, from the last two years on retail shelf one could find odd pack weights like 180 gm,
225 gm etc as a part of strategy of cost cutting by several companies by reducing the product
quantity.
Branded tea penetration is quite high in cities like Delhi and Ahmedabadwhen compared to other
major cities in India.
State No. of Household
(in millions)
Branded Tea
penetration per cent

7. Delhi 2.6 m 91 per cent
Ahmedabad 1.0 m 90 per cent
Bangalore 1.4 m 69 per cent
Chennai 1.4 m 72 per cent
Kolkata 2.9 m 20 per cent
Mumbai 3.7 m 72 per cent
Hyderabad 1.2 m 59 per cent
Pune 0.9 m 64 per cent
Flavored teas doing well
The product diversification strategy by big players in tea industry has also lead to pep in flavoured tea
production in last ten years. Tata Tea, Taj mahaland Twinings have introduced flavoured teas in the
market. The differentflavours that are available in Indian market are that of ginger, cardamom, lemon,
earl grey (with bergamot essence), ashwaghandha, mulethi(yashtimadhu), and tulsi. On the other
hand green teas sales have picked up on health grounds. Though Indians are hard-core black tea
consumers, their interest in flavoured tea can be attributed to their curiosity to test new products and
the change in trend in consumption. Flavoured tea market in India is growing at the rate of 25 per cent
annually.