- Name of the local brand that is going to be introduced in the Maltese Market:
“Royal Classic Tea”
§ Reasons for choosing this brand name:
v Local tea brands in Malta are Lion Brand, Tower tea and Star tea.
v Royal Classic Tea is a strong name, easy to remember, refers to a good brand because the associations with royalty are “master”, “the best”, “the strongest”, “luxury”.
v The crown represents the power because we want to be the no 1 on the market.
v It can be associated with quality, a luxury brand that is available for everyone at a reasonable price; customers are receiving a good value for their money.
v There is also a “name-game” the brand name “Royal Classic Tea” resembles the word “Royalty” giving associations that our tea is made for the nobility.
Enjoy the luxury…
…. of Royal classic tea
§Reasons for choosing this Slogan:
v The Slogan: “Enjoy the luxury…” stress the uniqueness of our product. It stands for high quality, tasteful and a wide selection for low prices.
v The Slogan is simple to remember and people connect the jingle easy with our product.
v It fits very well with the Logo and the name of the product and tells the customer in a whole package the image of the product.
§ The Logo
Explanation of the different choices:
v The style of the crown: It is a common symbol that refers to the royal Kings and Queens; it is easy to remember and catches the eye of the customer. The style is very simple and modern. Simple because we want to show that that the crown represents the best quality but simple because our prices are not expensive. The 20 modernity represents a new birth for the tea because the young people believe that the tea is a beverage for old people. With this modernity it will attract a new segment: young target.
v The colors: the red, the yellow. We chose a red background because it represents the strength, the power; the power is linked with the crown which represents the status and the sovereignty of the king. The yellow represents the gold, the colour of the king; it represents the wealth of the ingredients, the recipe, and the taste.
v The style of the writing: we chose a writing that represents the royalty and the modernity; it stands for the image of the brand and our values: young, good quality, low prices. Our goal should be to attack our main competitor Lion Brand, gaining more Market Share by selling Black tea as well as Fruit and Herbal tea, so we can cover the existing tea Market but also focus on new emerging markets like the health market.
Preparation Of Tea Products:
A process for the preparation of water-soluble tea extracts from spent tea residues formed during the hot aqueous extraction of tea leaves in the production of water soluble tea extracts which comprises hydrolyzing the said spent tea residues with an acid catalyst at a temperature from 170 DEGC to 250 DEGC and a pressure from 120 to 600 psig for a period of from 5 to120 seconds.
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Current Scenario of the Indian Tea Sector
India is the largest producer of tea in the world with annual production of over 900 million kgs, representing over 28% of the world production of 3.2 billion kgs. The Indian Tea Industry was in recession for the last few years due to high level of taxes, very high social cost, low labour productivity, no commensurate change in wages to changes in productivity or realizations and unavailability of adequate funds for replanting and rejuvenation of old tea bushes. During the last few years, exports from India have been languishing owing to the low international prices particularly for tea imported from Africa and Vietnam. This also resulted in cheap imports into India for re-exports thus impacting domestic prices. However, after seven years of recession, the Indian Tea Association (ITA) hopes to regain the growth momentum, which it enjoyed in the mid-90. According to the Status Paper 2007 published by the ITA, production this year is pegged at 930 million kg (mkg), total consumption is expected to increase by 25 mkg at 805 mkg for the year 2007, imports at 20 mkg and exports at 195 mkg. ITA felt that 2006 would end with a shortfall of 27 mkg. It is expected that the year 2007 will start on a finer note with lower crop in the pipeline. The report observes that to meet the shortfall and the "burgeoning" domestic demand, the industry will have to produce quality tea at a reduced cost, increase productivity and manufacture more orthodox tea.
Current Year’s Figures:
Total Production has increased by 3.5% at 704.3 mkg, whereas the total tea imports has increased by 4.24 mkg at 16.79 mkg in the first nine months of 2006 compared to the same period last year. Total Exports in the first nine months of 2006 are marginally up by 0.4 mkg compared to 2005.However, tea exports from south India have registered a growth 16.7 mkg during this period.We have observed that total tea consumption has grown by 4.87% for the last five years and if the same tren continues then the total consumption is expected to increase by 39 mkg for the year 2007. The domestic production however has seen a marginal growth of 1.87% over the last five years. As it takes around 3-4 years with specific demography to set up a new plantation farm, the scope of increasing the domestic production in the short term gets limited. The production will also be subdued due to the closure of some small tea gardens in Assam.
The increasing demand for tea consumption and limited increase in production would lead to demand supply mismatch. This in turn would lower the inventory levels and increase the tea prices over the period.
Recent Developments in the Industry:
- Tea has been the most common drink in the rural India due to its affordability and healthiness. The Board is taking various health awareness programmers to push the demand. We expect the robust demand from the rural market to continue.
- Tea suffers from staid and non-contemporary image. In order to counter the non-contemporary image of tea consumption in India, the Tea Board and Ministry of Commerce has launched promotion campaigns for communicating tea as a healthy and lifestyle beverage and making it more appealing and contemporary. These campaigns have been targeting customers from various age groups.
- Recently, Cabinet Committee on Economic Affairs (CCEA) gave the go-ahead to set up a Special Purpose Tea Fund (SPTF) under the Tea Board to fund replantation and rejuvenation activities aimed at improving the age profile of tea plantations. This is going to benefit the companies having financial constrains but potential to improve.
- The CCEA also gave its approval for providing budgetary support towards outstanding statutory dues, salary/wages in respect of defaulting CPSEs under the department of heavy industry. The move is expected to “motivate” employees for better output and prepare them to achieve the goal of revival of companies.
- The Tea Industry both in Assam and West Bengal have discussed with the Trade Unions for the implementation of productivity linked wage rates for the tea workers with a view to partially regain the Industry's competitiveness in the global market. With the implementation of the above policy the operating margins for the companies in the industry is expected to improve.
The recent developments in the industry give an early signal for the revival of Industry, but the effects of all will be gradual.
- After years of falling prices, Indian tea has seen a price reversal in the current year. From an average tea price of Rs 64.55 per kg in 2004 it dropped to Rs 58.06 per kg in 2005. In 2006, all auction centers across the globe have registered price increases.
- Indian tea prices have witnessed an average growth of Rs. 9.08 per kg for the first nine months of 2006. Prices in north India have increased by Rs. 9.60 per kg, whereas in the south it has increased by Rs. 8.38 per kg. Tea prices are expected to remain firm over the next few years due to the demand supply mismatch.
With unfavorable weather conditions global production has been lower by 1.4% during the first 9 months of 2006 compared to the same period last year. The scope of increasing the overall Indian tea production gets limited due to scarce demographic resources, long gestation period and closoure of few small tea gardens in Assam. The increasing demand for tea consumption and limited scope of increasing production would lead to further demand-supply mismatch, thereby causing shortfall in the inventories. Already there has been a rise in the tea prices in 2006, wherein the average tea price for major trading centers in India has increased by 15.81% in the first 9 months of 2006 compared to the same period last year. We expect prices to remain firm for the next few years. In view of all these favorable developments it could be safely concluded that the outlook of the tea sector is positive.
- First mover in market introducing soluble instant tea powder.
- Soluble instant tea powder makes tea prepation less time and resource consuming.
- Available in small size packets at low price for instant use
- Purified and filter tea as impurities are extracted during process of making tea powder soluble.
- Available in different flavors as provided by other existing competitor tea products.
- Available in same price range as existing tea products.
- It can be instantly used to make cold tea with different flavors especially in summers.
- People may have mindset that it contains chemical not herbal as it is processed in soluble powder form.
- Traditional Tea-making ideology of people.
- Strong competitors like HUL, TATA, ASSAM TEA etc. have brand image.
- In today’s globalization scenario people are busier they will readily accept product as it is less time consuming. So large market in Tier-1 and Tier-2 cities.
- Educational institutes, offices, railway and other transportation hubs can be targeted to set-up automatic vending machine to acquire quick and large market.
- Soluble instant tea powder can be launch in small packets of Rs.1 like coffee to acquire large segment.
- Tea has been the most common drink in the rural India due to its affordability and healthiness and rural market is 2/3 of total market so in future course of time we can enter in rural.
- Competitors price cutting in existing products
- High profit realization will not be achieved in initial years as cost incurred in making tea powder soluble
v Achieve sales about 200,000 kilograms in the first year of operation.
v We are planning to transfer its entire tea plantation business in Assam & Darjeeling in into two wholly owned subsidiaries in the fifth year.
v In the coming five year we are planning to export in the Asian countries like Bangladesh, Pakistan, Shri lanka etc.
- Profit:target profit margin is 18% on total sales.
- Return On Investments: Earn an annual rate of return on investment of 20% over the next five years
- Market Share:Generate 50% brand awareness within the consumer target market and 60% brand awareness within the business target market by the end of next year. The product will achieve 25% market share in tea market segment within a year (other competitor’s TATA & HUL have 22% & 25% right now). Achieve an image of “an ideal beverage” for youth and working group in next five years.
- Target Market: Working group and youth in the Rs.10,000 and above monthly household- income families who are trendy, ambitious, health conscious and people who have fast moving life.
- Positioning: Instant soluble tea powder which is easy to make anytime. Anywhere!! For youth and working group. Concept marketing to Indian consumer to use cold tea with cream as other drinks available in summers. Our tea is totally herbal even after all process of making powder.
- Product: Instant soluble tea powder material, packed in modern carton packs of 25 grams, 50 grams and 100 grams with different flavors of Adarak, Elaichi, Tulsi and different cloves. The 25-grams packets will be trial packs, which will be discontinued in the fifth year of operation. The product has to be mixed like coffee in boiling water, preferably consumed with milk. Sugar can be added for taste.
- Pricing: Available in Rs.5 for 25 grams, Rs.10 for 50 grams and Rs. 20 for 100gms.
- Distribution: In select up market retail chains and up market Kirana stores. Opening free trial stalls in up market in first month of operations. Vending machines installments in offices and educational institutes in second year of operations.
- Marketing Communications:
v Focus on creating brand awareness and a distinctive image of instant soluble tea and cold tea to be used anywhere anytime in 2 minutes with emphasis on exclusivity.
v Focus on high profile product launch as well as on publicity and media coverage.
v In first year we will give advertisements in niche category women magazines and advertisements in Hindi, English newspapers.
v We will be giving high profile advertisement with endorsement with celebrity creating image of truly innovative instant tea in 2 minutes with any snack anytime and cold tea with cream for summers.
Initial tracking studies to measure differentiation, preference, market penetration and repeat purchase rate; to monitor the profile of the customers. It will help us to know market and target in better way for deep penetration in tea market.