Jugal upadhyay

Tea can be considered as a health drink (known of its

antioxidant properties) Demand for tea has been growing at some 2% per annum and should accelerate further ..

 Draconian Indian labor laws, do more harm to

industry and labor. Labor intensive industry so related problems Limited scalability; its a US $ 5 billion market globally and growing at a very slow pace. Supply from more efficient players like Kenya, Vietnam, Sri lanka Climate change may harm tea growing region, escalating prices and hampering the capacity..

 Visible trend towards the health drink; up to the tea

industry to make aware consuming population of the facts. Tea has a distinct advantage over more popular beverage coffee To make tea more acceptable and fashionable like coffee To come up with new flavors/formulation of the tea

 To retain young population from being lured by

multinationals to aerated and flavored drinks. Labor problems Cost escalation Fragmented production

Vision Be Indias foremost tea based beverage company Mission Achieve market and thought leadership for branded tea in India Be recognised as the foremost innovator in tea and tea based beverage solutions Drive long term profitable growth Co-create enhanced value for all stakeholders Make Tata tea a great place to work

 A part of the Tata group of companies, one of the

largest and most respected business houses of India. Tata Tea was formed in 1983. Headquartered in Kolkata, India. Set up in 1964 as a joint venture with UK-based James Finlay. Tata Tea has been involved in the tea extract business for last 40 odd years.

 Leads market share (in volume) in India

Hot beverages
Tata Tea, Tetley, Kanan Devan, Chakra Gold, Gemini

Mineral water Non carbonated drinks Chai Unchai outlets

STRENGTHS Market leader in tea segment Backward integration Wide market coverage

WEAKNESS Concentration risk over single category

OPPORTUNITES Potential in fruit & herbal teas Global existence Low penetration level

THREAT Competition from regional and local players

Threat of new entrants: High level Encouraging govt. policies Easy to imitate Bargaining power of suppliers: High; as suppliers are few Bargaining power of buyers: Low; as demand is high Loyalty for taste

Threat of substitute products: Moderate to high Substitutes Coffee, Cold drinks, etc (young generation new to tea) Existing consumers are loyal Competition: Intense competition Lipton, Brooke bond, other local players, loose tea market Ad-spend of cos. : indication of competition

Resources :

51 tea estates in states of Assam, West Bengal, Tamil Nadu, Kerela. Area of 26,500 hectares under tea cultivation. Produces about 60 million kg of black tea annually. Subsidiaries & Associated companies Overseas business Distribution system. Strong and trusted management. Research and development. Marketing.

Capabilities

Core competencies.
Brand name Distribution network

Bought leaf factories & co-operatives to change the structure of

green leaf production

Un-remunerative operations are 1st given the opportunity to

transform and if not hived off

Re-organisation of 20 tea estates in clusters of 5 Identified branded tea as its thrust area To exit the beverage retailing business to focus on branded

products

 Tata Coffee sold off its stake in Barista, no plans of re-entering

the business
Introducing drinks like TiON, all over India Jaago Re campaign followed by the 'Aaj Se Khilana Bandh,

Pilana Shuru' campaign to target the youth for voting and work

against corruption
Focus on brands like Chakra Gold, Gemini and Kanan Devan

in regions where they are strong

 Competitors: Firms operating in the same market, offering similar products and targeting similar customers.

Competitive Dynamics: Ongoing actions and responses taking place between all firms competing within a market for advantageous positions.

Competitive Rivalry: Ongoing actions and responses taking place between an individual firm and its competitors for advantageous market position.

Competitive Rivalry (Individual firms)

Market commonality and resource similarity Awareness, motivation and ability First mover incentives, size and quality

Competitive Dynamics (All firms)

Market speed (slow-cycle, fast-cycle, and standardcycle

Effects of market speed on actions and responses of all competitors in the market

517

Competitive Analysis Market commonality Resource similarity

Drivers of Competitive Behavior Awareness Motivation Ability

Feedback
Outcomes Market position Financial performance

Inter firm Rivalry Likelihood of Attack

First-mover incentives Organizational size Quality

Likelihood of Response
Type of competitive action Reputation Market dependence

518

Slow cycle market

Fast cycle market

Standard cycle market

Competitive advantage

Shielded from imitation for long periods of time

Not shielded from imitation

Low

Moderately shielded

Sustainability High

Partial

Imitation

Costly

Quick & inexpensive Competitors quickly imitate or improve on firms products.

Moderate

Strategy

Concentrate on competitive action & try to protect ,maintain & extend proprietary advantage

Upgrade quality continuously, seek large market share, gain customer loyalty
519

Competitors with their Market Share & Profit:

Market Cap. (Rs. cr.) Tata Tea Mcleod Rus Tata Coffee Assam Company Bombay Burmah Jayshree Tea CCL Products 5,239.07 2,196.78 593.84 503.36 411.65 326.29 206.06 Net Profit (year 2008-09) 159.06 88.79 18.64 -2.82 -13.88 13.88 19.00

Harrisons Malay
Dhunseri Tea Duncans Ind

191.84
179.18 50.83

6.04
16.66 -38.61

Rivalry
The competitors are using same resources to acquiring product here Tea leaves. It is working for To use to innovate products

e.g. Tata Tea Gold To give aggressive advertising To invent or modify the product in R&D e.g. Tetley green Tea It become difficult for competitors to acquire market share of Tata Tea. The company has loyal customers. Approx 52.37% of market share is captured by Tata tea. Because of its quality standard. Variety of brands.

Dynamics:
Tea companies have competitive advantage of slow cycle market. In

which - Tea needs less innovation & upgradation - All firms are like to protect their market share by maintaining quality. The firm Tata tea enjoys global market share of more than 38.76% ( Market is very sustainable for Tea because the user of tea are not ready to change their preferences for long time period.

Revenue %
Business Segment
Tea Coffee & other produce

Revenue (Rs. Lakhs)

378514.72 104712.27 21.49

0.84 Tea Coffee & other produce Others

Others Total

4088.15 487315.14

77.67

 Started out with tea extract business, owned tea plantations Later on ventured into coffee business as both drinks go hand

in hand (Related diversification) Entered the business of packaged drinking water (Himalaya) Now also venturing into RTD beverages (introduced a juice drink Tion in India) , seeking more opportunities in this space The Co entered in these businesses keeping in line with their focus on providing a refreshing drink for a thirsty world Taken a conscious decision to hive off their plantation business

 Taken a conscious decision to hive off their plantation business Tata Tea no longer a tea company, it is a beverage company The Co entered in these businesses keeping in line with their

focus on providing a refreshing drink for a thirsty world New strategy - To diversify away from its core categories of tea and coffee and build positions in high growth areas of good for you beverage through strong product innovation and growth.

Star Product Growth Rate

T

Question Mark

Cash Cow
Market Share

Dog

TATA Tea has 3 subsidiary Tata tea inc US, Tata Coffee, Tata Tea GB (formed to acquire and add Tetley into the group)
Tata Tea along with Tata sons acquired Tetley group of UK 100% owned

for $453 million in Feb 2000.

Tata Tea GB subsidiary acquired Joekels Tea Packers of South Africa with

33% for $0.91 million in Sep 2006.

Tata Tea GB subsidiary acquired JEMCA Czech Republic $11.60million in

May 2006
Tata Tea GB acquired Good Earth Corporation & FMali Herb Inc US -

100% owned for $31 million in Oct 2005.

Tata Tea Tetley subsidiary acquired Vitax and Flosana trademarks Poland.

 Restructuring of the organization structure worldwide Strategy - Focused on 'Good for you' drinks along with coffee

and tea - more like ready to drink beverages (have launched Tion drink in Chennai and planning national launch) Divest - Pulled out of retailing business - sold off stake in Barista and moved out of Chai Unchai chain of tea stores in Bangalore Emphasis on R&D - innovation (disruptive) in tea and coffee business - (first innovation in ready to drink with tea bags of liquid tea - Tetley fusion) Re-branding exercise for Tata Tea name Restructuring the operations in North India

Revenue %
Geography India UK USA & Canada Rest Total Sales Revenue (Rs. Lakhs) 150816.83 123942.34 144671.83 29.84 65356.48 484787.48 25.57 13.48 31.11 India UK USA & Canada Rest

 To be worlds no.1 tea-based beverage company

West Asia, South America and Africa to be targeted

Will soon begin operations in France and Australia Regional focus to be on brands like Vitax, Jemca,

Eight O'Clock Coffee, etc

Entity

Year of formation 1987

Status

Role

Tata Tea, Inc, USA

100 per cent subsidiary To process and market instant tea from its facility in Florida, based on sourcing of products from facility at Munnar

Consolidated Coffee 1991 Ltd (Tata Coffee Ltd)

Acquisition of 52.5 per cent stake

To diversify into coffee via a company which was Asia's largest seller of coffee

Estate Management 1992 Services (P) Limited, Sri Lanka

Joint venture

To manage 22 plantation companies involved in tea, rubber, coconut and palm oil, that were privatised by the Sri Lankan government

Tata Tetley, India 1993 (merged with Tata Tea with effect from April 1, 2005)

100 per cent subsidiary

Kochi-based EOU that services the branded business of specific Tetley and Tata Tea markets outside India

Asian Coffee Ltd (later merged with Tata Coffee) Watawala Plantations Limited, Sri Lanka Tata Tea (GB) Limited

1995

Acquisition of 55 per cent stake

To get into selling instant coffee globally

1996

Acquisition of 49 per cent stake through EMSPL 100 per cent subsidiary

Production and marketing of tea, oil palm and rubber in Sri Lanka

2000

Special Purpose Vehicle (SPV) established for the acquisition of Tetley, UK

Tetley Clover Pvt Ltd., Pakistan

2003

50:50 joint venture of Tetley with Lakson group in Pakistan

To import and sell tea in Pakistan as well as build a tea blending factory in Baluchistan

Tetley ACI, Bangladesh

2003

50:50 joint venture of To distribute Tetley's products in Tetley with Advanced Bangladesh Chemical Industries (ACI) in Bangladesh Acquisition of 100 per cent stake by Tetley Acquisition of 100 per cent stake by Tetley Establish Presence in the US and acquisition of strong product portfolio Market Leadership in Czech republic with a product portfolio which goes across both mainstream and speciality

Good Earth, USA

2005

Jemca, Czech Republic

2006

8 O Clock Coffee, USA

2006

Acquisition of more than 50 per cent stake, alongwith Tata Coffee and Tata Enterprises Overseas

To help establish global presence in coffee and facilitate movement up the value chain

Glaceau, USA

2006

30 per cent minority stake Presence in unfolding crossover space of alongwith Tata Sons the beverages market through enhanced water