By Nandini Goswami
Tea happens to be the second most widely consumed drink worldwide after water. Spreading across a wide spectrum of product forms, its offerings range from the exotic black, to the green herbal and the plain liquoring. With 3,000 different varieties of tea grown around the world, the beverage, works well with food much as the way wine does.

Today, even the US, a hardcore coffee drinking country considers tea as a `feel good’ drink that is riding high in the beverage market.

The 90’s has witnessed rapid changes in the world economy, and marketing has gained much sophistication as well. And tea has not been left out of all this. Multinational tea companies have evolved strategies to keep pace with the changes in marketplace and consolidate their marketshare globally. Value-additions through changes in the product forms, packaging innovations, delivery systems, promotional policies and marketing tie-ups have been part of the winning formula in the international market.

Product forms: Shift from the conventional
Value-additions have been innumerable. Tea manufacturers have experimented with tastes to counter the growing competition from other beverages such as coffee and the profusion of soft drink products. Tea has undergone a shift in its image in many markets. There has been a shift in the product form from hot to cold, from the conservative to the flavoured, from sheer cuppage to convenience. And, global companies have cashed in on this trend.

Tea bags, the most common form of value-addition, dominates the world market. Almost 75 per cent of the UK tea drinking population prefers tea bags square, tagged, round, and pyramid-shaped bags for a convenient brew. Tetley remains the market leader in tea bags as it had been since the introduction of tea bags in the 1940s.

Significant innovations have been introduced in the instant tea segment since the arrival of tea bags in the 1990s. Brook Bond launched its freeze-dried tea granules. Since then, the success of instant tea has been phenomenal an answer to the changing needs of the consumer. Very common in the US, instant tea has also caught on in more conventional markets like Europe as well.

Product innovations have continued with introduction of iced tea, speciality and gourmet tea in the ready-to-drink category or more commonly known as the RTD market. In the US, where this category has grown by leaps and bounds, the RTD tea targets a whole new generation of young Americans for whom the perception of tea is no longer sippping a delicate beverage is seen as a refreshing beverage of choice.

Flavoured tea also has much potential. In fact, big flavour companies like Medallion Flavours, Robertet Flavours and others have predicted that the entire tea category including traditional, herbal, botanical or flavoured are expected to grow. Many flavours liquid and granulated have been introduced like fruit flavours including raspberry, strawberry, bergamont, vanilla, yellow passion, lemon, honey, spiced, pear, flavours, etc.

Packaging: One of the most important Ps of marketing
Packaging, a major driving force in any marketing success story, remains the same for the tea market as well. Today, the global marketplace demands brands that are quickly recognised by the consumer. As marketing expert Randy Altman says, If a high quality Darjeeling is packed in a bland ambiguous ill-defined falling apart package, the financial survival of the growing region is also at stake.

Large-sized retail packaging is also fast gaining ground in the world market. Two traditional centuries-old speciality tea companies Jacksons of Picadilly and Twinings have prominently sized tea packing and selling around the globe. Assortment packaging has also caught the fancy of tea manufacturers around the world.

Many tea companies carry up to 10 lines of samplers. To create a separate market demand for each line, assorted package contents are often selected from one major category of tea including black tea varieties, fruit-flavoured, greener oolong, all herbal varieties, etc. Bigelow, Twinings and Stash Tea offer a whole range of assortments.

Delivery systems: A promotion to widen reach
With a wider marketing reach, the need to gear up the delivery system to cater to the changing consumer markets has assumed prime importance. Selling points and establishments devoted to tea drinking is reflected in the springing up of tea houses (eg., Lipton Teahouse) which offers a whole range of tea from around the world which is served hot or cold or in carry packs in an ambience that combines the traditional with the trendy.

Meanwhile, the more sophisticated tea companies trademark the tea accessories to protect the link between the accessory and the company’s own branded tea. Tea wares and accessories ranging from strains, tea caddies, lemon wedges, tea balls, tongs, and tea pots alongwith sub-categories like porcelain animals that pour cream out of their mouths, creams shaped like cows, ducks, rabbits, etc., represent the prosaic family-oriented market segment, dominated by the middle-class female retail buyer.

All this because tea wares and accessories do enhance the consumer’s feeling of tea being a part of life. The short-term outcome of this trend is additional income for tea companies and the long-term outcome a stronger consumer bonding to tea as the all-day long and everyday beverage.

In the US, Celestial Seasonings is the largest company selling a large number of tea-related products including books relating to cooking with tea. As part of the free upscale media publicity, Twinings has also publicised tea pots to promote its brand.

Promotion of the beverage does not end with tea consumption alone assorted gift packs for occasions, bath tea bags, fragrances and perfumes, and the connection between beauty and tea has uniquely positioned the beverage in many markets.

Marketing tie-ups: unique partnerships
Thus, with tea marketing becoming increasingly diffused as compared to other beverages like wine or soft drinks, it provides an opportunity as well as a challenge. Global tea companies have struck strategic partnerships to tap the full potential of the market. There have been corporate alliances in the form of co-branding, joint ventures (JVs) and partnerships to draw synergistic benefits.

Large companies have also forged alliances to work together as multi-million dollar JVs in the tea business combining the strong points of the parent companies.

The biggest example is the Pepsi-Lipton Tea Partnership, Inc. The whole idea is Lipton’s expansion in the ready-to-drink (RTD) tea market far exceeds its packaging manufacturing capacity. It is here that Pepsi could generate that extra revenue from its hugely capitalised bottling plants and maximise its extensive distribution system.

Pepsi, incidentally manufactures and distributes Lipton’s iced tea in glass through its C&G (convenience-stores and gas stations) distribution channel. Randy Altman says, The idea is that there are thousands of locations where people must simply stop because they drive an automobile, the mechanic’s phrase `maintaining fluid levels ‘can now apply to the consumer tea needs.

The Pepsi-Lipton goal is that one or more types of RTD Lipton will be sold wherever Pepsi is sold. The idea is that the partnership will expand the consumer consciousness of tea as a beverage option.

Co-branding is another concept that has caught on in recent times in the world market where the names of two different companies are prominently displayed on one label. Pre-printed packaging that displays co-branding tends to involve prestigious or successful companies.

For instance, Harrods co-brands with single estate origin Darjeeling tea such as Castelon, Margaret’s Hope, Ambootia and others to market its tea. Again Ambootia, for example, co-brands with the US company The Republic of Tea for a California trendy image, a far different image from Harrods.

According to Altman, complexity of co-branding exists as one partnership could intrude into any other co-branding by the same company, but with a different partner. The best way to handle this is restricting oneself to one national market, he says.

Cross-over, yet another marketing trend, uses the relatively marginal cost of adding a second line of beverage produced onto a pre-existing distribution, transportation and marketing network. For example, Starbucks with one of its alliances with Kraft Foods has opened 20,000 supermarkets. Their trademarked Tiazzi brand combining tea and a fruit drink has been immensely successful.

If negotiations for a buyout of the Tetley brand by Tata Tea fructifies, the partnering could bring together Tata’s strength in tea production manufacturing and distribution with Tetley’s strength in product innovation and marketing, says Tata Tea vice-chairman, RK Krishnakumar.

Small tea businesses in their efforts to survive in an era of globalisation have been considering the JV option. Improved telecommunications and Internet have helped strengthen links. Increasingly, high quality computer businesses are signing deals with tea companies, feels Altman.

The Republic of Tea has not only been co-branding with prestigious names like Disney and Barnes & Noble but has also bought licensed technology from Open Market Inc, to facilitate e-commerce. This company sells over the Net including through a web site co-branding with the Joe Muggs Coffee, he says.

The focus on tea worldwide has been phenomenal. Maybe, competition is not just against its own product forms, or coffee or other beverages or for that matter even soft drinks.

As one of the past presidents’ of the world’s most marketed brand Coca Cola has said, The goal for expansion of Coke’s marketshare was not merely against all other soft drinks but was to expand the competition beyond the one beverage category to include the total stomach share.