Roll Nos. 41 - 50
 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; it’s 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 India’s 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
Capabilities
•
•
•
•
Distribution system.
Strong and trusted management.
Research and development.
Marketing.
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
5–17
Competitive Analysis
• Market commonality
• Resource similarity
Feedback
Outcomes
• Market position
• Financial
performance
Drivers of Competitive
Behavior
• Awareness
• Motivation
• Ability
Inter firm Rivalry
• Likelihood of Attack
• First-mover incentives
• Organizational size
• Quality
• Likelihood of Response
• Type of competitive action
• Reputation
• Market dependence
5–18
Slow cycle market
Fast cycle
market
Standard cycle
market
Shielded from imitation
for long periods of time
Not shielded from
imitation
Moderately
shielded
Sustainability High
Low
Partial
Imitation
Costly
Quick &
inexpensive
Moderate
Strategy
Concentrate on
competitive action & try
to protect ,maintain &
extend proprietary
advantage
Competitors
quickly imitate or
improve on firm’s
products.
Upgrade quality
continuously, seek
large market share,
gain customer
loyalty
Competitive
advantage
5–19
Competitors with their Market Share & Profit:
Market Cap.
Net Profit
(Rs. cr.)
(year 2008-09)
Tata Tea
5,239.07
159.06
Mcleod Rus
2,196.78
88.79
Tata Coffee
593.84
18.64
Assam Company
503.36
-2.82
Bombay Burmah
411.65
-13.88
Jayshree Tea
326.29
13.88
CCL Products
206.06
19.00
Harrisons Malay
191.84
6.04
Dhunseri Tea
179.18
16.66
Duncans Ind
50.83
-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 it’s 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
Revenue (Rs.
Lakhs)
Tea
378514.72
Coffee & other
produce
104712.27
Others
4088.15
Total
487315.14
0.84
Tea
21.49
77.67
Coffee &
other produce
Others
 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.
Product Growth Rate
Star
Question Mark
T
o
C
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
Sales Revenue
(Rs. Lakhs)
India
150816.83
UK
123942.34
USA &
Canada
144671.83
Rest
65356.48
Total
484787.48
13.48
31.11
29.84
25.57
India
UK
USA & Canada
Rest
 To be world’s 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
Status
Role
Tata Tea, Inc, USA
1987
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)
1995
Acquisition of 55 per
cent stake
To get into selling instant coffee globally
Watawala
Plantations
Limited, Sri Lanka
1996
Acquisition of 49 per
cent stake through
EMSPL
Production and marketing of tea, oil palm and
rubber in Sri Lanka
Tata Tea (GB)
Limited
2000
100 per cent subsidiary
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
Good Earth, USA
2005
Acquisition of 100 per
cent stake by Tetley
Establish Presence in the US and
acquisition of strong product portfolio
Jemca, Czech
Republic
2006
Acquisition of 100 per
cent stake by Tetley
Market Leadership in Czech republic with
a product portfolio which goes across both
mainstream and speciality
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