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Brand Attractiveness in Packaged Tea Industry: Local, National and Global Brand*

CASE STUDY, BRAND MANAGEMENT
ET Cases - GSMC, 15 Pages
AUTHOR(S) : Dr. Rinalini Pathak Kakati, Associate Professor and Anubhuti Deorah, Senior Research Fellow, Department of Business Administration, Gauhati University

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Brand Attractiveness in Packaged Tea Industry: Local, National and Global Brand

Morning starts with a cup of tea for millions of people around the world. In India, tea is a staple beverage without which a day is impossible and incomplete. Tea, in India, was first introduced for commercial production by the British. India has retained its leadership over the tea industry for the last 150 years. The market size in India is estimated at INR 10,000 crores with a penetration of more than 90% in the domestic market. This industry provides employment to more than 1.1 million Indian workers and almost half the workforce constitutes of women. Indians take a lot of pride in their tea industry because of the pre-eminence of the industry as a significant earner of foreign exchange and a significant contributor to India’s GNP. The three prominent tea-growing regions in India are Darjeeling, Assam and Nilgiri. While Darjeeling and Assam are located in the North East regions, Nilgiri is a part of the southern region of the country.

Tea Industry Background

Key Players in the Tea Industry

Being the oldest industry, a large number of players operate at the national level. In India tea is consumed mainly in two forms (i) packaged and (ii) unpacked/loose. Most of the tea gardens of Eastern and North Eastern parts belong to big national tea groups like the Tata, HUL, Duncan, etc. Only in the beginning of the twenty first century, global players entered India (Exhibit I). The packaged tea players are mostly the national and global brands at all India level. Almost all the national and global brands have presence across India by leveraging on their own distribution networks. The share of Cut Tear Curl (CTC) tea constitutes 80 percent of the tea market followed by Orthodox tea, Green and Flavored tea. HUL leads the market with a share of 32% and Tata Tea has the second largest share of 22% (Exhibit II). For the big players, branded tea accounts for close to 70-80 percent of their total revenues................

National Brands in North East

Despite these big players marketing acumen, many national brands also find difficult to compete with other strong brands. North East India, which accounts for 50.7 percent of India’s domestic production finds local tea brands occupying considerable market share together with national and a few global brands. The  most prominent tea brands operating in North East are Tata Tea, Brooke Bond, Wagh Bakri, Duncan, Society Tea, Jayshree Tea (Mangalam). These national  brands enjoy a considerable market share by offering only limited variants in the North East compared to their overall product..............

Global Brands in North East

The most prominent global tea brands operating in North East are Twinings of Associated British Foods of UK, Tetley of Tata Global Beverages and Lipton of Unilever.

Twinings is undisputedly a purveyor of finest tea worldwide. Twinings entered the Indian market in 1997 after being the global leader since 1706. Twinings India offers over 15 flavours in the Premium Black Tea, Green Tea, Herbal & Fruit Infusions categories enjoying a sizable market share in the premium teabag category in modern trade, thus making them one of the leading players in the teabag industry in India today.............

Local Brands in North East

The North East packaged tea market is cluttered with local brands. The most popular local brands are Golaghat Tea, Korangani Tea and Mangalam Tea in Assam; Maaza Gold and Korangani in Meghalaya and Nagaland; Upahaar and Korangani in Mizoram. Most of the local brands have limited variants available in the market.................

History of Korangani Tea

It was back in 1926 that Jadav Prasad Chaliha, freedom-fighter and a pioneer tea-planter of Assam, undertook the daunting task of clearing a densely forested land granted by the British, in abundance of “Koranga” tree, locally known as “Korangani”, and refilled the plot with tea plants. Battling the hardships of a severe environment and colonial harassments, his determination bore fruit and the young plantation began to flourish.................

Productmix – Consumer Packs

100% CTC Blend
Korangani ensures 100% Garden Fresh Assam CTC in its flagship product. They launched themselves with the poly pack in 1998 and since then they have introduced many variants in packaging. This product is full bodied liquor and has a strong local taste flavour............

Broken Orange Pekoe CTC Tea
Many more premium blends of CTC tea were launched from 2000 to 2005. 100% Garden Fresh Assam CTC single grade BOP (Broken Orange Pekoe) tea is in market since 2001. Today it is packed in exclusive gift styles – Traditional design metal caddy/Porcelain Mug with assorted motifs packed in exclusive box of Rhino Dung paper/Bamboo Strip pouch with jingle bells..............

Assam- Darjeeling Blend
Launched in 2005, the Assam Darjeeling Blend is another blended CTC tea. It is 100% Garden Fresh Assam CTC tea blended with 100% Garden Fresh Darjeeling Broken grade teas for a royal combination of..........

........................

Gift Packs

Assam Orthodox Tea
100% Garden Fresh Assam Orthodox Whole Leaf grade tea, with golden tips of young tea buds and refreshingly Light Aroma with Assam tea character...........

Silk Box
Korangani Tea has created an exclusive handcrafted gift package for the discerning customer. The packaging material used is not found anywhere else in the world, but in Assam – Muga, Mulberry and Endi silks. Three types of high quality tea – CTC Brokens (Grade-BOP), Whole Leaf Orthodox and Green Teas, are packed in pouches made from these silks............

Pricing, Promotion Mix and Distribution Network of Korangani Tea

Korangani Tea has managed to keep its brands at a lower price than major competitors. Tea being a commodity with less functional differences, hence its fair price mainly depends on the available price of tea leaves. Korangani Pvt. Ltd. has to ensure cost-cutting measures from the tea gardens to maintain its pricing strategy.
It supplies its products at the basic price to its distributors which consist of the following: ...............

Pricing, Promotions Mix and Distribution Network of National and Global Brands

Tata Tea has its variants and SKUs ranging from INR 25 to INR 480 (approx.), for HUL brands like Red Label its INR 35 to INR 462, while for Global Brands like Twinings start from INR 180. And if we look at Korangani it ranges from INR 25 to INR 290 (Annexure II). So we see that packaged tea industry is very price sensitive, which targets the same segments of consumers. National and Local Brands have little or no difference with respect to pricing. While Global brands do not come in the price war.............

Positioning Dilemma of Korangani

Undoubtedly, tea is going to remain as a popular beverage for millions. Concerns for health and wellness have helped tea marketers to enter new segments and go for product development. The key to successful brand management is to understand what benefits consumers are looking from a particular product. Consumers today are more demanding; they are often looking beyond the physical and tangible aspects of the product................

Conclusion

The Director of Korangani Ltd. could little understand the manager’s findings. He is optimistic that his brand does not have high difference with the global brand in two factors i.e., brand performance and brand efficiency (marked in bold in Exhibit VI) the local brand is found to be more attractive and believes that there is still chance to survive in the battle with national and global giants................

Assignment Questions

i. Examine how local brands survive only on points-of-parity rather than points-of-difference.
ii. Will local brand Korangani be able to create any differential advantage by its brand attractiveness?
iii. ................

Exhibits

Exhibit I: List of Present National and Global Players in India in Packaged Tea Industry

Exhibit II: Major Tea Brands Market Share

Exhibit III: Year Wise Launch

Exhibit IV: Distribution of Korangani Tea

Exhibit V: Factor dimensions of Appeals and Elements of Brand Attractiveness

Exhibit VI: Mean Score of Consumers Response

Annexures

Annexure I: Promotion Pictures of Korangani and Other National and Global Brand

Annexure II: Tea Brands (Local, National & Global Brands) available in North East urban markets with volume & prices

Teaching Note Preview

Brand Attractiveness in Packaged Tea Industry: Local, National and Global Brand

 

Synopsis

This case deals with a local tea brand Korangani belonging to Assam , an important state of North East India and examines its progress from its first launch in  packaged tea industry since 1997. Korangani Tea with its variants are now a household name in the major markets of the North East and parts of Eastern India, having sales of approximately 350,000 kilograms annually, with a turnover of INR13.38 crore in 2013-14. Korangani has been experiencing tremendous competition not only from other local players but also from National and Global brands. How can local brands sustain itself alongside the highly resourceful National and Global brands? Korangani has constantly upgraded its product level, has been using competitive pricing and distribution strategies. Local brands may also enjoy certain brand equity. This case tries to answer – Whether local, national and global tea brands differ in brand attractiveness? In fact tea marketers need to ascertain what consumers look beyond the functional values of the product.

Pedagogical Objectives

  • • To identify the points-of-parity and points-of-differences of the local brand Korangani
  • • To understand importance of branding issues so as to evaluate brand attractiveness, this can emulate differential advantage to the local brand
  • • To examine the strengths of global and national brands and listing down of critical success factors of local brands

 

Case Positioning and Setting

This case can be used in the MBA programs, for the course of Marketing to highlight the concepts of branding, brand positioning and brand attractiveness.

Assignment Questions

  • i. Examine how local brands survive only on points-of-parity rather than points-of-difference.
  • ii. Will local brand Korangani be able to create any differential advantage by its brand attractiveness?
  • iii. Develop SWOT analysis for the local brand Korangani. What are its critical success factors?
  • iv. .................

 

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Abstract

This case is expected to enlighten the participants regarding the difficulties faced by local tea brands while positioning against the national and global tea brands. What makes a consumer choose his cup of tea remains a marketing dilemma? This has been intensified by local, national and global brands sharing the same shelf in  almost all retailing outlets. Is the attractiveness of these tea brands different among the consumers? The present booming tea industry of Assam originated in 1926  when a forest in Upper Assam was cleared by a visionary person to cultivate tea plants and later got converted into tea estates. Incorporated in 1985, it started packaged tea distribution from 1998 allover North East India. Today this local tea brand ‘Korangani’ of Assam is a popular household name of North East and Eastern Region of  India. This local brand has been facing tremendous competition from national brands and recently from global brands. In order to sustain, Korangani has been  constantly upgrading its product level and using competitive pricing and distribution strategies. Korangani’s management feels there are other drivers that make  consumers choose between the different brands. Can identifying its brand attractiveness help Korangani to design effective positioning strategies?



Pedagogical Objectives

  • To identify the points-of-parity and points-of-differences of the local brand Korangani.
  • To understand importance of branding issues so as to evaluate brand attractiveness, this can emulate differential advantage to the local brand.
  • To examine the strengths of global and national brands and listing down of critical success factors of local brands.

Case Positioning and Setting
This case can be used in the MBA programs, for the course of Marketing to highlight the concepts of branding, brand positioning and brand attractiveness.


* GSMC 2016, IIM Raipur

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- Case Study
- Teaching Note (**ONLY for Academicians)
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