Tata Tea, HUL to slug it out for market & mind share

Written by Lalitha Srinivasan | Mumbai, Jul 30 | Updated: Aug 1 2008, 05:08am hrs
After fighting a pitched battle for market share in Q1, Tata Tea Ltd and Hindustan Unilever Ltd (HUL) are gearing up for yet another round of warfare. To sustain its volume leadership in the branded tea sector, Tata Tea is hiking its advertising budget in FY 09 to gain high visibility for its brands. With rising input costs, the company is also raising the prices of its tea brands across diverse categories by Rs 10 per kilo.

Meanwhile, Tata Tea's arch rival HUL is also planning to take a price hike for its tea brands -an increase of around Rs 8 to Rs 10, inform leading retailers in Mumbai.

Like Tata Tea, HUL is also planning to invest behind its brands in Q2 to drive volumes in competitive markets. In essence, Tata Tea and HUL will soon slug it out to gain market as well as mind share in the Rs 5,000-crore branded tea industry sector.

On the company's strategy, Sangeeta Talwar, executive director (marketing) Tata Tea Ltd said, "We are in the process of increasing the prices of our brands across the nation. Also, we will be hiking our ad spend for this fiscal.

"At present, Tata Tea enjoys volume leadership while HUL has value leadership in the highly competitive branded tea industry.

According to Talwar, Tata Tea has gained 2% market share as compared to its position in the previous year-both in volumes and value. "In 2007, our market share (volume) was 18.7 and now it stands at 20.9%. Also, we've added 2 % market share (value) from 19 to 21.2%," she added. In the United Kingdom, Tata Tea has taken a price hike to counter inflationary pressures.

In a bid to pump up volumes, both the players -- Tata Tea and HUL -- are heavily investing behind their brands, according to industry analysts. "In addition to high-voltage mass media ad campaigns, both players are investing in consumer promotions and ground activations," said an industry analyst based in Mumbai.

After seeing the response to its `Jago Re' ad campaign, Tata Tea is now going ahead with the same communication concept to woo tea drinkers across the nation. As for its cause- relating marketing strategy, Talwar said. "With the launch of `Tata Tea Arsenal Soccer Stars Programme' our intent is to identify and nurture latent talent at grass root level."

On the other hand, HUL has unleashed an aggressive consumer promotion to promote its flagship brand `Brooke Bond' in an increasingly competitive market. The tug of war between Tata Tea and HUL has truly begun in Q2.