In India, where tea's penetration is 100 per cent, the tea bag's share of throat may be laughably small, but Twinings and Tetley are doing their best to grow the premium end of this category.
Can you imagine paying Rs 3,000 or the equivalent of that in pounds for a cup of tea? Well, if you order British tea brand Twinings at the plush Criterion restaurant in Piccadilly, you might have to.
Whether India is ready for that expensive a brew is a call that Ian Gowlett, Managing Director, Twinings India, has to make. But he is certainly going to introduce a super-premium range (not in that Rs 3,000 range, he quickly clarifies), trading up the already posh tea brand.
“We are unashamedly premium, and our consumers tend to appreciate that and what it means,” Gowlett says. The Twinings strategy is to reach out to people who know the nuances of fine wine or designer clothing. “We look at ourselves as offering special tea moments, catering to different moods and different needs,” he says.
After 14 years of being in India, Twinings, which is owned by Associated British Foods, the fifth biggest food company in Europe, is now buckling down to the task of growing its business here.
This will be done, says Gowlett, through a four-pronged strategy – upgraded packaging and product; selling the Twinings experience through HORECA (hotel, restaurant and café) and perhaps its own special tea bar; introducing a super-premium tea bag variety as well as super-premium loose tea; and, finally, by driving consumer awareness about the Twinings heritage through ATL (above the line) and BTL (below the line) investments.
As part of the last strategy, it has flown down Stephen Twining, 10th generation scion of the Twinings tea family, to do his tea act in select cities of India. The high tea with Stephen Twinings is delightfully la di dah – served with great pomp and ceremony in a very charming setting. (see box)
Gowlett admits that right now India is just a blip on Twinings global sales figures (which he refuses to share), accounting for not even a one per cent share. But he points that Twinings has already bagged 35 per cent market share in the tea bags business here (which admittedly is a laughably small size), and that like everybody else the company is seeking growth from the country.
The last five years (2006-2011) have seen a CAGR of 26 per cent. “I would like to now deliver five-fold growth in the next five years,” says the former PepsiCo man, who is clearly enjoying his innings with a family business (ABF is owned by the Weston family) after his stint with an MNC.
The easy part for Twinings is that India is a 100 per cent tea-penetrated country and a daily habit; the tough part is that the tea bag habit is not so well ingrained. And unlike others who salivate at the population numbers here, Gowlett is more worried about finding where the Twinings customer is within that population.
“The biggest difficulty in India is not the numbers but finding them. Yes, the metros where we operate have about 100 million people. But trying to search and find people who will truly appreciate the Twinings experience is the difficulty,” says Gowlett.
But fortunately for Twinings, there are others in the tea bag game, trying much the same thing. With Tata Global Beverages-owned brand Tetley also getting aggressive in this segment, and introducing higher value offerings, the market for premium tea bags has suddenly emerged in India. Gone are the days when marketers would struggle to sell the basic tea bag proposition – FMCG veteran Kannan Sitaram, Operating Partner with India Equity Partners, recalls how in his old HUL days, he struggled to sell the concept of tea bags, and is amazed at the acceptance of them now.
Today, not only are institutional sales increasing, but as Vikram Grover, Vice-President (Marketing), Tata Global Beverages, India, points out, there is a steady increase in the in-home consumption of tea bags as well.
Although Tetley, which offers six variants apiece of value-added premium tea bags in the black and green categories, says it has been at the forefront of stimulating new tea habits in India, Grover shrugs asides questions on market shares. “Market shares may not be the relevant metric on tea bags as the game in this tiny market is all about market growth - India continues to lag behind the world in terms of usage of tea bags and emergence of newer segments of tea,” he says.
Grover says the Tetley strategy to grow the market for tea bags is to introduce more flavours. “We believe the most important lever for developing this market is the range of offerings and the taste of the products on offer. We did that first with flavoured black tea bags and now we are doing the same with green tea,” he says.
Adds Grover, “Unlike regular packet tea, the purchase of tea bags is more impulse-led, hence most of our marketing strategy is focused on visibility and trial generation at the point of sale. We are also constantly evaluating newer avenues of connecting with consumers, such as online.”
Even as Tetley is introducing flavours such as cinnamon, Gowlett insists that Twinings will not go down the localisation route at all (although it does have an elaichi variant). “Why should I offer a local brew which people here can do better? We are a global company, and our offerings will remain international,” he says.
Globally it has 200 blends, but in India, Twinings offers only 18 – including its bestselling Earl Grey and English Breakfast. It also has indigenous Classic Assam and Darjeeling in its India portfolio. But that, Gowlett rushes to explain, is also to do with the duty structures here which curb imports. “India wants to look after its tea industry and we have to be realistic to a degree,” he says, explaining how the Classic Assam they offer is still very, very premium.
Gowlett also says that Twinings will be very selective of where it will be available and keep the snob value intact – “There are 16 million retail outlets in India, but we won't be seen in all of them,” he says.
Will the Tetley and Twinings strategy of trading up their offerings pay off? Or remain just a storm in a tea bag?
Tea time theatre
When Stephen Twining calls you to tea, you can be sure that what you get will not be a simple cuppa, but a whole lot of attendant drama – from the brewing, the smell, the look and the taste down to the chosen food accompaniments – the high tea session is transformed into quite a theatrical production. And, why not? As Ian Gowlett, managing director of Twinings in India, says, “While coffee is rather industrial and brisk and mechanical, tea with its looks and smells lends itself to leisurely drama.”
And who better to enact this drama than the 10th generation scion of the Twining family, which got Britain into the daily habit of a tipple back in 1706. His family no longer owns the brand – having sold it to ABF in the 1960s, but 47-year-old Twining remains closely associated with it as Corporate PR and global brand ambassador. He travels round the world, hosting tea sessions and giving you nuggets of tea's history and brewing practices.
In India on his first official visit, he hosts one such session at the Leela Kempinski in Delhi. For a moment he looks taken aback to see only ladies gathered, but quickly recovers his aplomb, and says “Ah, it's fitting to see so many ladies, as tea has been a story of ladies. They have been drivers of the tea tradition,” proceeding to show us slides of tea parties attended by ladies. It's a consummate act, and the accompaniments of scones and tarts top off a perfect afternoon, where we learn that the ideal brew takes three minutes of dipping, and has to be had without sugar. We also learn that Twinings' tea blenders have to taste tea for five years and guzzle up to 3,000 cups a day to become masters at their craft.