Tea bag Market & Trends in India – 2013 Tea & Coffee Festival

30th Sep, 2013 Askoka, New Delhi

SACHEN VERMASr Vice President – JV Gokal & Co. Pvt Ltd.

Tea Penetration – 2012 (All India)

0%10%20%30%40%50%60%70%80%90%

100%

96%86%

50%

Major Branded players in the Indian market

425 m kg Packaged tea Market dominated by HUL & Tata

Unilevers & Tata Global Market leaders with a total 40%+ market share

Strong Regional brands in many states trying hard to enter new markets

RTD share is 80 Cr & growing by 20% annum

Green tea accounts for share of 40 m kg in the 800 m kg tea market & growing @ 35% annually

Branded Tea segments

Economy49%

Popular30%

Premium21%

Annual value share break up

Local players32%

Regional players

26%

National players

42%

Growth

• As against CAGR of 6% in coffee the CAGR in tea is 3.3% as the penetration of tea is 90%

• As against Russia where the tea consumption in terms of volume is declining by 1% every year, in India the CAGR is impressive 3.3%

• Growth from tea parlours is not forthcoming as in coffee Industry. Café culture has not been successful due to perception value & tilt of youth towards coffee. As against over 3000 coffee retail outlets in India the no. of tea outlets is around 100.

• Probable entry of big marketers like ITC in branded teas within next year or two will offer consumers more options & shall be good for the growth of branded segment

Tea Bags Usage

• Tea bags account for about 12 percent of the volume of world consumption & in terms of Value it is much higher

• Tea bags are very Popular in Europe, US, CIS, Middle East, Australia & Africa

• Tea bags revolutionised tea brewing, Now volumes look set to grow as tea drinkers reach for Convenience, Innovation & flavours

• In India tea bag growth is @ 10% annum via vol. though growth of flavoured tea bags is estimated @ 18% annum

• Tea bag in India accounts for annual sales turnover of Rs 450 cr ie. 4% of the total tea share in terms of Value

Global tea bag consumption

UK Germany USA Russia

96% 92%

65% 56%

Tea Bag Share – India (In volume)

Packet tea98%

Tea bags 2%

Tea Bag Share – India (In value)

Packet tea96%

Tea bags 4%

Tea bags Statistics 2012

Domestic Consumption – 8000 mt/annum

Annual Growth – 10 %

Production – 16500 mt/annum

Exports – 8500 mt

In Organised retail - Private label tea sale is 7% & tea bags sales is double that in General trade

Tea bag Exports

Exports – 8000 mt/annum

Major exporters – HUL, JV Gokal, Tata Global Beverages & Madhujayanti account for 85% of tea bag exports

Major Exports Market – Australia, CIS, US & Middle east

JV Gokal is the leading exporter in value added flavoured tea bags

Dynamics

• Emergence of market for premium tea bags • Increase in choice of flavours

• Upgraded packaging

• Unlike regular packet tea, the purchase of tea bags is more impulse-led

• Marketing strategy is focused on visibility and trial generation at the point of sale

• As against Packet tea consumption CAGR growth of 4% the CAGR in tea bags is 12%

• Target group for flavoured now moving on to the aspiring middle class

flavoured tea bags

• Flavoured teabags showing 18% growth annum

• Flavoured teabag annual consumption – 1000 mt

• Popular flavours - Ginger, cardamom, lemon, Earl grey, Mint and Tulsi

• Green tea getting popular in flavours like Mint, Lemon etc.

CONSUMER DRIVERS

• Wellness and convenience - These continue to play major roles for modern consumers. Consumers are now well aware for instance of the apparent health benefits of flavoured & green teas.

• New flavours and functionalities - Today’s consumers is more connected & savvy then ever, he want new flavours, functionality, interesting ingredients, and practical packaging that can be taken anywhere

• Convenience and portability - This shift is having a notable effect on tea bags with more intensely-flavoured blends and packaging solutions. Increasing appeal among the youth & growing middle class

• Emerging Consumer demand – This demand in tea bags specially in the premium segment is coming mainly from Metro’s & Class 1 cities. Premium segment is driving growth of teabag. OOH consumption in a major driver . {Middle markets (1-10 lac population) contribute 20% of country’s FMCG consumption but the consumer pull for tea bags has not been that exciting}

Tea bag Trends

• Modern trade format is a big boost to tea bags. Premium teas growing at a much faster rate in organised retail

• Packaging Innovations on their way. Newer formats available in Nylon pyramid tea bags. Over 10 brands available in the market in this new segment

• Companies now focusing on new products in the flavored tea, green tea, Organic tea, specialty tea and herbal infusion sectors

Appreciate Your Kind Cooperation!