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Kohinoor Mandal

We intend to competitively deliver a better mix of products and services to customers across geographies in a more relevant and effective manner and, while doing so, drive benchmark efficiencies across our operations.

The branded tea market in India is no longer what it used to be. Tata Tea has stirred it up. In the last few months the company has launched three more brands and it now has a presence in all the segments.

It began with Tata Tea Temptation, then Agni Sholay and finally the world famous brand, Tetley. Tata Tea has also priced its products in such a manner that they can take on the competition, whatever the hue — from the market leader Hindustan Lever to such local players as Girnar, Wagh Bakri or Society. To integrate its operations with Tetley, Tata Tea has appointed Boston Consulting Group. An apex supervisory board has also been constituted, under Mr R. K. Krishnakumar, vice-chairman of the company.

From here on, Tata Tea's focus will be on the development, promotion and nurturing of these brands. One of the key persons behind all this action is Mr P. T. Siganporia, Deputy Managing Director. In a discussion with Business Line, he explained Tata Tea's position in the Indian branded tea market and the integration with Tetley.

Excerpts of the interview:

How big is India's packet tea market?

India's total tea production is about 840 million kg (mkg); about 15 mkg is imported. About 180 mkg is exported. About 680 mkg is consumed in India. Of this, we feel 300 mkg is sold as packet tea and the rest as loose tea.

However, ORG-MARG holds a different view. According to it, 245-260 mkg is sold as packet tea. But they look mainly at the organised packet tea players and leave out the unorganised and smaller packet tea players.

How do you place Tata Tea in the Indian branded tea market?

Going by the ORG-MARG figures, we are No 2, just behind Hindustan Lever. In terms of volumes, HLL's share is 29 per cent, followed by Tata Tea at 16 per cent and then Duncans with 4 per cent. The other branded players individually hold market shares less than that of the Duncans. In terms of value, HLL leads with a share of 32 per cent. Tata Tea's is 18 per cent and Duncans's 5 per cent. All these ORG-MARG figures.

Tata Tea recently launched three brands — Tetley, Tata Tea Temptation and Agni Sholay. How are you now placed with your main competitor, Hindustan Lever, in the different categories of the packet tea market?

First, let us take the premium leaf tea sector, in the Rs 200-220 per kg price band. Here HLL has three brands — Taj Mahal, Yellow Label and Green Label.

We never had any presence in this category. So, we introduced the famous Tetley brand. Then, in the premium dust category (Rs 180-200 per kg), HLL has such brands as Three Roses and Top Star.

We have Chakra Gold. brand. In the medium leaf sector (Rs 140-180 per kg), HLL is present through its Red Label and Taaza brands. We have Tata Tea Premium.

In the medium dust category (Rs 130-180 per kg), there are a number of brands in this sector: HLL has Taaza, Super and we have Tata Tea Premium, Kanan Devan and Gemini.

Last comes the popular or the economy category. The price of the leaf tea in this category is Rs 120-140 per kg.

HLL is present with A-1 and Tiger and we recently introduced the Agni Sholay brand. In the economy dust teas (Rs 120-130 per kg), HLL has brands like A-1, Ruby and others and we have Agni and Leo.

So, Tata Tea now has a brand in every segment and every category of the packet tea market.

Earlier we were not present in the premium sector and were not too strong in the economy teas. With the launch of Tetley and Agni Sholay, we are now active in those two categories.

We have also priced our products competitively to meet all sorts of challenges.

In the last few years, tea prices at the auction centres have dropped dramatically. What changes has this engendered in the packet tea market?

It is true that from 1998 to 2001, or even 2002, tea prices have dropped like anything. This has certainly brought about changes in the selling pattern in the packet tea market.

In 1998, the premium segment was mostly occupied by the organised packet tea players; mostly premium and some medium quality.

Just below it was the economy sector. Local players were very active in this segment; but it was quite small.

Loose tea market held a chunk of the market. Three years down the line, the market has changed.

The economy, or the popular, segment has grown significantly and that too at the cost of the organised premium packet tea players.

This sector has also drawn consumers away from the loose tea market. So, the competition is now mostly in the economy category and obviously in the premium and medium sectors.

What are your plans of introducing the Tetley brand in the overseas market?

The Tata group recently roped in Mr Vijay Singh, former CEO of Sony Music, to head the Tetley operations in the emerging markets.

His mandate is to work out a strategy to launch successfully the brand in the new markets. He has full freedom and flexibility to work out his strategies, only it has to be a success.

Does this mean Tata Tea will stop exporting bulk teas?

No, exporting bulk tea is a different business altogether. Out of our total production of 58 mkg, we export about 2.5 mkg as bulk tea and we will continue with that.

How is the company going about with the integration of Tata Tea with Tetley and the Sri Lanka-based Watawala Plantations?

We have begun the process of integrating these three companies into one seamless organisation.

The process is being managed by Boston Consulting Group.

A systematic procedure of integrating management leadership is being formulated and strategic goals and best practices are being set for all our operations.

The business objective of all the three companies is to attain results in alignment with the unified vision of the business and complement one another's effort.

All stakeholders are to benefit from this endeavour. We intend to competitively deliver a better mix of products and services to customers across geographies in a more relevant and effective manner and, while doing so, drive benchmark efficiencies across our operations.

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