I

Analyzing Tea Imports in Pakistan

Analyzing Tea Imports

In Pakistan

Presented To

Mrs. Nighat RizviCourse Instructor

Business CommunicationInstitute of Business Management

Submitted By

Suleman Ahmed AliMBA Executive

ID # : 2008-1-41-8754

April 8, 2023

II

Letter of Authorship

Date: December 26, 2008

Dear Reader,

This report has been authorized by teacher Mrs. Nighat Rizvi for Business Communication course to analyze tea imports in Pakistan and impacts of this industry on culture.

This report is now finished and is provided for review. I hope that I have communicated true facts, which have been learnt during the research of this report and have interpreted the same accordingly.

Sincerely,

Suleman Ahmed Ali ID # : 2008-1-41-8754

III

Preface

The report focuses on the structure of tea industry of Pakistan, its key players with their contribution in the economy and the market share of import in the country. It contains detailed statistics of all the major products of tea industry and a comparative analysis of our Industry with other competitors.

We would be pleased to provide additional information that is required or if there are further queries that need clarification.

IV

Letter of Transmittal

Nighat RizviCourse InstructorBusiness CommunicationInstitute of Business ManagementKorangi Creek, Karachi-75100

December 26, 2008

Dear Mrs. Rizvi,

Here is the report you requested entitled "Analyzing Tea Imports in Pakistan”, along with the recommendations of uses of Tea. The study included both primary and secondary research. The primary study focused on a particular tea company currently operating in the market.

Although the import of Tea has increased in recent years, the information gathered shows that with some effort the import bill on tea can be decreased and illegal tea influx into the country needs to be minimized. Recommendation is to exploit the opportunities of self cultivation can be expanded enough to make Pakistan quench the consumer market within the country.

Through the course of the term, I was given the opportunity to learn much about the tea industry and import business in general. I am grateful to my business communication classmates for accompanying me in visits to the tea company. I feel that this knowledge will be helpful in future work terms, and in my career.

Please give me a call, if I may provide additional information or answer questions. I would be happy, at your request, to prepare a SWOT analysis of implementing the recommendations in this report.

Sincerely,

Suleman Ahmed Ali ID # : 2008-1-41-8754

V

Letter of Acknowledgement

Looking back at the hard and rough road that we have been undertaking to propose this report, we are astonished at the contributing factors that lead us to success and kept our hopes alive throughout.

Our heads bow before our first and fore most guide, our beacon and strength, the ALMIGHTY ALLAH. Thank you ALLAH for giving us strength, knowledge and power to standup after small failures, and for impossible, possible for us.

We are thankful to Mrs. Banoo Ahmed Ali, Proprietor Lion Tea Company and Mrs. Fatema Salman, Marketing Rep LTC for updating us with current situation of the industry and providing us with some market statistics. Without their guidance, we would not be able to collect data in a limited time.

We are very thankful to Mrs. Nighat Rizvi, Teacher IoBM, for helping us in this report and for giving us initial strength, courage and confidence and showing us the way to move ahead.

As the best is always saved for the last, we’ll always be obliged to our dearest teacher Mrs. Nighat Rizvi, who guided us in shaping this report and enhancing our skills of report writing.

VI

Executive Summary

The hot drinks market recorded growth in both volume and current value terms in 2007. Tea remained dominant and continues to lead the overall market in both the on-trade and off-trade. The growth rate of tea in both value and volume terms are always influenced by sales in rural areas. Multinational and local companies have to focus on rural areas more and study the market carefully to maintain their share. Pakistan, officially a country of teetotalers with an Islamic ban on alcohol, has become one of the highest per capita consumers of tea in South Asia, as reported in The Financial Times recently.

The government is trying to take measures and reduce import duties and other taxes to encourage importers and manufacturers. It is expected that these steps will lead to an increase in imports from a wider range of countries. These steps were also taken to discourage smugglers from smuggling tea which has been a major problem for both the Pakistani government and tea blending companies. Increasing health awareness has also led to an increase in demand for green tea and fruit/herbal tea. Green tea is consumed mostly in urban areas and some rural areas due to the increasing health awareness.

Smuggled tea accounts for a considerable amount of the total tea available in. Kenya, Pakistan's biggest tea supplier, accounts for around 50% of its legal tea imports. Tea is smuggled into the country via the border areas of the North West Frontier Province (NWFP) and Baluchistan. Smuggled black teas are sold cheaper as compared to teas available in the marketplace for retail. This has affected legitimate sales to a large extent but the government has taken preventative measures to stop the smuggling of illegal imports into the country.

VII

Table of Contents

CHAPTER # 1 (INTRODUCTION)...................................................................................................................1

History of Tea..........................................................................................................................................2

Evolution of Tea in Pakistan.....................................................................................................................2

CHAPTER # 2 (Analyzing Tea in Pakistan).....................................................................................................4

Types and preparation Methods.............................................................................................................5

Tea Influx in Pakistan...............................................................................................................................7

Import Share of Tea.............................................................................................................................7

Supply and Demand Trends.................................................................................................................9

Illegal Tea Influx.................................................................................................................................11

Self Cultivation...................................................................................................................................12

Consumer Market Segmentation...........................................................................................................13

Packaging Segmentation....................................................................................................................13

Brand Segmentation..........................................................................................................................14

Global Statistics claimed by Unilever for Lipton Brand..........................................................................14

Impact on Pakistan’s culture.................................................................................................................17

Asserting Family Value.......................................................................................................................17

Socialization.......................................................................................................................................17

Non-Alcoholic Environment...............................................................................................................17

CHAPTER # 3 (CONCLUSION & RECOMMENDATION)................................................................................18

Conclusion.............................................................................................................................................19

Recommendation..................................................................................................................................20

BIBLIOGRAPHY...........................................................................................................................................21

VIII

List of Figure

Figure 1: Girl picking tea leaves in China.................................................................................................2Figure 2: Robert Bruce and his family 1823.............................................................................................2Figure 3: Tea cultivation regions..............................................................................................................3Figure 4: Tea shop in Pakistan (Dhaba)...................................................................................................5Figure 5: A Cup of Black Tea.....................................................................................................................5Figure 6: Green Tea (Kahvah)...................................................................................................................5Figure 7: Illegal Movement of Tea in Pakistan.......................................................................................11Figure 8: Plain Tea Bag............................................................................................................................13Figure 9: Loose tea leaves.......................................................................................................................13Figure 10: Lipton products available in Pakistan..................................................................................14Figure 11: Brooke Bond A1 products available in Pakistan..................................................................15Figure 12: Brooke Bond Supreme products available in Pakistan........................................................15Figure 13: Pearl dust products available in Pakistan............................................................................15Figure 14: Tapal Tea Company’s brands available in Pakistan.............................................................16Figure 15: Tea party in Karachi (Pakistan)............................................................................................17

List of Tables

Table 1: Year Wise Tea Import.............................................................................................................................................8Table 2: Year-wise Tea Cultivation (Acres)..................................................................................................................12Table 3: Plantation with Other Agencies.......................................................................................................................12

List of Charts

Chart 1: Country Wise Share in Black Tea Import........................................................................................7Chart 2: Country Wise Share in Green Tea Import......................................................................................7

IX

Chart 3: Tea Import Volume Analysis (1994-2005) .…..…………...……………………………..……………………… …….8 Chart 4: Tea Import Value Analysis (1994-2005).........................................................................................8Chart 5: Demand trend of Pakistan from 2001-2005...................................................................................9

X

CHAPTER # 1 (INTRODUCTION)

1

History of Tea

Discovered in China, close to 5000 years ago, tea is the second most consumed beverage in the world after water. It is truly a global beverage and is consumed in every corner of the world. All tea comes from the Camellia Sinensis or Camellia Assamica plant. From this plant - black, green or oolong teas are produced. Black tea is by far the most popular tea. The largest producer and consumer of black teas in the world is India. Widely consumed in the Indian sub continent from the turn of the 20th century, tea is an 'essential commodity' for most people living in his part of the world!

Tea originated in Southeast Asia, specifically around the intersection of latitude 29°N and longitude 98°E, the point of confluence of the lands of northeast India, north Burma, southwest China and Tibet. The plant was introduced to more than 52 countries, from this ‘centre of origin’. Yunnan Province has been identified as "the birthplace of tea...the first area where humans figured out that eating tea leaves or brewing a cup could be pleasant". Indeed, Fengqing County, in Lincang City area of Yunnan Province, is said to be home to the world's oldest cultivated tea tree-- some 3,200 years old.

According to the Encyclopedia Britannica (2008): "In 1824 tea plants were discovered in the hills along the frontier between Burma and the Indian state of Assam. The British introduced “tea culture” into India in 1836 and into Ceylon (Sri Lanka) in 1867. At first they used seeds from China, but later seeds from the Assam plant were used.”

Evolution of Tea in Pakistan

Long before the commercial production of tea started in Subcontinent in the late 1830s, the tea plant was growing wild in the jungles of north east Assam. In 1788, the British botanist, Joseph Banks, reported to the British East India Company that the climate in certain British-controlled parts of north east India was ideal for tea growing. However, he missed the fact that the plant was a native to Bengal and suggested transplanting tea bushes from China

In 1823 and 1831, Robert Bruce and his brother Charles, an employee of the East India Company, confirmed that the tea plant was indeed a native of the Assam area and sent seeds and specimen plants to officials at the newly established Botanical Gardens in Calcutta. Nothing was done - perhaps because the East India Company had a monopoly on the

trading of tea from China

2

Figure 1: Girl picking tea leaves in China

In 1833, the company lost its monopoly and suddenly woke up to the fact that India might prove a profitable alternative. A committee was set up, Charles Bruce was given the task of establishing the first nurseries, and the secretary of the committee was sent off to China to collect 80,000 tea seeds. They were still not sure that the tea plant really was indigenous to India, committee members insisted on importing the Chinese variety.

Figure 3: Tea cultivation regions

The seeds were planted in the Botanical Gardens in Calcutta and nurtured until they were sturdy enough to travel 1000 miles to the newly prepared tea gardens. Meanwhile, up in Assam, Charles Bruce and the other pioneers were clearing suitable areas of land on which to develop plantations, pruning existing tea trees to encourage new growth, and experimenting with the freshly plucked leaves from the native bushes to manufacture black tea. Bruce had recruited two tea makers from China and, with their help; he steadily learnt the secrets of successful tea production.

After partition in 1947, West Pakistan (Pakistan) who did not have Tea cultivation areas started importing Tea from East Pakistan (Bangladesh) and Kenya. In 1971 East Pakistan took independence and West Pakistan then relied 100% on imported tea from various countries.

3

Figure 2: Robert Bruce and his family 1823

CHAPTER # 2 (Analyzing Tea in Pakistan)

4

Types and preparation MethodsThe traditional method of making a cup of tea in Pakistan is to place loose tea leaves, either directly, or in a tea infuser, into a tea pot or teacup and pour hot water over the leaves. After a couple of minutes the leaves are usually removed again, either by removing the infuser, or by straining the tea while serving.

Most green teas should be allowed to steep for about three minutes, although some types of tea require as much as ten. The strength of the tea should be varied by changing the amount of tea leaves used, not by changing the steeping time. The amount of tea to be used per amount of water differs from tea to tea but one basic recipe may be one slightly heaped teaspoon of tea (about 5 ml) for each teacup of water (200 ml) (8 oz) prepared as above. Stronger teas, such as Indonesian, to be drunk with milk are often prepared with more leaves, and more delicate high grown teas such as a Kenyan are prepared with a little less (as the stronger mid-flavors can overwhelm the champagne notes).Some tea sorts are often brewed several times using the same tea leaves. Historically, in Northern parts of Pakistan, tea is divided into a number of infusions. The first infusion is immediately poured out to wash the tea, and then the second and further infusions are drunk. The third through fifth are nearly always considered the best infusions of tea, although different teas open up differently and may require more infusions of hot water to bring them to life.

Black Tea: The water for black teas should be added at the boiling point (100 °C or 212 °F). Many of the active substances in black tea do not develop at temperatures lower than 90 °C. For some more delicate teas lower temperatures are recommended. The temperature will have as large an effect on the final flavor as the type of tea used. The most common fault when making black tea is to use water at too low a temperature. Since boiling point drops with increasing altitude, this makes it difficult to brew black tea properly in Northern mountainous areas of Pakistan. It is also recommended that the teapot be warmed before preparing tea, easily done by adding a small amount of boiling water to the pot, swirling briefly, before discarding. In Pakistan black teas are usually brewed for about 4 minutes and are not allowed steeping for less than 30 seconds or more than about five minutes as longer steeping times make the tea bitter.

Green Tea : Water for green tea, according to most accounts, should be around 80 °C to 85 °C (176 °F to 185 °F); the higher the quality of the leaves, the lower the temperature. Hotter water will burn green-tea leaves, producing a bitter taste. Preferably, the container in which the tea is steeped, the mug, or teapot should also be warmed beforehand so that the tea does not immediately cool down. Recently, green tea (as well as some black teas) has shown to significantly increase interferon levels

5

Figure 4: Tea shop in Pakistan (Dhaba)

Figure 5: A Cup of Black Tea

Figure 6: Green Tea (Kahvah)

in tea consumers, which lends credence to the theory that some teas help boost the immune system.

Serving: Traditionally in Pakistan to preserve the pre-tannin tea without requiring it all to be poured into cups, a second teapot may be employed. The steeping pot is best unglazed earthenware; Yixing pots are the best known of these, famed for the high quality clay from which they are made. The serving pot is generally porcelain, which retains the heat better. Larger teapots are a post-19th century invention, as tea before this time was very rare and very expensive. Experienced tea-drinkers often insist that the tea should not be stirred around while it is steeping. This, they say, will do little to strengthen the tea, but is likely to bring the tannins out in the same way that brewing too long will do. For the same reason one should not squeeze the last drops out of a teabag; if stronger tea is desired, more tea leaves should be used.

Adding milk to Tea: The order in which to make a cup of tea is a much-debated area; some say that it is preferable to add the milk before the tea, as the high temperature of freshly brewed tea can denature the proteins found in fresh milk, similar to the change in taste of UHT milk, resulting in an inferior tasting beverage. Others insist that it is better to add the milk after brewing the tea, as most teas need to be brewed as close to boiling as possible. The addition of milk chills the beverage during the crucial brewing phase, meaning that the delicate flavor of a good tea cannot be fully appreciated. By adding the milk afterwards, it is easier to dissolve sugar in the tea and also to ensure that the desired amount of milk is added, as the color of the tea can be observed. In Pakistan, the order in which the milk and the tea enter the cup is often considered an indicator of social class. Persons of working class background are supposedly more likely to add the milk first and pour the tea in afterwards, whereas persons of middle and upper class backgrounds are more likely to pour the tea in first and then add milk.

6

Tea Influx in Pakistan

Import Share of TeaThe world market is dominated by four leading exporters of tea, namely India, Sri Lanka, China and Kenya and by four leading importers of tea, namely, United Kingdom, United States of America, Pakistan, and Egypt. The major tea suppliers to Pakistan are Kenya, Indonesia, and Bangladesh but there is a variation in the type of tea supplied. The imports can be classified in to major categories Black Tea and Green Tea with Kenya and Vietnam as the primary exporters. The country wise share in tea import is give below:

Chart 1: Country Wise Share in Black Tea Import

Chart 2: Country Wise Share in Green Tea Import

7

To analyze the performance of imported tea into Pakistan during 1994-2005, the compiled data in terms of volume and value are documented in the following table:

Table 1: Year Wise Tea Import

Year Quantity

Qty Change

Growth Rate

Total Value

Value Change

Growth Rate

(Ton) (Ton) % (Rs. Bill.) (Rs. Bill.) %1994-95 116,62

9489 0.42 5.79

4 0.18 3.02

1995-96 114,760

-1,869 -1.63 5.707

-0.09 -1.52

1996-97 85,426 -29,334

-34.34

5.218

-0.49 -9.37

1997-98 98,649 13,223 13.40 9.818

4.60 46.85

1998-99 119,695

21,046 17.58 11.15

1.33 11.95

1999-00 108,644

-11,051

-10.17

10.895 -0.26 -2.34

2000-01 111,867

3,223 2.88 12.03

1.14 9.43

2002-03 106,000

-5,867 -5.53 9.6 -2.43 -25.31

2003-04 117,000

11,000 9.40 11.19

1.59 14.21

2004-05 127,000

10,000 7.87 12.41

1.22 9.83

Analysis of data shows that during the whole period of the study (1994-2005) the average volume of imported tea approached to 110567 thousand kgs per annum. In the first 5 Years (1994-99) it reached to 107,032 thousand kgs, while in the last 5 years it came up to 114,102 thousand kgs. Hence the average growth rate of the whole period (l994-2005) sustained at -0.01 percent per annum. In the first 5 years (1994-99) it was -0.91 percent, while in the last 5 years (1999-2005) it increased to 0.89 percent per annum. The main reason was that in the whole period the fall in the volume of imported tea appeared as 34.34 percent in 1996-97, 10.17 percent in 1999-2000, and 5.53 percent in 2002-2003 as compared to their respective preceding years.

Chart 3: Tea Import Volume Analysis (1994-2005) Chart 4: Tea Import Value Analysis (1994-2005)

8

The charts reflect that the value of imported tea increased by Rs. 9.6 billion in 2002-03, Rs.11.19 billion in 2003-2004, Rs. 12.41 billion in 2004-2005 thus indicating a steady rise of -25.31 percent in 2002-2003, 14.21 percent in 2003-2004 and 9.83 percent in 2004-2005 against their respective preceding years. On the other side, the charts show that the value of imported tea decreased by Rs. 5.2 billion in 1996-97 thus expressing a fall of 34.34 percent in volume. This was the time of the Asian Financial Crises where currencies of Asia were devalued and South East Asia to be affected the worst.

Supply and Demand Trends

Analyzing Supply Demand TrendsGrowth in tea demand emanates both due to shortage in supply and excess in demand. Drought in Kenya is one of the prime reasons for the bright outlook of the tea industry in India. Kenya is one of the largest producers of tea in the world. Incidentally, its consumption of tea is almost nil. During 1996-1997 tea prices were very high across the

9

world. However, later on there was a supply glut as more land was brought under tea plantation.

During this period Kenya emerged as one of the largest exporters of tea in the world and was that the period when Pakistan started losing its due to supply of inferior quality of tea. However, now after eight years prices have again started moving up and India is likely to benefit from it.

Per capita consumption is another interesting factor to look at. Pakistan’s per capita consumption of 1 Kg is still less when compared to the market of UK with a consumption 2.5kg, respectively. Considering the gap in figures Pakistan has bright chances of increasing its tea production. Recent surge in coffee prices has also added effervescence to the tea industry. The rise in coffee prices has forced people to shift from coffee to tea. Besides, world-over international companies like Coca Cola have plans to launch tea-based beverages.

Chart 5: Demand trend of Pakistan from 2001-2005

One heartening matter for the investors is a good premium commanded by companies in an auction. In 2005, tea prices were low across all major tea auction centres of the world. But post December at the Mombasa (Kenya) auctions, there has been rise in tea prices. For the period between January-July 2006 prices have increased by 38.4% compared to corresponding period in the previous year.

Experts have also forecasted drought-like condition in Assam. This reduced supply is likely to increase the prices in the international markets. According to a tea report by IDBI Capital tea prices are expected to move at an annualized rate of 10% till 2008.

Key Drivers of Pakistan Tea Demand GrowthPopulation Growth: The continuing growth of Pakistan’s already enormous population is a major factor in the region’s large and ever growing demand for food.

Demographic Change: Yet while Pakistan will continue to be one of the world’s most populous region, its population growth is decelerating. Also, the combination of falling birth rates and extended life expectancy in most Asian economies is resulting in expanding

10

population numbers in older age cohorts. This is particularly noticeable in higher income Asian economies, with Japan leading the trend

Urbanization: A steady trend of urbanization has been underway in Pakistan over the past half century, mostly due to economic diversification with growing manufacturing and services sectors, and the accompanying shift of population from rural areas to centres of greater employment opportunities and higher wages. In most of Asia this trend is now accelerating

Economic Growth and Per Capita Income Growth: Pakistan over nearly three decades into the 1990s averaged slightly below 2 per cent per annum but from the start of substantial economic reform in 2001, Pakistan’s per capita income growth picked up to average 3.5 - 4 per cent per annum over 2001-2008. It has been widely recognized that the rate of economic growth and rise in per capita incomes is the major driver of growth in per capita food demand.

Tea Prices: The actual price and price structure for tea within an economy will be affected by many factors, including international agricultural commodity prices, seasonal and cyclical fluctuations in local agricultural production, domestic systems of agricultural production, agrifood processing and distribution infrastructure, the nature of government policies applied to each part of the agrifood chain (including taxation, subsidisation and regulation), an economy’s international and domestic trade regimes, and general economic conditions.

Other Factors: A host of other factors is also influencing the pattern and direction of Pakistan’s tea demand trends. Asia is increasingly affected by the globalization of diets, though some strong cultural differences remain, prominently those related to religious or customary dietary restrictions. There is growing consumer interest in food safety, food integrity, food quality, and health and nutrition issues, particularly among higher income consumers.

Modeling Demand Supply Trends on 2010In the category of non-alcoholic beverages, while demand growth for traditional carbonated beverages is slowing, there is a major shift by higher income consumers towards beverages with greater perceived health benefits such as bottled water and ‘nearwater’, pure fruit and vegetable juices, and tea beverages. Growth in Tea consumption is eminent.

Illegal Tea Influx Tea exporters are expecting a decline in the import of tea through legal channels during the current financial year, in line with the declining trend during the last couple of years, due to an expected increase in smuggling of tea.

In this situation, the ratio between tea imports through legal and illegal channels is said to be equal. Out of the total consumption of tea in the country at 170 million kilograms, around 70 million kilograms is smuggled.

However, this illegal activity is likely to hit the peak level of 85 million kilograms, mainly due to unchecked tea smuggling under Afghan Transit Trade (ATT) according to one of the industrialists.

Pakistan Tea Association (PTA) publicized that major tea blenders like Unilever Pakistan, Tapal and Tetley have 100 million kilograms of the total tea import, which has been sold in

11

their company packaging while 70 million kilograms of open tea is being sold in the market. Open tea importers future is at stake, as every year the situation is getting worse. PTA has brought this matter to the authorities several times but in vain

Figure 7: Illegal Movement of Tea in Pakistan

Self Cultivation

After separation of East Pakistan in 1971, Pakistan started importing tea. Simultaneously steps were taken to encourage tea cultivation in the suitable areas of the country. In 1973-74 a special crops cell was introduced in Ministry of Food and Agriculture. A project titled as "Research and Introduction of Tea in Pakistan" was also initiated in the same year. In 1982 Chinese experts were invited for advice. In 1986 National Tea Research Station was established at Mansehra. It introduced five Chinese varieties suited to Hazara and Swat hills and established different tea plantations.

The Establishment of National Tea Board under Ministry of Commerce and setting up of tea development society with the participation of local partners are under decision process.The national tea companies (Tapal and Isphahani) also offered for setting up tea gardens. In this context, the foreign tea companies Lever Brothers promoters of Liptons, Brooke Bond brands of tea are also waiting for approval.

The project has established 525 acres tea plantation on farmer’s land in districts Mansehra, Battagram & Swat. 

12

Illegal movement of Tea via the Pak-Afghan border

Legit movement of Tea via Pak-Afghan transit and via Iran border resulting in smuggling into Pakistan

Smug

Table 2: Year-wise Tea Cultivation (Acres)

Year Mansehra

Oghi Balakot Battagram Swat Total

1999-00 - - - 08 10 182000-01 03 - - 12 - 15

2001-02 12 23 27 14 17 932002-03 01 03 04 - 07 15

2003-04 10 08 - 40 38 962004-05 06 08 01 41 96 152

2005-06 - 01 - 40 95 136Total 32 43 32 155 263 525

 

Table 3: Plantation with Other Agencies

Year Tepal Sungi Found FATA Hazara Uni AJK 2000-01 04 02 - - - 2001-02 07 02 - - - 2003-04 - - 03 01 - 2004-05 - - 04 02 02

Total 11 04 07 03 02 G. Total 27 Acres

13

Consumer Market Segmentation

Packaging Segmentation

Tea BagsTea leaves are packed into a small (usually paper) tea bag. It is easy and convenient, making tea bags popular for many people today. However, the tea used in tea bags has an industry name - it is called "fannings" or "dust" and is the waste product produced from the sorting of higher quality loose leaf tea. It is commonly held among tea aficionados that this method provides an inferior taste and experience. The paper used for the bag can also be tasted by many, which can detract from the tea's flavor. Because fannings and dust are a lower quality of the tea to begin with, the tea found in tea bags is less finicky when it comes to brewing time and temperature.Additional reasons why bag tea is considered less well-flavored in Pakistan include:

Dried tea loses its flavor quickly on exposure to air. Most bag teas (although not all) contain leaves broken into small pieces; the great

surface area to volume ratio of the leaves in tea bags exposes them to more air, and therefore causes them to go stale faster.

Breaking up the leaves for bags extracts flavored oils. The small size of the bag does not allow leaves to diffuse and steep properly.

Pyramid tea bagsThe "pyramid tea bag", introduced by Lipton and PG Tips in 1996, has an unusual design that addresses one of connoisseurs' arguments against paper tea bags, because its three-dimensional shape allows more room for tea leaves to expand while steeping. However, some types of pyramid tea bags have been criticized as being environmentally unfriendly, since their synthetic material does not break down in landfills as loose tea leaves and paper tea bags do.

Loose Tea LeavesThe tea leaves are packaged loosely in a canister or other containers which resist crumbling are commonly vacuum packed for freshness in aluminized packaging for storage and retail. The portions must be individually measured by the consumer for use in a cup, mug, or teapot. This allows greater flexibility, letting the consumer brew weaker or stronger tea as desired, but convenience is sacrificed. Strainers, "tea presses", filtered teapots, and infusion bags are available commercially to avoid having to drink the floating loose leaves and to prevent over-brewing. A more traditional, yet perhaps more effective way around this problem is to use a three-piece lidded teacup, called a Gawain. The lid of the Gawain can be tilted to decant the leaves while pouring the tea into a different cup for consumption.

Instant teaIn recent times, "instant teas" are becoming popular, similar to freeze dried instant coffee. Instant tea was developed in the 1930s, but not commercialized until the late 1950s, and is only more recently becoming popular. These products often come with added flavors, such

14

Figure 8: Plain Tea Bag

Figure 9: Loose tea leaves

as vanilla, honey or fruit, and may also contain powdered milk. Similar products also exist for instant iced tea, due to the convenience of not requiring boiling water. Tea connoisseurs tend to criticize these products for sacrificing the delicacies of tea flavor in exchange for convenience and are not so popular in Pakistan. A company launched a product by name of “Doodh patti” but did not find its way with consumer market.

Canned teaCanned tea was first launched in 1981 in Japan. As such, it is a fairly recent innovation, and it has mostly benefits in marketing but is very rarely available in Pakistan.

15

Brand Segmentation

Pakistani tea market is pre-dominated by two major companies Unilever and Tapal. Unilever is a British company which has 4 tea brands in the market Lipton, Brooke Bond A1, Brooke Bond Supreme and Pearl Dust while Tapal is 100% Pakistani owned company and has prevented other major tea company’s to penetrate the market.

Lipton: Lipton is the world's leading brand of tea by far. It's the global market leader in both leaf and ready-to-drink tea, giving a global share of all tea-based beverages that's nearly three times larger than its nearest rival. In total non-alcoholic beverages, Lipton is the global number two brand in terms of volume consumed.

Lipton Yellow Label sachet Lipton Yellow Label pack Jar Lipton green tea

Figure 10: Lipton products available in Pakistan

Global Statistics claimed by Unilever for Lipton Brand

1649  cups of Lipton Tea are enjoyed every second 8245 cups of Lipton Tea are enjoyed every time you blink

1252 cups of Lipton Tea are drunk every time your heart beats

52 billion cups of Lipton Tea  are drunk each year

45.75 billionTea Bags are produced by Lipton Tea each year         

Brooke Bond A1: A1 is the individual’s aegis. Launched in 1996 the brand has certainly come a long way to acquire national status. It has two variants catering to regional taste preferences, mixture for the South and leaf for Punjab. 

A1 has a unique standing thanks to its strong blend which translates into the strength of the common man. It mentally and emotionally revives, bolstering courage to face challenges and defy all odds. 

Leaf Tea Mixture

Figure 11: Brooke Bond A1 products available in Pakistan

16

Brooke Bond Supreme: The success of Brooke Bond Supreme is based on this very insight, since tea is a part of the social fabric of Pakistanis. Brooke Bond Supreme was launched in Pakistan in 1984. The brand was extremely successful from its very inception due to its outstanding blend quality. Since then Brooke Bond Supreme has never looked back and today, is the largest selling tea brand in Pakistan. On average, 30 million cups of Supreme are consumed daily by people from all walks of life. 

Supreme 7 gms Supreme 36 gms Supreme 50 gms Supreme 125 gms

Supreme 250 gms Supreme 450 gms Supreme 500 gms Supreme 1 kg

Figure 12: Brooke Bond Supreme products available in Pakistan

Pearl Dust: Launched in 1984 this dust tea brand has become the largest Sindhi tea brand. Sindh land renown for its strong traditions & culture, passion, and hospitality is

Pearl Dust’s citadel – phenomena in the making. The Pearl logo has acquired an iconic status. Tea in Sindhi culture is taken very seriously; it is the cornerstone of hospitality and can make or break relationships. In a society where traditions run supreme, Pearl Dust gives the couple a chance to share a personal moment together. Pearl Dust is a testament to the couple’s relationship and their future. The brand is the market leader in in-home in the out of home segment, thanks to a strong ritual of tea café’s. 

Pearl Dust bag Pearl Dust sachet Pearl Dust 55g Pearl Dust 250g

Figure 13: Pearl dust products available in Pakistan

17

Tapal: The reason behind Tapal’s success in catching the hearts of the consumers is that, it has always been close to them. This has been possible because of its strong Brand Activation Activities.  These activities have added a new dimension to their marketing activities making them more attractive, exciting and interactive as possible.

Figure 14: Tapal Tea Company’s brands available in Pakistan

These activities not only reinforce Tapal as a national company but also assist all its other brands in having their desired impact wherever required. These activities are customized according the brand requirements to achieve maximum results. Not only this, these activities also provide the consumer with a 360-degree product experience, which not only helps in educating the consumer but also engages them to the brand. These activities cover Outdoor Billboards, Event Marketing, Road Shows (floats, mobile kitchens etc), Rural Development Programs, Weekly Bazaars, and Merchandizing of the products

18

Impact on Pakistan’s culture

Asserting Family ValueTea asserts family values by promoting quality family time. Every house hold in Pakistan has a tradition of having tea in the evening causing family members to sit together and take some time out for family. Couples have reported that Tea plays a pivotal role in bonding, as per tradition the female folk make and present tea to their spouse showing a sense of affection

SocializationIn cultures across Pakistan, tea is often had at high class social events, such as afternoon tea and the tea party. It may be consumed early in the day to heighten alertness; it contains theophylline and bound caffeine (sometimes called "theine"), although there are also decaffeinated teas.  Tea is usually a focal point for social gatherings and one source cites: "the first thing you will be offered when a guest at a Pakistani household is tea". There are tea ceremonies which have arisen in different cultures especially in Pathan and Sindhi ones being the most well known. Other examples are the Karachi tea ceremony which uses some traditional ways of preparing tea and serving to the guests. The event can be as small as a friends gathering or as big as marriage functions.

Non-Alcoholic EnvironmentLooking at some cultures who have adopted Tea as part of their culture have lower rates of alcohol addicts when compared to culture who opted for coffee. Offering tea rather than alcoholic drinks to visitors is the cultural norm in Pakistan. Tea has also entered the common idiom so much so that the term “Chai-Pani” which translates to tea, or tea and water usually refers to wages, tips or even bribery.

Tea is drunk from small glasses to enjoy it hot in addition to show its colour, with lumps of beetroot sugar. To a lesser extent than in other Muslim countries, tea replaces both alcohol and coffee as the social beverage. In Pakistan, the teens and tweens have their own location of Tea store where a group sits and socializes. This is also a meeting point and a nice activity for people living in a country where there is not much activity. Many claim that this activity demotes the youngsters from going to pubs and bars or consuming alcohol.

19

Figure 15: Tea party in Karachi (Pakistan)

CHAPTER # 3 (CONCLUSION & RECOMMENDATION)

20

ConclusionPursuant to the above statistics, the volume of tea import is increasing year by year but the rate of increase is decreasing. The government has always advertised that tea import bill of Pakistan is huge and causing trade deficit so measures need to be taken to reduce it. This conclusion is contra to the conclusion drawn from this report.

The tea import bill mounts to US$ 220 million in 2007 and the population is 164 million this implies a US$ 1.3/person (Rs 104/person) of tea in a year. The import share of tea is 13 % from total imports and trend analysis shows in increasing trend. This is mainly due to the economic boom from 2002- 2006 where consumer markets have grown steadily. Other factors for import bill to increase are currency devaluation and inflation. However this does not explain the deceleration in the rate of increase in import. The primary rationale for this is the increase in self cultivation of tea which sustained significant load of the local market. The National Tea Research Institute Mansehra plans to develop tea production technology including the selection of suitable varieties, standardization of agronomic practices and processing techniques. The institute is also making efforts to extend tea production technology to the prospective farmers

The consumer market in Pakistan does not have many branded teas (Tapal and Unilever being prominent). The market is liked with the cultural indulgence of tea and the brands are exploiting this for their sales campaigns. Companies have strategically launched different packaging to suit the needs of the different classes of people from poor to the rich. As tea contains a special place in Pakistani culture so it has a significant impact on bonding families and promoting a non-alcoholic environment.

21

RecommendationPakistan is well positioned and on the route of reduction of tea imports. The analysis shows that steps need to be taken to promote the self cultivation efforts already underway in Pakistan as this has the following advantages:

1. The import bill is reduced thus reducing trade deficit2. Irrigation land is increased 3. More opportunities for farmers with better returns4. Urban markets will no longer be dominated by few big players5. Local economy will thrive as money revolves locally

Import can not be eliminated completely as the cultural significance of Tea causes people to get the best markets has to offer. Kenyan teas taste better than most teas available therefore they will continue to hold its market share but increase in import of tea from India and Bangladesh can achieve better results.

22

BIBLIOGRAPHYEncyclopedia Britannica (2008):

http://www.britannica.comWikipedia:

http://en.wikipedia.orgPakistan Agricultural Research Council:

http://www.parc.gov.pk/ntri.htmlThe Financial Express: Retrieved on 2008-12-05

http://www.financialexpress.com/news/Tea-industry-Just-the-right-blend/181433/0Pak team moots single tea market in Asia:

http://www.rediff.com/money/2003/sep/27upasi1.htmDepartment of Foreign Affairs and Trade:

http://www.dfat.gov.au/publications/agrifoodasia/vIII.htmlA 2007 study published in the European Heart Journal

certain beneficial effects of tea may be lost through the addition of milk . [53] West Word (Guffey reference)

http://www.westwords.com/guffey/student.htmMarry Ellen Guffey Website

http://www.meguffey.com

23