Branded tea market in India

Mr. Sachen Verma, Senior Vice President – Marketing of JV Gokal & Co. Pvt Ltd

 

The Indian branded tea market is highly vibrant and full of challenges. This article looks at some of the interesting aspects constituting the branded tea market in India in the packed, tea bag and flavored tea segments.

 

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 though dominated by HLL and Tata tea which have presence in all pack size 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.

 

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 Ahmedabad when compared to other major cities in India.

 

State	No. of Household (in millions)	Branded Tea penetration  per cent
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 mahal and Twinings have introduced flavoured teas in the market. The different flavours 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.