Financial Daily from THE HINDU group of publications
Saturday, Mar 16, 2002
New Products & Services
Tata Tea plans 200 Tetley vending machines in a year
Mr Homi Khusrokhan, MD, Tata Tea Ltd, at the launch of a vending machine in Mumbai.
MUMBAI, March 15
TATA Tea Ltd (TTL), which officially launched its first `Tetley' vending machine at the city's Churchgate station on Friday, hopes to have 200 such facilities in place at major airports and railway stations, over the next one year.
The company is using the franchisee system to grow its base of vending machines, emphasis being on the quality of locations selected. High density spots such as Churchgate station offer sales in the scale of 3,000-3,500 cups per day, Mr Mathew Xavier, General Manager (Marketing), TTL, said.
"The response so far to Tetley has been excellent," Mr Homi Khusrokhan, Managing Director, TTL, said. Tetley was officially launched in the domestic market in January. The premium segment is pegged at 7-8 per cent of the total tea market.
According to him, retailing Tetley through vending machines won't be at the cost of the brand's premium image. "A new brand is always better for a new initiative," he said, when asked if the consumer would find Tetley's multiple market positioning, conflicting.
In fact, Mr Khusrokhan feels, in the days ahead, rigid segmentation of the market would blur as consumers realise their ability to sip good tea at affordable prices.
TTL will look at variants such as iced tea and flavoured tea. Its main domestic competitor, Hindustan Lever Ltd (HLL), has done its vending machine foray in tea using two brands Taj Mahal for tea served hot and Lipton for iced tea, including flavoured variants.
Mr Khusrokhan said that TTL would like to do all this under one brand and not several. Though preferring not to take a stand on the business potential for tea parlours, he pointed out that coffee - in which category parlours have taken off - is a very different brew to host that practice, compared to tea. As for `Gaffers' the tea parlour owned by Tetley in the UK it is in the wind-up mode.
TTL's Kanan Devan brand is scheduled for a re-launch while TTL's subsidiary Tata Coffee has similar exercises lined up for, Tata Coffee, Tata Kapi, Tata Coorg Pure and Tata Coorg Double Roast.
Mr Khusrokhan said that TTL would need to sustain its earlier announced higher brand spend for at least one year. The hiked outlay had pushed TTL's board to sound a caution on profits for current fiscal. On the other hand, Tetley is projected to average annual sales of Rs 100 crore in 3-5 years.
Further, he pointed out that where brand extensions and re-launch of existing brands are concerned, costs would be commensurately modest.
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