"Love might not have been invented in India but it was certainly perfected here," wrote Gregory David Roberts in Shantaram. One may write that about our tea-drinking too. The British may have introduced tea in India, but drinking it became a competitive sport on our watch, with the copious quantities consumed daily. So much so, that the action for tea brands is gradually shifting to newer brews.
While green tea is not a brand new segment, it is one that has tea majors, Tata Global Beverages (Tata) with Tetley and Hindustan Unilever (HUL) with Lipton and Taj Mahal, rooting for us to go green. In the process, they have beaten the erstwhile leader, London-based Twinings, and are going neck and neck with each other. The steady rise in competition indicates the segment's significance.
The ubiquity of tea has made focus on new segments inevitable to obtain further growth. With near-complete market penetration, black tea is saturating. The total branded tea market is about Rs 9,500 crore, growing at about 5 per cent. But the branded green tea market, in contrast, is at about Rs 150 crore, growing faster at 21 per cent.
With retail margins that can be 50 per cent more than that of black tea, according to Technopak consultants, the stir in the green tea market is hardly a surprise.
Twinings has seen its share eroded by more than 50 per cent since 2011. HUL has just about pipped Tata in the year 2013, as per retail market share data sourced from the industry. To consolidate their gains further, the top two players have signed on new brand ambassadors - Kareena Kapoor for Tetley and Anushka Sharma for Lipton - this year.
Beneath the surface
Apart from the buzz it generates around the brand, the endorsement deal with Kapoor fits snugly into Tata's plan to foray deeper with green tea. "We wish to replicate the awareness surrounding the product in the metros in tier II and III cities and towns. A big star like Kareena would help us connect with audience better," says Vikram Grover, vice-president, marketing, India & South Asia, Tata Global Beverages. Tata is using predictive analytics to chalk out the distribution for such towns.
HUL's reasons for bringing Sharma is not just awareness but communicating the benefits as well. "The main task in green tea is to build appreciation of the benefits of the category and drive penetration. Hence, our key activities are centred around making consumers aware of the category, clearly communicating the benefits and driving trials through sampling," says Krishnan Sundaram, category head, tea, HUL. Both HUL and Tata have launched multiple flavours. In the December-quarter, HUL launched a new variant, Lipton Clear Green in packs of 100 tea-bags, as well as cartons. Similarly, Tata added more flavours to the Tetley range in January, 2014 - ginger, mint, lemon, and honey and lemon.
The variants make distribution a key cog in the green tea wheel. "Unlike black tea, where preferences are well-entrenched, with green tea the consumer is still experimenting. At the point of sale, she wants to check the entire product range before making her choice. We, therefore, have to ensure the availability of the entire range," says Grover of Tata.
The increasingly competitive distribution needs have taken a toll on Twinings, say industry players. They attribute its market share loss to a patchy footprint. "There is no consistency as far as its distribution is concerned. One day you will find one flavour, the next day you won't. In contrast, HUL and Tata are old hands, drawing on the strength of their distribution networks," says an industry player.
A vital piece in green tea's growth is the demand for tea bags, which is still nascent in the country. Unlike loose, crushed black tea, green tea is mostly consumed in the form of tea bags. But the largest buyers of tea bags - institutional clients - are yet to be tapped in a big way. "Airlines and railways are possibly the largest consumers of tea bags. In volumes, this is a big segment as yet untapped by green tea," says Tarun Jain, vice-president, food services and agriculture, Technopak.
However, the other segment comprising institutional clients - hotels, restaurants and cafes - holds more promise for green tea brands. Tata has the advantage of access to its in-house hotels businesss (the Taj Group), airline-catering operations (TajSATS) and even a cafe chain in the joint-venture with US-based Starbucks. HUL could look inwards to its own chain of coffee shops, BRU World Cafes, albeit not on the same scale as Tata.
Tetley, then, already has a strong presence in the hospitality segment. With HUL hinting at designs on the space, the brew is set to only get stiffer