Looking for a pick-me-up

At her parties, Nita Ambani prefers to serve Basilur tea. The Reliance group Chairman’s wife also makes sure Basilur is served at the Mumbai Indians VVIP enclosure at Wankhede stadium during IPL matches. Basilur is one of the Sri Lankan tea brands that is now making its way into Indian stores. Local distributor SVA India has represented it since 2011.

Another Sri Lankan brand Dilmah has been trying to make inroads in India. Having changed distributors several times, it recently resumed selling through institutional channels. Brands such as Basilur and Dilmah believe there is a market tilting towards this segment. “When we launched Dilmah tea in India originally, Indian consumers were not exposed to quality Ceylon tea or to international tea brands. As a tea-growing country, India had to be protected from imports,” says Merrill J. Fernando, Founder and Chairman, Dilmah.

Dilmah had originally entered India by appointing FMCG company Dabur as a distributor. “Dabur was an excellent distributor for Dilmah. However, with the high cost of Dilmah Single Origin Pure Ceylon tea, they were unable to generate sales whilst securing distribution. We are now concentrating on top-end institutional trade, where quality is respected and is in much demand,” added Fernando.

 Recently Dilmah set up its first T-Bar in India at Radisson Blu in Hyderabad. It intends having more by the year-end. “The launch was a remarkable success. It was an indication that Dilmah Single Origin tea is now understood and appreciated. We are not in a hurry to enter the Indian retail market which is experiencing the normal flood of old colonial names, supplying mass market tea aimed at exploiting their old brand names. Dilmah Single Origin tea will target affluent Indians with fine quality Ceylon tea, presenting a completely different tea culture, character and taste. That is what we take to consumers in nearly 100 countries today,” says Fernando.

Free trade advantage

Brands from Sri Lanka have an edge as they can avoid the steep duties (there is a 100 per cent import duty on teas) due to the country’s free trade agreement with India.

“While premium tea may comprise just two-three per cent of the tea category in India, we will not chase the business. We are in no hurry to get profitable as we expect discerning consumers to find us. After all, clients like Ms Nita Ambani patronise our brand. We have set up tea bars at her parties,” says Raghav Gupta, Director, SVA India, the distributor of Sri Lankan brands such as Basilur, Tipson and Wazar.

Even in Sri Lanka, Basilur is a premium tea brand available at duty-free shops. In India, Basilur, along with more premium brands such as Tipson and Vazar, is reaching out to 50-odd gourmet stores. New health variants have also been introduced, such as the fruit-based soursop tea under the Tipson brand whose target market includes cancer patients.

S. Africa in the ring

“The global tea industry is largely dominated by India, the largest producer and consumer of tea, accounting for 30 per cent of the world’s production, followed by China, Sri Lanka, Kenya and Indonesia. During the last few years, India has seen an increase in the number of tea variations of specialty hot and iced teas along with different types of beverages in varied flavours. Beyond just the traditional cup of chai , tea is continuing to expand in all of its forms due to improved brewing methods and growing awareness of health benefits coupled with the rise of health-conscious individuals,” says Gupta. The benefits of drinking premium tea are not the preserve of Sri Lankan brands. South African brands proclaim the virtues of their ‘rooibos’(Red Bush) variety of teas. Rooibos has flavonoids that act as antioxidants, making it popular among health-conscious consumers. It is reputed to be low in tannins compared to most black teas, caffeine-free and rich in many minerals, including iron, calcium, potassium, copper, fluoride, manganese, zinc, magnesium, and alpha hydroxy acids.

Every year, Charl Rudman, Managing Director of Blue Africa Trading, visits India along with a South African trade delegation scouting for distribution partners to introduce the rooibos teas to India.

During his previous visit, Rudman said, “We are planning to bring a tea which looks and tastes like coffee in India and are in talks with coffee chains. Starbucks in the US is already offering this kind of tea, which is a much healthier drink than coffee.’’

Blue Africa Trading is scouting for local distributors who can sell their rooibos teas, in categories such as organic and ‘chaippuccino’ (tea which looks and tastes coffee), at both retail outlets and coffee chains.

In South Africa rooiboos tea is already available across 150 coffee retail outlets. Even in China rooibos teas have been introduced in coffee chains under name of ‘chappuccino’ category.

“Rooibos is 300-year-old tea blend and is already popular in the US, Netherlands, Germany and the UK. Even the Tatas had approached us to package their Tetley Red Bush tea brand in the past. But today we hope to be the first company to introduce this tea in India,” said Rudman.

Tough going

But it has been tough for such premium tea brands to establish themselves in India. Even Tata Global Beverages has tried to enter the premium segment with brand Tea Veda in the past. Today it is still struggling to find a footing for Tetley, an English brand it acquired a few years ago. Jagdeep Kapoor, Managing Director, Samsika Marketing Consultants, says, “Tetley is a premium brand, yet the Tatas have not been giving it enough focus in terms of inputs like advertising and promotions. Today it is the premium green tea segment which is growing more than any other tea variant and the market is ready to accept brands, including a UK-based brand Tetley.”

However, another UK-based tea brand, Twinings, is trying to get a new lease of life in India. Twinings came to India in 1997 and found it difficult to establish itself without a partner. It worked with its own sales team for the first 15 years before it decided to outsource its distribution to the Narang Group. It now sources and packs its tea in India, but making money on the brand will take time as Twinings does not intend on shedding its premium image.

With the help of its new distribution partner Suntory Narang, Twinings today reaches out to 100 top hotels and QSRs (quick-service restaurants) and expects to target a new segment with its premium teas. “In the last 15 years, we have consciously chosen not to get profitable and whatever money we make is put back in packaging and advertising to drive the business forward.. Our bread and butter will come from tea bags but for loose teas, we are launching 21 new variants for the hotel segment. However, there is a lot of competition in India with over 3,000 tea brands , so we cannot ever afford to rest on our laurels,” says Ian Gowlett, Managing Director, Twinings India.

Suntory Narang is expected to make sure that Twinings reaches its targets in the Indian market. As Gowlett adds, “Together with Suntory Narang, we are stronger than being alone in so many ways like distribution reach, modern trade focus, collective bargaining for lower media costs and the like. We are now bullish in terms of reaching our goals and expect to grow Twinings top line at least five times in the next three years.”

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