The Indian hot beverages market is dominated largely by tea. Though the majority of the market consists of unorganised players, major branded players include Godrej Tea, Tata Tea, Unilever and Lipton, and home grown brands like Wagh Bakri and Pataka Tea. HUL, with its wide basket of offerings that caters to almost all segments of consumers, has been trying to stay ahead of competition on the back of its consistent positioning of tea as a healthy beverage. It has yet again reiterated this positioning in its latest campaign for Brooke Bond Red Label tea.
According to Euromonitor, Black standard tea is a traditional and highly popular drink in India and accounted for some 84 per cent of tea retail volume sales in 2011. And amongst the players, Tata Tea Premium, by Tata Global Beverage, and Brooke Bond Red Label, by Hindustan Unilever, were the two largest brands in retail value sales terms within tea in the same year. Hindustan Unilever led sales with a retail value share of 29 per cent followed by Tata Global Beverages (25 per cent).
The report also points out the fact that consumers are fast moving towards testing new products especially in terms of flavour and health benefits.
Sipping on the health factor
Recently HUL launched a campaign for tea brand Brooke Bond Red Label with Akshay Kumar and Sonakshi Sinha as the endorsers. The commercial underlined the fact that tea drinking is a healthy habit. A number was flashed by Akshay Kumar for users to call and convince Sonakshi Sinha that it is healthy. â€œThere are many myths associated with tea in India. For example, people believe it is unhealthy when in reality; it is actually a super food. This triggered our initiative to make our consumers aware of the many health benefits of tea including its positive effects towards improving blood circulation. The Akshay-Sonakshi campaign is a part of Red Labelâ€™s long standing effort to bring the goodness of drinking tea to the fore. We are looking at making our belief larger than life and also starting conversations amongst consumers on the health benefits of tea,â€ says HUL spokesperson.
Both Akshay & Sonakshi are said to have strong health credentials according to HUL. â€œGiven their mutual passion for health and their rapport, they were the perfect fit for the Red Label campaign,â€ the spokesperson adds.
Brooke Bond has a wide array of offerings in the tea industry. According to HUL, Brooke Bond Taj Mahal and 3 Roses are premium based on the aroma and expertise. Red Label, Sehatmand and Tazaa are on the other hand, inclined towards taste and health in the mass segment. â€œThe brand has existed for 140 years and a lot of R&D has gone into establishing it as a healthy beverage,â€ appends HUL spokesperson.
Talking from a health point of view Shripad Nadkarni, Director, MarketGate Consulting, says that, for a long time Brooke Bond has been talking about health, like Tata tea is talking about social activism. â€œBrands such as Lipton Tazza, talks about freshness, Tata on the other hand projects a jolt waking the consumer up to the current affairs; and the health platform is captured by Brooke Bond Red Label. Therefore, the strategy is well thought out and HUL has been consistent to the platform,â€ he adds.
Commenting further on the strategy, Shushmul Maheswari, Chief Executive, RNCOS, opines, â€œMost of the time tea is something that is taste specific; most of the people find it difficult to switch over from one brand to the other. The market entry barriers are high in terms of the consumer taste buds. I think the â€˜tea is healthyâ€™ is a good strategy because the urban population is health conscious, the general perception is that green tea is healthy and milk tea is unhealthy. It is something the mothers donâ€™t want their children to drink.â€
He says that to market it as a healthy drink might help change the perception. â€œMarket education is very important. I think they are trying to try something different. There is no other way to change the TG or expand it unless there is a different pitch. By bringing in the â€˜healthy factorâ€™ in the commercial, Brooke Bond is trying to differentiate the product. But I donâ€™t think it is going to help much. Most people do not connect the dots that the tea is by HUL but go for the taste that suits them.â€
The tea sales including exports according to a report in the HUL website states that HUL sold Rs 1,982.35 crore worth tea for FY 2012, compared to FY 2011 (year ended 31st March) when it sold Rs 2,097.50 crore. If tea is a healthy beverage, the why has the sales gone down?
Not reaching out to youth?
According to Market Gateâ€™s Nadkarni, he is not very sure about growth. He says, â€œMaybe because it is not relevant for the younger audience. There are a lot of beverage options available for the younger audience. Hence, that is the biggest challenge. Health is based on both dimensions functional and emotional.â€ He adds that it is a solid platform, if it is delivered through credible sources.
However, Maheshwari, on the other hand says, â€œIt (Brooke Bond) is doing a lot of television ads; I have seen ads on television and newspaper. It has not done anything on social media, which means it is not very keen on looking at the young generation. I think it is not targeting the young, as the decision maker, to buy tea, is not the child in the family but the mother. She is the person who is usually not too net savvy and online social network friendly. I think it is important for a brand with wide offerings to have a wide TG because of the number of brands that are available. The grey market brands and the domestic brands are many; if one wonâ€™t have a wide coverage then it will be difficult to have a big TG.â€
HUL has been pursuing marketing initiatives that help establish each brand’s seperate identity in the market. Being a Rs 7,900 crore packaged tea market, HUL spokesperson states that HUL is one of the largest players and the thought-leaders. â€œWe believe that each brand has a distinct functional and emotional proposition and hence, we communicate their benefits individually,â€ the spokesperson adds.
The tea market, which witnessed downtrading in 2010-11 stabilised in 2011-12. The market saw low single digit volume growth and close to double digit value growth. According to HULâ€™s report, most parts of the portfolio witnessed good performance. 3 Roses had another year of strong growth strengthening its position in the southern part of India. Red Label witnessed second consecutive year of volume and value growth ahead of market, across geographies. Natural Care, a value added variant of Red Label and 3 Roses also grew well ahead of the market by building on the differentiated proposition of immunity.
Taj Mahal and Lipton led the charge in the premium segment and witnessed both price and volume growth. Tea bags had a very successful year, with the launch of new flavoured and green tea bags under these two brands, enabling the HUL to build leadership in the format of the future. Lipton Ice Tea was launched in ready to drink and powder formats to enter into the fast growing non-carbonated beverage market and to make the tea portfolio future ready. A strong entry in the bottom of the pyramid and mid price segment was made in select geographies through relevant brands like Taaza Bachat, Ruby, A1 and Super.
According to the Tea Board of India, India presently has a CAGR of 15 per cent at an annual turnover of Rs 19,500 crore, which is estimated to grow to Rs 33,000 crore by 2015.