The Hindu Business Line : Armed to the tea

Cha or Spa? Riding on the wellness wave, Hindustan Unilever Ltd (HUL) is asking consumers to choose between its Lipton’s new flavoured tea bags or a trip to the spa. To fortify its position as market leader by value, HUL is now focusing on the tea bag market with its premium offerings.

Bringing in another international offering in the Indian market, this time it is the wellness and vitality range from Lipton which are calculated to entice consumers with flavours such as Camomile, Hibiscus, Green Tea and English Breakfast. Restricting the distribution of its premium tea flavours to 21 select outlets across Mumbai and Delhi, HUL is clearly betting on the premium end of the tea market to hold on to its leadership position with a value share of 24.3 per cent as per AC Nielsen data for the quarter ended June 2007.

But the gap with its nearest competitor Tata Tea is closing, with the latter just four percentage points away at 20.7 per cent in value share for the same quarter. At the same time Tata Tea has beaten HUL to attain the top place in terms of sales volume during June 2007. Tata Tea’s volume share stood at 19.2 per cent in June as compared to 18.6 per cent of HUL, which all this while has been a leader in the Indian organised tea market with successful brands such as Taj Mahal, Brooke Bond and Lipton. According to FMCG analysts, Tata Tea had been positioning its offering differently and widening distribution. It has witnessed strong growth in Tata Tea Premium and Tata Tea Gold and repositioned Agni. It has also forayed into new segments by launching Tata Tea Life with natural herbal extracts and Tetley Green Tea in the premium segment. In 2002, HUL’s market share was 26.1 per cent while that of Tata Tea was 16.3 per cent in volume terms. But the difference in volume shares has been dwindling and for the first time in June this year, HUL lost its leadership position to Tata Tea.

In spite of its nearest competitor catching up, HUL believes it has got its tea strategy right. Announcing the June ending quarterly results, Harish Manwani, Chairman, HUL, said, “We believe in value creation and are consolidating our portfolio with value leadership. Ultimately what drives us is our value leadership. Although we have some low-priced brands, it is value leadership which matters to us. We have a value-creating strategy and that is giving us profitable growth. Our growth numbers in the tea business show that we have grown by 20 per cent. It is all about going for category value leadership.”

Today the FMCG behemoth is building a premium strategy for its teas, banking on the boom in the health and wellness segment, with plans to tap it with the latest range of Lipton. “Lipton is the international leader in speciality teas. Indians are evolving as wellness-conscious in the choices they make,” says Vikram Grover, the new Category Head - Beverages, HUL.

At the same time, HUL has been making efforts to draw consumers towards its mega Rs 1,000-crore Brooke Bond franchise which includes sub-brands such as Taj Mahal, Red Label, 3 Roses and Taaza. Early this year it brought in Saif Ali Khan as the new Taj ‘Shaukeen’ to give Brooke Bond Taj Mahal a new face after its long association with Ustaad Zakir Hussain. It also came up with its ‘Taj Jaisa Ghar’ promotion/contest. The winners of the contest get Rs 2 lakh each to renovate their homes. “Consumers today are looking at making a statement about their distinctive lifestyles and personalities, and get acknowledged for that in their peer circle,” said Siddharth Banerjee, Marketing Manager – HLL Tea.

In the past there have been efforts to position the mass brand Brooke Bond Red Label as a natural care brand with added ingredients such as Aswagandha, Mulethi, Tulsi and ginger. The brand was also re-launched this year with new packaging and now there are plans to fortify it with more ayurvedic ingredients and get its ‘goodness’ endorsed by a competent authority.

Today Tata Tea is emulating HUL’s master branding strategy for Brooke Bond implemented a couple of years ago. Recently, it decided to unify all its four brands under the mega Tata Tea brand with a new ‘Jaago re’ campaign based on social awakening. The four Tata Tea brands – Tata Tea Premium, Tata Tea Gold, Tata Tea Agni and Tata Tea Life have been bought under the umbrella of Tata Tea with the intention of gaining market leadership in the category. On the way forward for Tata Tea, Percy Siganporia, Managing Director, Tata Tea, said, “We are charting a course to be India’s foremost tea-based beverage company. While we are building a market volume leadership position, we are also aiming for market value leadership. Tata Tea will lead the category thought and widen the scope of the current universal appeal of tea based beverages.” This comment should pose a threat to HUL but industry observers feel that as long as HUL continues to hold on to the premium tea market, its value shares face no threat.

Siganporia further adds, “While I have a lot of respect for HUL’s managers as they have excellent minds, there is relatively less emphasis on their tea portfolio. In our case we are marketing our tea brands with our mind and body and have been growing in double digits year after year. In terms of creating value, today we have to look at the separate segments. We are relatively weak in the higher end and the economy segment and these are the areas and gaps we need to address. Today HUL is just 4 percentage points higher in value share.” With Tata Tea charting out its own strategy to gain a value share leadership position, it may be a matter of time before HUL bows to its closest competitor.

More Stories on : Strategy | Insight | Tea | Hindustan Unilever Ltd | Tata Tea Ltd

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