Savoured as much in ramshackle roadside stalls as in corporate boardrooms, tea is a fundamental part of life in India. But the diversity of individual preferences in the country has spawned a wide spectrum of teas. How does a tea company cater to such an extensive spread in terms of taste, blend and price? Tata Tea provides a tasty answer.

The company offers a bouquet of six brands with numerous variants for different segments of the market. More than 15 million Indian households — 10 per cent of the 152-million tea-drinking families in the country — swear by a Tata Tea brand. Tata Tea, the flagship offering in the company’s stable, is the largest selling brand in the Indian packaged tea segment.

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.

The company’s research centres at Munnar, Assam and Bangalore ensure that Tata Tea plantations grow the right kind of leaves, and an expert tea-tasting and blending cell sees that the best blends are delivered to consumers.

The total consumption of tea in India is 650 million kg, with packaged tea accounting for 290 million kg. The big challenge facing the plethora of brands — local, regional, national and now international — in this bubbling market is to keep pace with changing consumer habits and attitudes.

While drinking tea, as a habit, is deeply ingrained in India, consumer lifestyles and consumption patterns are evolving rapidly. In an environment increasingly dominated by cola wars and coffee bars, it is imperative to upgrade tea offerings for tea to remain a relevant and attractive beverage for consumers.

It is here that Tata Tea scores. The company is committed to being a major mainstream player. "We have brands in all segments of the market: premium, popular and economy," says Vivek Mathur, the company’s vice president (marketing and sales). "Our strategy is simple: 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."

Tata Tea’s brand-building initiatives are focused on taste, quality and imagery. "Our strategy is to invest in long-term brand building for sustained growth," adds Mr Mathur. "We focus on a brand’s theme to establish its proposition." 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.

Each brand endeavours 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.

Chakra Gold, a strong premium tea in Tamil Nadu and Andhra Pradesh, is a blend of high-quality Assam dust with ‘a golden taste’ that ‘creates golden moments’. Gemini, positioned as a ‘strong tea for strong family relationships’, is a dominant player in central Andhra Pradesh, and Kanan Devan, a heritage brand that delivers ‘the unique taste of the Kanan Devan Hills’, holds fort in Kerala and Karnataka.

The competition Tata Tea is faced with operates on two fronts: organised 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.

"The fall in auction prices [for tealeaves] over the last few years has led to a huge gap between the commodity and the consumer prices of packaged teas," explains Pankaj Dant, Tata Tea’s general manager (marketing). "Low entry and exit barriers in the packaged tea business have allowed local entities to prosper."

These are primarily wholesalers who can retail products at lower prices, while offering customised blends, thanks to minimal overheads. They attract non-discerning consumers for whom a steel thali is inducement enough to purchase a brand. "Many established brands have resorted to tactical measures such as consumer freebies and heavy trade discounting in an attempt to hold on to their volumes," says Mr Dant. "Some have come out with lower-priced brand variants."

This is not the garden path Tata Tea is taking. The company is concentrating on building value around its brands to distinguish them. Mathur clarifies the strategy: "The median price for a 250-gm pack in northern India, Tata Tea’s main market, is approximately Rs 30. Tata Tea, which is priced at Rs 42.50, must offer something more to make the consumer agreeable to paying extra, or it must discount its price.

"Our task is to justify to the consumer, in terms of the product, its brand imagery and the differentiated sets of values we stand for, that Tata Tea is indeed superior and deserves a higher price. If we can do that, we then lift ourselves away from the local competition and, at the same time, differentiate ourselves from organised players at similar price points."

With this objective, the company embarked on new brand communication activities. Kanan Devan, Chakra Gold and Tata Tea were strengthened in terms of product delivery and re-launched in 2002. Gemini is due for a face-lift next month, and Agni will be the next brand focus. The global brand Tetley, acquired by Tata Tea in 2000, was launched at the upper end of the market, in packet and teabag variants, in early 2002.

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.

Tata Tea has invested heavily in regular tracking of consumer preferences, so that it can customise blends for diverse buyer segments. The tea remains consistent at the core, but the specific product is tweaked. For instance, a consumer in Uttar Pradesh may like a stronger Tata Tea than the one available in Mumbai (the focus on customisation explains the availability of as many as seven blends of Tata Tea).

There is an equal focus on product consistency. Tea cultivation is a seasonal activity, with quality differing from month to month. For example the best-quality tea is produced in June and July, whereas production in March and April is ordinary. At one time, Tata Tea would sell whatever was produced. That has changed.

"The customer now has certain expectations from Tata Tea," says Mr Mathur, "and we have to ensure consistent product delivery." To ensure consistency of blend, the company sometimes buys teas at auctions and blends them with its own produce. "The brand requirements are now uppermost."

These key initiatives and the consistency and customisation of blends have significantly improved the perception of the brands. As a result Tata Tea is seeing a turnaround in its branded portfolio in an extremely adverse market scenario (ORG reported a market size decline of 9 per cent in 2002).

The biggest turnaround has been in the Tata Tea brand, after its re-launch in October 2002. Mr Mathur says the re-launch was necessary. "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. We decided to combat this by strengthening and improving our product offering."

Tata Tea’s market share was declining sharply in 2000-01 and 2001-02. The re-launch helped arrest the fall by mid 2002-03 and the brand has been on a growth path ever since.

Mr Mathur adds that the Tata Tea brand is still a teenager, having been around for only 17 years, as opposed to some national brands that have been selling for 30 years or more. So, while Tata Tea may sell more than, say, Red Label, people still perceive the latter as the big brand. In the new Tata Tea campaign, which positions it as ‘Desh Ka Number 1 Taste’, the brand is communicating its own bigness and defining its leadership position.

To enable further growth, the company will need to strengthen its position in rural and semi-urban markets. A major move here is to target wholesalers in feeder markets. Traditionally, wholesale has not been a preferred route since most companies extolled the mantra of ‘direct reach’, but that is about to change. "We are encouraging wholesalers and retailers in small towns," says Mr Mathur. "In rural areas it is important to be available. If you are there, you sell."

At the other end of the market there is a clear need to give tea a more modern and peppy feel. The tea-bag market in India is completely nascent. For Tata Tea, Tetley will lead the way by growing this segment and enhancing tea imagery through the launch of new variants such as flavoured teas, out of home consumption, and iced teas.

The company is also promoting the benefits of tea drinking in association with the Indian Tea Board. These are some of the avenues it is exploring to make an enduring mark.

The company would like to have a Tata Tea product at all price points of the packaged tea market. Power brands such as Tata Tea, Tetley and Agni will be the growth drivers of the future, while southern gems Kanan Devan, Gemini and Chakra Gold will get extra muscle.

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.

Said Orwell: "Chinese tea has virtues which are not to be despised… but there is not much stimulation in it. One does not feel wiser, braver or more optimistic after drinking it. Anyone who has used that comforting phrase 'a nice cup of tea' invariably means Indian tea." And if it’s Indian tea you seek, look no further than Tata Tea.