April 2007 | Sujata Agrawal
A tea-maker's tale
For the last 170 years, ever since the Tetley brothers — Joseph and Edward — started selling tea in 1837, Tetley has built its brand worldwide by creating innovative products and listening to the customer
Tetley is Britain’s favourite brand of tea, savoured in over 10.5 million homes every year, with a 27 per cent value share of the UK’s tea market. The inventor of the ubiquitous tea bag, Tetley’s product innovations — which extend to drawstring tea bags as well as ‘stay-fresh’ packaging — have conquered the hearts of tea lovers worldwide. Little wonder that the brand is well known in 41 markets globally, including Australia, Bangladesh, Canada, France, India, Pakistan, Poland, Russia and the US.
"Tetley is successful for a number of reasons," says chief operating officer Peter Unsworth. “At our core is a product which is completely in tune with current trends. Our people have a passion for the business and proudly tell their friends about Tetley products — how healthy they are, the great and tremendously varied tastes they offer, the exciting places they come from, and the way they have been produced with care for the environment and for the communities involved.”
The brand has been built on a number of key approaches. The first and most important is product quality — achieved through getting best-in-business tea buyers and blenders, and ensuring precise manufacturing processes and quality assurance systems in manufacturing facilities in the UK, India and the US. Tetley sources tea from about 25 different countries including Malawi, India, Kenya, Sri Lanka and Indonesia, to offer distinctive blends to customers in various regions. “If a product says ‘Tetley’ on the label, it must taste great, every time, anywhere in the world,” says Unsworth emphatically.
Innovative advertising has helped in no small measure in building the brand globally. The animated ‘Tetley Teafolk’, for example, helped build the brand in the UK. The latest campaign features members of the public and Tetley employees — who reinforce the fact that Tetley is ‘everyone’s cup of tea’.
Over the years, Tetley has had many corporate identities but the passion for tea remains unchanged.
In 1974, the Tetley Tea Company was bought by J Lyons and became Lyons Tetley. Four years later, Allied Breweries acquired the business. The current Tetley Group identity was created in 1995, when a group of investors bought the worldwide beverage business from Allied Domecq (Allied Breweries). In 2000, in a historic deal, Tata Tea acquired the Tetley Group and it became part of the Tata group. Tata Tea and Tetley are together looking to take advantage of the opportunities offered by world tea markets.
The global tea industry is not only highly competitive; it is also very changeable and faces many challenges. “The reality is that our business currently depends on a small number of markets and on mainly one product, black tea, which now has low growth worldwide and is in decline in some key markets,” Unsworth admits. “Customers want new variants and convenience, while shareholders want rapid returns as well as long-term growth.” Striking the right balance is not easy.
A changing cuppa
Changing customer tastes means tea drinkers are increasingly demanding healthier options and greater convenience. The ability to understand and respond quickly to diversity and change gives competitive advantage. Tetley puts a lot of effort into gaining consumer insights, so it can anticipate and meet the needs of tea drinkers globally.
At Tetley, tea now has new avatars, including green, red, and white tea. Then there’s chai, decaffeinated tea, ready-to-drink or RTD, specialty flavoured teas and fruit and herbal infusions with exotic names like Summer Merry Berry, Mango Passion, Tangy Pomegranate and Ginger Mint. The decline in the black tea market is being balanced by growth sectors such as these specialty and herbal teas.
As Tetley enters new markets, it offers customised products based on market studies of customer tastes and preferences. In India, for instance, Tetley has launched variants that are relevant to Indian taste buds — flavours like elaichi, masala and ginger.
Tetley also continually innovates: with new packaging like the ‘stay-fresh’ flip-top carton, new blends like ‘Tetley Extra Strong’, and new products like ‘Tetley T of Life’ (launched in 2005, it became UK’s fastest growing brand of iced tea and is now called ‘Tetley Ice T’).
In the RTD segment, Tetley has launched products in the UK, Australia and Canada, but says it is still on a learning curve. Unsworth feels there is strong competition from soft drinks in this segment, but it has the potential to attract youngsters who want a healthy and tasteful alternative to coffee and colas.
People are not only moving away from black and towards green tea, but to drinks that are not tea in the purest sense, because they do not come from the Camellia sinensis plant. One of Tetley’s newest brands, Tetley Redbush, is a ‘flavoured tea’ in the health drink category which isn’t from a tea plant, but is becoming very popular, says Unsworth.
A world to win
Large though it may be, Tetley reaches only half the tea-drinking world. Of the top 10 tea markets, which account for 65 per cent of the world’s packaged tea sales, Tetley and Tata Tea are present in only five — India, Poland, Russia, the UK and the US. At present, they are present in only 35 per cent of the global markets and have just 4.5 per cent of the global tea business.
Tetley’s goal is to become a global leader in the international branded tea business. That explains the slew of acquisitions it has made over the last two years. These include Good Earth Teas, a specialty tea brand in the US; a minority stake in Joekels Tea Packers, the third largest player in South Africa; and JEMCA, the market leader in the Czech Republic.
JEMCA, which sells a range of black, green, fruit and herbal teas, is Tetley’s first east European acquisition, and it has given them a leading position in a market where tea consumption is high. In the US, both the Tetley and Good Earth brands will be managed by a single team and Tetley could consider introducing new products under the Good Earth label, which has a strong brand identity in the US.
It’s an ambitious target: Tata Tea and Tetley plan to double their consolidated turnover from Rs3,100 crore to Rs7,000 crore within the next five years, using a three-pronged approach: leverage opportunities and favourable trends; enter new geographies; and develop business streams that have the potential to outweigh the black tea decline in developed markets. “We want to see the Tetley brand available in more countries and offer products that consumers want,” says Unsworth.
But the most potent business driver by far for Tata Tea and Tetley is their vision of ‘challenge for leadership in tea around the world’. Unsworth elaborates, “By ‘challenge’ we mean ‘doing things differently’. ‘Leadership’ is not about size; it is thought leadership. We want stakeholders around the world to think of us as the tea company; the way Virgin is perceived to be as big as British Airways, when in fact it’s just a fraction of the size.”
It is this kind of passion and innovation that will continue to delight tea lovers round the world with more interesting tea-times!
Doing the right thing
Environment, ethics and social initiatives are the focus of Tetley’s CSR efforts
Tetley, in different countries, supports projects that help build communities. “We have a responsibility to look within our supply chain and do something about the environment and social injustice,” says Sara Howe, director of Company Identity and Communication, who heads the corporate social responsibility (CSR) function in Tetley. "What we do is driven by the complex needs our varied stakeholders. Shareholders want good financial returns, consumers want to buy products from companies they see as 'socially responsible’ and increasingly, I find that our people, too, want to do things right and work for a company that does things right,” she adds.
Tetley has three clearly defined CSR areas — environment, ethics and social initiatives. It partners with UK-based development charity, Concern Universal (CU) to provide access to safe water for people living in Malawi’s tea growing areas. Malawi is one of the poorer countries in the world and Tetley sources more of its tea than any other packer. “We felt it was right to do sustainable development, not relief work,” says Howe. Tetley employees also have the opportunity to earn a visit to Malawi and use their skills to build the capacity of CU.
Howe visited Malawi for the first time three years ago. “I think this project, which has been on for three years, will make a positive difference, both to Malawi’s rural poor and to the Tetley people involved,” she says. “The real success is in understanding what people in Malawi want, and helping them to help themselves,” she says.
Tetley’s environment initiative involves using resources wisely and well. Its three UK sites already have the ISO14001 accreditation for environment, and are working to further cut down waste, conserve energy and reduce overall environmental impact. In packaging, the focus is on reducing packaging quantity, increasing recyclability and developing optimum packaging specifications.
Tetley is also a member of the Ethical Tea Partnership (ETP), an organisation committed to ensuring that the tea sold by its members is produced in a socially responsible way, and that tea estates provide decent, clean living and working conditions for workers and their families. Over 90 per cent of the tea sourced by Tetley comes from countries where ETP is active, and senior executives are closely involved in supporting ETP work, as well as in creating awareness of its activities.