The Hindu Business Line : HLL gives up tea parlour chain plans

FMCG major Hindustan Lever Ltd seems to have scalded itself with ambitious plans to promote tea consumption through a chain of branded tea parlours, a la Barista or Café Coffee Day. The company has shut down T Place, the first of the tea parlours that it set up in Bangalore, and has now abandoned the idea of getting into the branded tea chain business.

"Based on our experience of the market and our business priorities, we decided not continue the tea parlour,'' an HLL spokesperson told Business Line when contacted.

HLL had launched the first T Place outlet at Koramangala in a large restaurant format, which presented the beverage in exciting new ways in contemporary settings. The company had also planned to leverage the health and wellness plank associated with tea drinking to promote the beverage, which is a major revenue grosser for it. The plans, however, ran into trouble with the franchisee downing shutters after he is believed to have found it an unviable proposition to run.

The HLL spokesperson did not specify reasons for exiting from plans to set up branded outlets but said it had helped the company to understand consumer preferences and that it would use its learning to leverage its other delivery formats such as kiosks and machines.

"The tea parlour in Bangalore was an experiment in testing new product formats and also in testing a new channel to reach consumers. More importantly, it has helped us to innovate and develop new product solutions... as a result of the insights we developed from the tea parlour experiment we have now launched a malt (premix) tea under the Lipton brand. And there are many more such innovations planned,'' the spokesperson said. With consumption of tea and coffee in India rapidly growing in the out-of-home channels, the company is stepping up its presence and tapping the opportunity that ranges from high street teashops to corporate offices, malls and multiplexes at the premium end, the spokesperson said. HLL has a base of 25,000 accounts in these channels with its Bru and Lipton brands and sells over 8 billion cups annually. Its premium channels sales are over one billion cups per annum and have been growing at a CAGR of 25 per cent over the last three years, the company said.

For now though, HLL's efforts to retail tea from its own branded outlets is on hold, at least till it gets the next big idea on how to do it. "We will keep on experimenting with formats but we have to keep making sharper choices keeping our priorities in mind," the spokesperson said. "Very clearly, we are not going ahead with this format."

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