Makeover manoeuvres

Value-additions through changes in the product forms and delivery systems have been part of the winning formula in the international markets, says Gautam Bhattacharya

Traditionally, the Indian tea industry has remained the largest producer of tea as a ‘commodity,’ but in the process it has reduced itself to being just a raw material supplier, which gets a transfer price for the product it sells. Today, the industry finds itself at the crossroads of its choices. On one hand it is adversely affected by low productivity and lower price realisations, and on the other it is grappling with changing consumer profiles and the threat of imports. Even as tea prices have risen, there are many variables like the unfavourable global demand-supply scenario, competition in export markets and imports from low-cost countries. In the third world countries where the economy is on the rise, the common target is to elevate a commodity from its own level to the brand level. In this backdrop it is necessary to review the retail of tea, its highs and lows, the challenges and emerging trends and action points for its reincarnation as a successful business proposition.

In search of a solution

The long-term profitability of India’s tea producers and marketers is predicated on the uncorking of excitement in the domestic market. Creating different variants is an important paradigm shift in this process, which coupled with the new vending facilities, will be able to capture the imagination of the new customers. The younger teens in India are closely associating themselves with the rest of the globe, and consumerism is clearly on the rise. With the advent of big shopping malls all across the country and shopping becoming a phenomenon in itself, relaxation associated with the same becomes a tool for marketing.

Global trends in tea retailing

In the United Kingdom, both absolute and per capita consumption of tea has been declining over the past two decades, reflecting the diversification of tastes in favour of coffee (particularly instant coffee) and soft drinks. By contrast, the US consumption has shown a continuous rising trend, reflecting the increased popularity of iced tea. Iced tea consumption is highest in Switzerland, at about 10 gallons per person per annum. Other contenders are Austria and Germany. The market holdouts are France and the UK, which view iced tea as cold, bitter tea. However, by blending tea with juices, these countries have been creating a tea concept to overcome such barriers while still promoting the health benefits of tea. In the lands where winters are cold and dank, winter tea is promoted as a flu-fighter. The product is a combination of tea, vitamin C and the kiwi fruit, black current and strawberry juices. Packaged in a microwavefriendly package, the product is designed to be consumed hot or cold. Europe has also developed a line of green teas to take advantage of its documented phyto-chemical benefits. Factors that seem to have stimulated the consumption of instant tea include its ease of use as a cold drink and the growing prevalence of vending machines

Flavoured tea in India – with base tastes...

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