Analyzing Tea Imports in

Pakistan

I
Analyzing Tea Imports
In Pakistan

Presented To
Mrs. Nighat Rizvi
Course Instructor
Business Communication
Institute of Business Management

Submitted By
Suleman Ahmed Ali
MBA Executive
ID # : 2008-1-41-8754

October 23, 2009

II
 Letter of Authorship

Date: December 26, 2008

Dear Reader,

This report has been authorized by teacher Mrs. Nighat Rizvi for
Business Communication course to analyze tea imports in
Pakistan and impacts of this industry on culture.

This report is now finished and is provided for review. I hope that I
have communicated true facts, which have been learnt during the
research of this report and have interpreted the same
accordingly.

Sincerely,

Suleman Ahmed Ali

ID # : 2008-1-41-8754

III
 Preface

The report focuses on the structure of tea industry of Pakistan, its key players with
their contribution in the economy and the market share of import in the country. It
contains detailed statistics of all the major products of tea industry and a
comparative analysis of our Industry with other competitors.

We would be pleased to provide additional information that is required or if there

are further queries that need clarification.

IV
 Letter of Transmittal
Nighat Rizvi
Course Instructor
Business Communication
Institute of Business Management
Korangi Creek, Karachi-75100

December 26, 2008

Dear Mrs. Rizvi,

Here is the report you requested entitled "Analyzing Tea Imports in

Pakistan”, along with the recommendations of uses of Tea. The study
included both primary and secondary research. The primary study focused
on a particular tea company currently operating in the market.

Although the import of Tea has increased in recent years, the information
gathered shows that with some effort the import bill on tea can be decreased
and illegal tea influx into the country needs to be minimized.
Recommendation is to exploit the opportunities of self cultivation can be
expanded enough to make Pakistan quench the consumer market within the
country.

Through the course of the term, I was given the opportunity to learn much
about the tea industry and import business in general. I am grateful to my
business communication classmates for accompanying me in visits to the tea
company. I feel that this knowledge will be helpful in future work terms, and
in my career.

Please give me a call, if I may provide additional information or answer

questions. I would be happy, at your request, to prepare a SWOT analysis of
implementing the recommendations in this report.

Sincerely,

Suleman Ahmed Ali

ID # : 2008-1-41-8754

V
 Letter of Acknowledgement

Looking back at the hard and rough road that we have been
undertaking to propose this report, we are astonished at the
contributing factors that lead us to success and kept our hopes
alive throughout.

Our heads bow before our first and fore most guide, our beacon
and strength, the ALMIGHTY ALLAH. Thank you ALLAH for giving
us strength, knowledge and power to standup after small failures,
and for impossible, possible for us.

We are thankful to Mrs. Banoo Ahmed Ali, Proprietor Lion Tea

Company and Mrs. Fatema Salman, Marketing Rep LTC for
updating us with current situation of the industry and providing us
with some market statistics. Without their guidance, we would not
be able to collect data in a limited time.

We are very thankful to Mrs. Nighat Rizvi, Teacher IoBM, for

helping us in this report and for giving us initial strength, courage
and confidence and showing us the way to move ahead.

As the best is always saved for the last, we’ll always be obliged to
our dearest teacher Mrs. Nighat Rizvi, who guided us in shaping
this report and enhancing our skills of report writing.

VI
 Executive Summary

The hot drinks market recorded growth in both volume and current value
terms in 2007. Tea remained dominant and continues to lead the overall
market in both the on-trade and off-trade. The growth rate of tea in both
value and volume terms are always influenced by sales in rural areas.
Multinational and local companies have to focus on rural areas more and
study the market carefully to maintain their share. Pakistan, officially a
country of teetotalers with an Islamic ban on alcohol, has become one of the
highest per capita consumers of tea in South Asia, as reported in The
Financial Times recently.

The government is trying to take measures and reduce import duties and
other taxes to encourage importers and manufacturers. It is expected that
these steps will lead to an increase in imports from a wider range of
countries. These steps were also taken to discourage smugglers from
smuggling tea which has been a major problem for both the Pakistani
government and tea blending companies. Increasing health awareness has
also led to an increase in demand for green tea and fruit/herbal tea. Green
tea is consumed mostly in urban areas and some rural areas due to the
increasing health awareness.

Smuggled tea accounts for a considerable amount of the total tea available
in. Kenya, Pakistan's biggest tea supplier, accounts for around 50% of its
legal tea imports. Tea is smuggled into the country via the border areas of
the North West Frontier Province (NWFP) and Baluchistan. Smuggled black
teas are sold cheaper as compared to teas available in the marketplace for
retail. This has affected legitimate sales to a large extent but the
government has taken preventative measures to stop the smuggling of
illegal imports into the country.

VII
 Table of Contents

Table of Contents.................................................................................................... VIII

List of Figure.............................................................................................................. IX
List of Tables.............................................................................................................IX
CHAPTER # 1 (INTRODUCTION).....................................................................1
History of Tea.......................................................................................................... 2
Evolution of Tea in Pakistan....................................................................................2
CHAPTER # 2 (Analyzing Tea in Pakistan)..................................................4
Types and preparation Methods..............................................................................5
Tea Influx in Pakistan..............................................................................................7
Import Share of Tea..............................................................................................7
Supply and Demand Trends...............................................................................10
Illegal Tea Influx.................................................................................................11
Self Cultivation...................................................................................................12
Consumer Market Segmentation...........................................................................14
Packaging Segmentation....................................................................................14
Brand Segmentation..........................................................................................16
Impact on Pakistan’s culture.................................................................................19
Asserting Family Value.......................................................................................19
Socialization....................................................................................................... 19
Non-Alcoholic Environment................................................................................19
CHAPTER # 3 (CONCLUSION & RECOMMENDATION)................................20
Conclusion............................................................................................................. 21
Recommendation.................................................................................................. 22
BIBLIOGRAPHY.......................................................................................................... 23

VIII
 List of Figure

Figure 1: Girl picking tea leaves in China...................................................................2

Figure 2: Robert Bruce and his family 1823...............................................................2
Figure 3: Tea cultivation regions................................................................................3
Figure 4: Tea shop in Pakistan (Dhaba)......................................................................5
Figure 5: A Cup of Black Tea......................................................................................5
Figure 6: Green Tea (Kahvah).....................................................................................5
Figure 7: Illegal Movement of Tea in Pakistan..........................................................12
Figure 8: Plain Tea Bag.............................................................................................14
Figure 9: Loose tea leaves........................................................................................14
Figure 10: Lipton products available in Pakistan......................................................16
Figure 11: Brooke Bond A1 products available in Pakistan.......................................16
Figure 12: Brooke Bond Supreme products available in Pakistan.............................17
Figure 13: Pearl dust products available in Pakistan................................................17
Figure 14: Tapal Tea Company’s brands available in Pakistan.................................18
Figure 15: Tea party in Karachi (Pakistan)................................................................19

List of Tables

Table 1: Year Wise Tea Import....................................................................................8

Table 2: Year-wise Tea Cultivation (Acres)...............................................................13
Table 3: Plantation with Other Agencies...................................................................13

List of Charts
Chart 1: Country Wise Share in Black Tea Import.......................................................7
Chart 2: Country Wise Share in Green Tea Import......................................................7

IX
Chart 3: Tea Import Volume Analysis (1994-2005) Chart 4: Tea Import Value
Analysis (1994-2005)..................................................................................................8
Chart 3: Tea Import Volume Analysis (1994-2005) Chart 4: Tea Import Value
Analysis (1994-2005)..................................................................................................8
Chart 5: Demand trend of Pakistan from 2001-2005................................................10

X
CHAPTER # 1
(INTRODUCTION)

1
History of Tea

Discovered in China, close to 5000 years ago,

tea is the second most consumed beverage in
the world after water. It is truly a global
beverage and is consumed in every corner of
the world. All tea comes from the Camellia
Sinensis or Camellia Assamica plant. From this
plant - black, green or oolong teas are produced.
Black tea is by far the most popular tea. The
largest producer and consumer of black teas in
the world is India. Widely consumed in the
Indian sub continent from the turn of the 20th
century, tea is an 'essential commodity' for most
people living in his part of the world!
Figure 1: Girl picking tea leaves in
China
Tea originated in Southeast Asia, specifically around the intersection of latitude 29°N and
longitude 98°E, the point of confluence of the lands of northeast India, north Burma,
southwest China and Tibet. The plant was introduced to more than 52 countries, from this
‘centre of origin’. Yunnan Province has been identified as "the birthplace of tea...the first
area where humans figured out that eating tea leaves or brewing a cup could be pleasant".
Indeed, Fengqing County, in Lincang City area of Yunnan Province, is said to be home to the
world's oldest cultivated tea tree-- some 3,200 years old.
According to the Encyclopedia Britannica (2008): "In 1824 tea plants were discovered in the
hills along the frontier between Burma and the Indian state of Assam. The British introduced
“tea culture” into India in 1836 and into Ceylon (Sri Lanka) in 1867. At first they used seeds
from China, but later seeds from the Assam plant were used.”

Evolution of Tea in Pakistan

Long before the commercial production of tea started in

Subcontinent in the late 1830s, the tea plant was growing wild
in the jungles of north east Assam. In 1788, the British botanist,
Joseph Banks, reported to the British East India Company that
the climate in certain British-controlled parts of north east India
was ideal for tea growing. However, he missed the fact that the
plant was a native to Bengal and suggested transplanting tea
bushes from China

In 1823 and 1831, Robert Bruce and his brother Charles, an

employee of the East India Company, confirmed that the tea
plant was indeed a native of the Assam area and sent seeds
and specimen plants to officials at the newly established
Botanical Gardens in Calcutta. Nothing was done - perhaps
because the East India Company had a monopoly on the trading
of tea from China

In 1833, the company lost its monopoly and suddenly woke up to the fact that India might
prove a profitable alternative. A committee was set up, Figure 2: Robert Bruce and his family
1823
2
Charles Bruce was given the task of establishing the first nurseries, and the secretary of the
committee was sent off to China to collect 80,000 tea seeds. They were still not sure that
the tea plant really was indigenous to India, committee members insisted on importing the
Chinese variety.

Figure 3: Tea cultivation regions

The seeds were planted in the Botanical Gardens in Calcutta and nurtured until they were
sturdy enough to travel 1000 miles to the newly prepared tea gardens. Meanwhile, up in
Assam, Charles Bruce and the other pioneers were clearing suitable areas of land on which
to develop plantations, pruning existing tea trees to encourage new growth, and
experimenting with the freshly plucked leaves from the native bushes to manufacture black
tea. Bruce had recruited two tea makers from China and, with their help; he steadily learnt
the secrets of successful tea production.

After partition in 1947, West Pakistan (Pakistan) who did not have Tea cultivation areas
started importing Tea from East Pakistan (Bangladesh) and Kenya. In 1971 East Pakistan
took independence and West Pakistan then relied 100% on imported tea from various
countries.

3
 CHAPTER #
2 (Analyzing Tea in Pakistan)

4
Types and preparation Methods
The traditional method of making a cup of tea in
Pakistan is to place loose tea leaves, either
directly, or in a tea infuser, into a tea
pot or teacup and pour hot water over the leaves.
After a couple of minutes the leaves are usually
removed again, either by removing the infuser, or
by straining the tea while serving.

Most green teas should be allowed to steep for

about three minutes, although some types of tea
require as much as ten. The strength of the tea
should be varied by changing the amount of tea
leaves used, not by changing the steeping time.
Figure 4: Tea shop in Pakistan (Dhaba)
The amount of tea to be used per amount of water
differs from tea to tea but one basic recipe may be one slightly heaped teaspoon of tea
(about 5 ml) for each teacup of water (200 ml) (8 oz) prepared as above. Stronger teas, such
as Indonesian, to be drunk with milk are often prepared with more leaves, and more delicate
high grown teas such as a Kenyan are prepared with a little less (as the stronger mid-flavors
can overwhelm the champagne notes).
Some tea sorts are often brewed several times using the same tea leaves. Historically, in
Northern parts of Pakistan, tea is divided into a number of infusions. The first infusion is
immediately poured out to wash the tea, and then the second and further infusions are
drunk. The third through fifth are nearly always considered the best infusions of tea,
although different teas open up differently and may require more infusions of hot water to
bring them to life.

Black Tea: The water for black teas should be added at

the boiling point (100 °C or 212 °F). Many of the active
substances in black tea do not develop at temperatures lower
than 90 °C. For some more delicate teas lower temperatures are
recommended. The temperature will have as large an effect on
the final flavor as the type of tea used. The most common fault
when making black tea is to use water at too low a temperature.
Since boiling point drops with increasing altitude, this makes it
difficult to brew black tea properly in Northern mountainous
areas of Pakistan. It is also recommended that the teapot be
warmed before preparing tea, easily done by adding a small Figure 5: A Cup of Black
amount of boiling water to the pot, swirling briefly, before Tea
discarding. In Pakistan black teas are usually brewed for about 4 minutes and are not
allowed steeping for less than 30 seconds or more than about five minutes as longer
steeping times make the tea bitter.

Green Tea : Water for green tea, according to most

accounts, should be around 80 °C to 85 °C (176 °F to 185
°F); the higher the quality of the leaves, the lower the
temperature. Hotter water will burn green-tea leaves,
producing a bitter taste. Preferably, the container in which
the tea is steeped, the mug, or teapot should also be
warmed beforehand so that the tea does not immediately
cool down. Recently, green tea (as well as some black teas)
has shown to significantly increase interferon levels in tea

Figure 6: Green Tea (Kahvah) 5

consumers, which lends credence to the theory that some teas help boost the immune
system.

Serving: Traditionally in Pakistan to preserve the pre-tannin tea without requiring it all to be
poured into cups, a second teapot may be employed. The steeping pot is best unglazed
earthenware; Yixing pots are the best known of these, famed for the high quality clay from
which they are made. The serving pot is generally porcelain, which retains the heat better.
Larger teapots are a post-19th century invention, as tea before this time was very rare and
very expensive. Experienced tea-drinkers often insist that the tea should not be stirred
around while it is steeping. This, they say, will do little to strengthen the tea, but is likely to
bring the tannins out in the same way that brewing too long will do. For the same reason
one should not squeeze the last drops out of a teabag; if stronger tea is desired, more tea
leaves should be used.

Adding milk to Tea: The order in which to make a cup of tea is a much-debated area;
some say that it is preferable to add the milk before the tea, as the high temperature of
freshly brewed tea can denature the proteins found in fresh milk, similar to the change in
taste of UHT milk, resulting in an inferior tasting beverage. Others insist that it is better to
add the milk after brewing the tea, as most teas need to be brewed as close to boiling as
possible. The addition of milk chills the beverage during the crucial brewing phase, meaning
that the delicate flavor of a good tea cannot be fully appreciated. By adding the milk
afterwards, it is easier to dissolve sugar in the tea and also to ensure that the desired
amount of milk is added, as the color of the tea can be observed. In Pakistan, the order in
which the milk and the tea enter the cup is often considered an indicator of social class.
Persons of working class background are supposedly more likely to add the milk first and
pour the tea in afterwards, whereas persons of middle and upper class backgrounds are
more likely to pour the tea in first and then add milk.

6
Tea Influx in Pakistan
Import Share of Tea
The world market is dominated by four leading exporters of tea, namely India, Sri Lanka,
China and Kenya and by four leading importers of tea, namely, United Kingdom, United
States of America, Pakistan, and Egypt. The major tea suppliers to Pakistan are Kenya,
Indonesia, and Bangladesh but there is a variation in the type of tea supplied. The imports
can be classified in to major categories Black Tea and Green Tea with Kenya and Vietnam as
the primary exporters. The country wise share in tea import is give below:

Chart 1: Country Wise Share in Black Tea Import

Chart 2: Country Wise Share in Green Tea Import

7
To analyze the performance of imported tea into Pakistan during 1994-2005, the compiled
data in terms of volume and value are documented in the following table:

Table 1: Year Wise Tea Import

Year Quantit Qty Growth Total Value Growth

y Change Rate Value Change Rate
(Ton) (Ton) % (Rs. Bill.) (Rs. Bill.) %
1994-95 116,62 489 0.42 5.79 0.18 3.02
9 4
1995-96 114,76 -1,869 -1.63 5.70 -0.09 -1.52
0 7
1996-97 85,426 - - 5.21 -0.49 -9.37
29,334 34.34 8
1997-98 98,649 13,223 13.40 9.81 4.60 46.85
8
1998-99 119,69 21,046 17.58 11.1 1.33 11.95
5 5
1999-00 108,64 - - 10.895 -0.26 -2.34
4 11,051 10.17
2000-01 111,86 3,223 2.88 12.0 1.14 9.43
7 3
2002-03 106,00 -5,867 -5.53 9.6 -2.43 -
0 25.31
2003-04 117,00 11,000 9.40 11.1 1.59 14.21
0 9
2004-05 127,00 10,000 7.87 12.4 1.22 9.83
0 1

Analysis of data shows that during the whole period of the study (1994-2005) the average
volume of imported tea approached to 110567 thousand kgs per annum. In the first 5 Years
(1994-99) it reached to 107,032 thousand kgs, while in the last 5 years it came up to
114,102 thousand kgs. Hence the average growth rate of the whole period (l994-2005)
sustained at -0.01 percent per annum. In the first 5 years (1994-99) it was -0.91 percent,
while in the last 5 years (1999-2005) it increased to 0.89 percent per annum. The main
reason was that in the whole period the fall in the volume of imported tea appeared as 34.34
percent in 1996-97, 10.17 percent in 1999-2000, and 5.53 percent in 2002-2003 as
compared to their respective preceding years.

Chart 3: Tea Import Volume Analysis (1994-2005) Chart 4: Tea Import Value
Analysis (1994-2005)

8
The charts reflect that the value of imported tea increased by Rs. 9.6 billion in 2002-03,
Rs.11.19 billion in 2003-2004, Rs. 12.41 billion in 2004-2005 thus indicating a steady rise of
-25.31 percent in 2002-2003, 14.21 percent in 2003-2004 and 9.83 percent in 2004-2005
against their respective preceding years. On the other side, the charts show that the value
of imported tea decreased by Rs. 5.2 billion in 1996-97 thus expressing a fall of 34.34
percent in volume. This was the time of the Asian Financial Crises where currencies of Asia
were devalued and South East Asia to be affected the worst.

9
Supply and Demand Trends

Analyzing Supply Demand Trends

Growth in tea demand emanates both due to shortage in supply and excess in demand.
Drought in Kenya is one of the prime reasons for the bright outlook of the tea industry in
India. Kenya is one of the largest producers of tea in the world. Incidentally, its consumption
of tea is almost nil. During 1996-1997 tea prices were very high across the world. However,
later on there was a supply glut as more land was brought under tea plantation.

During this period Kenya emerged as one of the largest exporters of tea in the world and
was that the period when Pakistan started losing its due to supply of inferior quality of tea.
However, now after eight years prices have again started moving up and India is likely to
benefit from it.

Per capita consumption is another interesting factor to look at. Pakistan’s per capita
consumption of 1 Kg is still less when compared to the market of UK with a consumption
2.5kg, respectively. Considering the gap in figures Pakistan has bright chances of increasing
its tea production. Recent surge in coffee prices has also added effervescence to the tea
industry. The rise in coffee prices has forced people to shift from coffee to tea. Besides,
world-over international companies like Coca Cola have plans to launch tea-based
beverages.

Chart 5: Demand trend of Pakistan from 2001-2005

One heartening matter for the investors is a good premium commanded by companies in an
auction. In 2005, tea prices were low across all major tea auction centres of the world. But
post December at the Mombasa (Kenya) auctions, there has been rise in tea prices. For the
period between January-July 2006 prices have increased by 38.4% compared to
corresponding period in the previous year.

Experts have also forecasted drought-like condition in Assam. This reduced supply is likely to
increase the prices in the international markets. According to a tea report by IDBI Capital tea
prices are expected to move at an annualized rate of 10% till 2008.

10
Key Drivers of Pakistan Tea Demand Growth
Population Growth: The continuing growth of Pakistan’s already enormous population is a
major factor in the region’s large and ever growing demand for food.

Demographic Change: Yet while Pakistan will continue to be one of the world’s most
populous region, its population growth is decelerating. Also, the combination of falling birth
rates and extended life expectancy in most Asian economies is resulting in expanding
population numbers in older age cohorts. This is particularly noticeable in higher income
Asian economies, with Japan leading the trend

Urbanization: A steady trend of urbanization has been underway in Pakistan over the
past half century, mostly due to economic diversification with growing manufacturing
and services sectors, and the accompanying shift of population from rural areas to
centres of greater employment opportunities and higher wages. In most of Asia this
trend is now accelerating

Economic Growth and Per Capita Income Growth: Pakistan over nearly three decades
into the 1990s averaged slightly below 2 per cent per annum but from the start of
substantial economic reform in 2001, Pakistan’s per capita income growth picked up to
average 3.5 - 4 per cent per annum over 2001-2008. It has been widely recognized that the
rate of economic growth and rise in per capita incomes is the major driver of growth in per
capita food demand.

Tea Prices: The actual price and price structure for tea within an economy will be affected
by many factors, including international agricultural commodity prices, seasonal and cyclical
fluctuations in local agricultural production, domestic systems of agricultural production,
agrifood processing and distribution infrastructure, the nature of government policies
applied to each part of the agrifood chain (including taxation, subsidisation and regulation),
an economy’s international and domestic trade regimes, and general economic conditions.

Other Factors: A host of other factors is also influencing the pattern and direction of
Pakistan’s tea demand trends. Asia is increasingly affected by the globalization of diets,
though some strong cultural differences remain, prominently those related to religious or
customary dietary restrictions. There is growing consumer interest in food safety, food
integrity, food quality, and health and nutrition issues, particularly among higher income
consumers.

Modeling Demand Supply Trends on 2010

In the category of non-alcoholic beverages, while demand growth for traditional carbonated
beverages is slowing, there is a major shift by higher income consumers towards beverages
with greater perceived health benefits such as bottled water and ‘nearwater’, pure fruit and
vegetable juices, and tea beverages. Growth in Tea consumption is eminent.

Illegal Tea Influx

Tea exporters are expecting a decline in the import of tea through legal channels during the
current financial year, in line with the declining trend during the last couple of years, due to
an expected increase in smuggling of tea.

In this situation, the ratio between tea imports through legal and illegal channels is said to
be equal. Out of the total consumption of tea in the country at 170 million kilograms, around
70 million kilograms is smuggled.

11
However, this illegal activity is likely to hit the peak level of 85 million kilograms, mainly due
to unchecked tea smuggling under Afghan Transit Trade (ATT) according to one of the
industrialists.

Pakistan Tea Association (PTA) publicized that major tea blenders like Unilever Pakistan,
Tapal and Tetley have 100 million kilograms of the total tea import, which has been sold in
their company packaging while 70 million kilograms of open tea is being sold in the market.
Open tea importers future is at stake, as every year the situation is getting worse. PTA has
brought this matter to the authorities several times but in vain

Illegal movement of Tea

via the Pak-Afghan
border

Legit movement of Tea

via Pak-Afghan transit
and via Iran border

Smug
resulting in smuggling

Figure 7: Illegal Movement of Tea in Pakistan

Self Cultivation

After separation of East Pakistan in 1971, Pakistan started importing tea. Simultaneously
steps were taken to encourage tea cultivation in the suitable areas of the country. In 1973-
74 a special crops cell was introduced in Ministry of Food and Agriculture. A project titled as
"Research and Introduction of Tea in Pakistan" was also initiated in the same year. In 1982
Chinese experts were invited for advice. In 1986 National Tea Research Station was
established at Mansehra. It introduced five Chinese varieties suited to Hazara and Swat hills
and established different tea plantations.

The Establishment of National Tea Board under Ministry of Commerce and setting up of tea
development society with the participation of local partners are under decision process.The
national tea companies (Tapal and Isphahani) also offered for setting up tea gardens. In this

12
context, the foreign tea companies Lever Brothers promoters of Liptons, Brooke Bond
brands of tea are also waiting for approval.

The project has established 525 acres tea plantation on farmer’s land in districts Mansehra,
Battagram & Swat.

Table 2: Year-wise Tea Cultivation (Acres)

Year Manseh Oghi Balakot Battagram Swat Total

ra
1999-00 - - - 08 10 18
2000-01 03 - - 12 - 15
2001-02 12 23 27 14 17 93
2002-03 01 03 04 - 07 15
2003-04 10 08 - 40 38 96
2004-05 06 08 01 41 96 152
2005-06 - 01 - 40 95 136
Total 32 43 32 155 263 525

Table 3: Plantation with Other Agencies

Year Tepal Sungi Found FATA Hazara Uni AJK

2000-01 04 02 - - -
2001-02 07 02 - - -
2003-04 - - 03 01 -
2004-05 - - 04 02 02
Total 11 04 07 03 02
G. Total 27 Acres

13
Consumer Market Segmentation
Packaging Segmentation

Tea Bags
Tea leaves are packed into a small (usually paper) tea bag. It is
easy and convenient, making tea bags popular for many people
today. However, the tea used in tea bags has an industry name - it
is called "fannings" or "dust" and is the waste product produced
from the sorting of higher quality loose leaf tea. It is commonly
held among tea aficionados that this method provides an inferior
taste and experience. The paper used for the bag can also be
tasted by many, which can detract from the tea's flavor. Because
fannings and dust are a lower quality of the tea to begin with, the
tea found in tea bags is less finicky when it comes to brewing time Figure 8: Plain Tea Bag
and temperature.
Additional reasons why bag tea is considered less well-flavored in Pakistan include:
• Dried tea loses its flavor quickly on exposure to air.
• Most bag teas (although not all) contain leaves broken into small pieces; the great
surface area to volume ratio of the leaves in tea bags exposes them to more air, and
therefore causes them to go stale faster.
• Breaking up the leaves for bags extracts flavored oils.
• The small size of the bag does not allow leaves to diffuse and steep properly.

Pyramid tea bags

The "pyramid tea bag", introduced by Lipton and PG Tips in 1996, has an unusual design
that addresses one of connoisseurs' arguments against paper tea bags, because its three-
dimensional shape allows more room for tea leaves to expand while steeping. However,
some types of pyramid tea bags have been criticized as being environmentally unfriendly,
since their synthetic material does not break down in landfills as loose tea leaves and paper
tea bags do.

Loose Tea Leaves

The tea leaves are packaged loosely in a canister or other
containers which resist crumbling are commonly vacuum
packed for freshness in aluminized packaging for storage and
retail. The portions must be individually measured by the
consumer for use in a cup, mug, or teapot. This allows greater
flexibility, letting the consumer brew weaker or stronger tea as
desired, but convenience is sacrificed. Strainers, "tea presses",
filtered teapots, and infusion bags are available commercially
to avoid having to drink the floating loose leaves and to
prevent over-brewing. A more traditional, yet perhaps more Figure 9: Loose tea leaves
effective way around this problem is to use a three-piece lidded teacup, called a Gawain.
The lid of the Gawain can be tilted to decant the leaves while pouring the tea into a different
cup for consumption.

Instant tea
In recent times, "instant teas" are becoming popular, similar to freeze dried instant coffee.
Instant tea was developed in the 1930s, but not commercialized until the late 1950s, and is
only more recently becoming popular. These products often come with added flavors, such

14
as vanilla, honey or fruit, and may also contain powdered milk. Similar products also exist
for instant iced tea, due to the convenience of not requiring boiling water. Tea connoisseurs
tend to criticize these products for sacrificing the delicacies of tea flavor in exchange for
convenience and are not so popular in Pakistan. A company launched a product by name of
“Doodh patti” but did not find its way with consumer market.

Canned tea
Canned tea was first launched in 1981 in Japan. As such, it is a fairly recent innovation, and
it has mostly benefits in marketing but is very rarely available in Pakistan.

15
Brand Segmentation

Pakistani tea market is pre-dominated by two major companies Unilever and Tapal. Unilever
is a British company which has 4 tea brands in the market Lipton, Brooke Bond A1, Brooke
Bond Supreme and Pearl Dust while Tapal is 100% Pakistani owned company and has
prevented other major tea company’s to penetrate the market.

Lipton: Lipton is the world's leading brand of tea by far. It's the global market leader in both
leaf and ready-to-drink tea, giving a global share of all tea-based beverages that's nearly
three times larger than its nearest rival. In total non-alcoholic beverages, Lipton is the global
number two brand in terms of volume consumed.

Lipton Yellow Label Lipton Yellow Label Jar Lipton green tea
sachet pack

Figure 10: Lipton products available in Pakistan

Global Statistics claimed by Unilever for Lipton Brand

• 1649 cups of Lipton Tea are enjoyed every second

• 8245 cups of Lipton Tea are enjoyed every time you blink
• 1252 cups of Lipton Tea are drunk every time your heart beats
• 52 billion cups of Lipton Tea are drunk each year
• 45.75 billionTea Bags are produced by Lipton Tea each year

Brooke Bond A1: A1 is the individual’s aegis. Launched in 1996 the brand has certainly
come a long way to acquire national status. It has two variants catering to regional taste
preferences, mixture for the South and leaf for Punjab.

A1 has a unique standing thanks to its strong blend which translates into the strength of the
common man. It mentally and emotionally revives, bolstering courage to face challenges
and defy all odds.

Leaf Tea Mixture

Figure 11: Brooke Bond A1 products available in Pakistan

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Brooke Bond Supreme: The success of Brooke Bond Supreme is based on this very
insight, since tea is a part of the social fabric of Pakistanis. Brooke Bond Supreme was
launched in Pakistan in 1984. The brand was extremely successful from its very inception
due to its outstanding blend quality. Since then Brooke Bond Supreme has never looked
back and today, is the largest selling tea brand in Pakistan. On average, 30 million cups of
Supreme are consumed daily by people from all walks of life.

Supreme 7 gms Supreme 36 gms Supreme 50 gms Supreme 125 gms

Supreme 250 gms Supreme 450 gms Supreme 500 gms Supreme 1 kg

Figure 12: Brooke Bond Supreme products available in Pakistan

Pearl Dust: Launched in 1984 this dust tea brand has become the largest Sindhi tea brand.
Sindh land renown for its strong traditions & culture, passion, and hospitality is Pearl Dust’s
citadel – phenomena in the making. The Pearl logo has acquired an iconic status. Tea in
Sindhi culture is taken very seriously; it is the cornerstone of hospitality and can make or
break relationships. In a society where traditions run supreme, Pearl Dust gives the couple a
chance to share a personal moment together. Pearl Dust is a testament to the couple’s
relationship and their future. The brand is the market leader in in-home in the out of home
segment, thanks to a strong ritual of tea café’s.

Pearl Dust bag Pearl Dust sachet Pearl Dust 55g Pearl Dust 250g

Figure 13: Pearl dust products available in Pakistan

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Tapal: The reason behind Tapal’s success in catching the hearts of the consumers is that, it
has always been close to them. This has been possible because of its strong Brand
Activation Activities. These activities have added a new dimension to their marketing
activities making them more attractive, exciting and interactive as possible.

Figure 14: Tapal Tea Company’s brands available in Pakistan

These activities not only reinforce Tapal as a national company but also assist all its other
brands in having their desired impact wherever required. These activities are customized
according the brand requirements to achieve maximum results. Not only this, these
activities also provide the consumer with a 360-degree product experience, which not only
helps in educating the consumer but also engages them to the brand. These activities cover
Outdoor Billboards, Event Marketing, Road Shows (floats, mobile kitchens etc), Rural
Development Programs, Weekly Bazaars, and Merchandizing of the products

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Impact on Pakistan’s culture
Asserting Family Value
Tea asserts family values by promoting quality family time. Every house hold in Pakistan has
a tradition of having tea in the evening causing family members to sit together and take
some time out for family. Couples have reported that Tea plays a pivotal role in bonding, as
per tradition the female folk make and present tea to their spouse showing a sense of
affection

Socialization
In cultures across Pakistan, tea is often had at high class social
events, such as afternoon tea and the tea party. It may be
consumed early in the day to heighten alertness; it
contains theophylline and bound caffeine (sometimes called
"theine"), although there are also decaffeinated teas. Tea is usually
a focal point for social gatherings and one source cites: "the first
thing you will be offered when a guest at a Pakistani household is
tea".
There are tea ceremonies which have arisen in different cultures
especially in Pathan and Sindhi ones being the most well known.
Other examples are the Karachi tea ceremony which uses some
traditional ways of preparing tea and serving to the guests. The
event can be as small as a friends gathering or as big as marriage
functions.
Figure 15: Tea party
in Karachi (Pakistan)

Non-Alcoholic Environment
Looking at some cultures who have adopted Tea as part of their culture have lower rates of
alcohol addicts when compared to culture who opted for coffee. Offering tea rather than
alcoholic drinks to visitors is the cultural norm in Pakistan. Tea has also entered the common
idiom so much so that the term “Chai-Pani” which translates to tea, or tea and water usually
refers to wages, tips or even bribery.

Tea is drunk from small glasses to enjoy it hot in addition to show its colour, with lumps of
beetroot sugar. To a lesser extent than in other Muslim countries, tea replaces
both alcohol and coffee as the social beverage. In Pakistan, the teens and tweens have their
own location of Tea store where a group sits and socializes. This is also a meeting point and
a nice activity for people living in a country where there is not much activity. Many claim
that this activity demotes the youngsters from going to pubs and bars or consuming alcohol.

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 CHAPTER #
3 (CONCLUSION &
RECOMMENDATION)

20
Conclusion
Pursuant to the above statistics, the volume of tea import is increasing year by year but the
rate of increase is decreasing. The government has always advertised that tea import bill of
Pakistan is huge and causing trade deficit so measures need to be taken to reduce it. This
conclusion is contra to the conclusion drawn from this report.

The tea import bill mounts to US$ 220 million in 2007 and the population is 164 million this
implies a US$ 1.3/person (Rs 104/person) of tea in a year. The import share of tea is 13 %
from total imports and trend analysis shows in increasing trend. This is mainly due to the
economic boom from 2002- 2006 where consumer markets have grown steadily. Other
factors for import bill to increase are currency devaluation and inflation. However this does
not explain the deceleration in the rate of increase in import. The primary rationale for this is
the increase in self cultivation of tea which sustained significant load of the local market.
The National Tea Research Institute Mansehra plans to develop tea production technology
including the selection of suitable varieties, standardization of agronomic practices and
processing techniques. The institute is also making efforts to extend tea production
technology to the prospective farmers

The consumer market in Pakistan does not have many branded teas (Tapal and Unilever
being prominent). The market is liked with the cultural indulgence of tea and the brands are
exploiting this for their sales campaigns. Companies have strategically launched different
packaging to suit the needs of the different classes of people from poor to the rich. As tea
contains a special place in Pakistani culture so it has a significant impact on bonding families
and promoting a non-alcoholic environment.

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Recommendation
Pakistan is well positioned and on the route of reduction of tea imports. The analysis shows
that steps need to be taken to promote the self cultivation efforts already underway in
Pakistan as this has the following advantages:

1. The import bill is reduced thus reducing trade deficit

2. Irrigation land is increased
3. More opportunities for farmers with better returns
4. Urban markets will no longer be dominated by few big players
5. Local economy will thrive as money revolves locally

Import can not be eliminated completely as the cultural significance of Tea causes people to
get the best markets has to offer. Kenyan teas taste better than most teas available
therefore they will continue to hold its market share but increase in import of tea from India
and Bangladesh can achieve better results.

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BIBLIOGRAPHY
Encyclopedia Britannica (2008):
http://www.britannica.com
Wikipedia:
http://en.wikipedia.org
Pakistan Agricultural Research Council:
http://www.parc.gov.pk/ntri.html
The Financial Express: Retrieved on 2008-12-05
http://www.financialexpress.com/news/Tea-industry-Just-the-right-
blend/181433/0
Pak team moots single tea market in Asia:
http://www.rediff.com/money/2003/sep/27upasi1.htm
Department of Foreign Affairs and Trade:
http://www.dfat.gov.au/publications/agrifoodasia/vIII.html
A 2007 study published in the European Heart Journal
certain beneficial effects of tea may be lost through the addition of milk.[53]
West Word (Guffey reference)
http://www.westwords.com/guffey/student.htm
Marry Ellen Guffey Website
http://www.meguffey.com

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