Case Assignment # 1

March 18, 2018 | Author: shan | Category: Tea, Pakistan, Brand, Drink, Beverages



CASE ASSIGNMENT # 1INTRODUCTION Tapal is a shining example of a successful brand, born in Pakistan, competing neck and neck with a formidable multinational. Managing Director of Tapal Tea (Pvt.) Ltd., Aftab Tapal belongs to the third generation of a business family. A well-trained tea taster and tea connoisseur himself, Aftab introduced new tea concepts and developed a wide range of tea blends catering specifically to the tastes of people throughout Pakistan. BRIEF HISTORY Tapal is neither a rags-to-riches nor an overnight success story. Adam Ali Tapal, grandfather of Aftab Tapal, started the company in Karachi in 1947 from a small shop in Jodia Bazaar (now called Tapal House). With hard work, he innovated a new blend of leaf and dust. The multinationals laughed at his idea because they believed that leaf should not be blended with dust. But Adam Tapal did it and it became very popular in Karachi. In early 60s, the dominant players were the multinationals and only two local brands, Ispahani and Adams (Tapal tea). By that time another big group had already come and gone; that was Aroma, which belonged to the Adamjees. In 1977, Aftab Tapal joined the company and went into distribution, branding and packaging. His contribution to business was Danedar, a totally new category of tea. Tapal tea was the first to introduce it. It became so popular that almost all the tea companies started copying the blend and the grade. Even the multinationals joined the brand wagon and, like Tapal, they all started calling their version of the tea, Danedar. Danedar is a granular tea, slightly larger than tea leaf. Danedar is bolder and has more flavor, although it is not as strong as tea leaf. MISSION STATEMENT To provide a value added service to our customers with quality, reliable, and world-class service. Customer satisfaction is our number one priority. VISION STATEMENT To provide value and quality to our consumers; our aim is to constantly provide world class service for our customers, deliver value, and make Tapal a great place to work for our employees. We aim to have a reputation for innovative thinking in the areas that matter to our Our objective is to become a global brand and to be an innovative. 6. expertise and professionalism to enhance our clients‟ operations. We desire a high level of customer satisfaction and unflinching brand loyalty through commitment to quality and constant innovation. Hence. 4. marketing and research oriented company. middle and lower income groups. 2. Family Mixture Danedar Mazban Tapal Safari Chai Chenak Tezdum . OBJECTIVES To transform our competencies into the best advantage for our clients To offer quality services with integrity. 5.customers. Tapal‟s target market mainly consists of young adults and adults belonging to high. 3. To offer personalized services according to the clients‟ need BUSINESS SCOPE The Business we are in: We are in the market of Hot Beverages and specialize in the area of Black Tea. Who are our Customers? We have a diversified customer base ranging from urban to rural areas including various institutions. BRANDS PORTFOLIO 1. a joint venture between Lakson Group and Tata tea of India. Tetley tea. Tea consumption for the year 2010 in Pakistan is summarized below: . Mr. Green Tea Gulbahar TEA INDUSTRY IN PAKISTAN The history of tea drinking in the subcontinent can be traced far back. the ratio is (55:45) respectively. though both import tea from the same countries. while the second category of bulk importers sell packaged tea under brand names. that tea was introduced with the arrival of the British in the Subcontinent and became popular in the region during the British rule. Thomas Lipton was the first person who introduced the aromatic soothing leaves to the common man at an affordable price. This is one of the main reasons why “Lipton” even now is one of the most well known brands of tea in this part of the world. the colonials improved the quality and taste of tea. Tapal stands out as the major competitor for Unilever with 28% share. Bulk importers sell tea to retailers in loose form. It is said. Other players in industry are Kohinoor Tea Company. which is continuously decreasing. Pakistan's Tea Market Unbranded 45% Branded Branded 55% Unbranded Unilever enjoys leadership with approximately 54% of Pakistan's tea market. At present there are two kinds of tea available in the market : branded and unbranded (loose) tea. the importers are also of two types. 8. Therefore. Over a period of time. was introduced early this year and it has approximately 4% share.7. Vital Tea Company and Alpha Tea Company. 250 tons.550 Unbranded 69. Lakson Group entered into a joint venture with Indian Tata Group for introducing Tetley tea in Pakistan.000 Tetley 3. is not increasing. Pakistan is only below the United Kingdom and Russian Federation on global imports. . and Bangladesh. POLITICAL ENVIRONMENT Pakistan is the third largest consumer and importer of tea in the world. The branded market can be divided by each player as follows: Branded Tea Market in Pakistan Tapal 28% Tetley 4% Others 14% Unilever Tapal Tetley Others Unilever 54% INDUSTRY GROWTH Tea industry is growing at a slow rate almost equal to population growth rate. India.750 Total Consumption 155.000 Tapal 24.700 Others 11. More than half of Pakistan's tea demand is met by Kenya. Pakistan imports about 140. Kenya accounts for 65% of Pakistan‟s tea imports. Per capita tea consumption in Pakistan.000 This gives us branded tea market of approximately 85. which is about 1 kilogram.Tea Consumption in Pakistan (in tons) Unilever 46. Pakistan tea market is still very attractive which is apparent from the fact that Sri Lankan and Indian are continuously negotiating with Pakistani Government for liberalization of tea import. which exported 64 million kg to Pakistan in 1999 and other contributors to tea imports in Africa are Uganda. Burundi and Tanzania. The other major tea suppliers to Pakistan are Sri Lanka.000 tons of tea every year. 8 FY 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-09 .9 -1.) Ltd.6 -9. In July 2001. Deputy Managing Director of Tapal Tea (Pvt.8 169. Muhammadi Miabhoy.3 185.3 0.Relations between Pakistan and India have always affected trade between these two neighbors and so is the case for the trade of tea. when relations between the two countries improved.6 206. Speaking in a seminar on Intellectual Property Rights in Pakistan for Journalists. and tea imports form a significant portion of our total import bill and it is shown as a separate item in SBP Annual Report & Economic survey of Pakistan.4 -1. Pakistan is the third largest importer of tea. said that tea smuggling had shot up 46% in 2002 due to the high import duty on the commodity. was hoping to grab a larger slice of the huge Pakistani tea market.6 -24.6 69. India. Government of Pakistan has also levied import duties on tea imports to earn revenue.8 222.5 -21. ECONOMIC ENVIRONMENT As mentioned earlier.7 210. High import duties have led to sharp increase in smuggled tea. But the summit was a failure and both leaders were unable to reach a consensus.3 226. Indian Industrialists pursued Indian Prime Minister Vajpayee to put trade ties on top of the agenda.. when President Musharraf visited India. the world's biggest tea producer. But in 2003. Lakson Group entered into a joint venture with Indian Tata Group for introducing Tetley tea in Pakistan. From this one can conclude that how much foreign exchange burden tea imports have on country‟s balance -of-payments.9 156.7 10.5 -5.7 14.5 133. One official of the Pakistan Tea Association said the Rs 28 billion local tea industry is fast losing its market share to the smuggled tea Tea Import Bill (Value in million US$) Value Percent change 187. Tea exports to Pakistan were a primary item in those trade talks. India is always keen to enter Pakistani tea market because prices are slightly low due to no -freight charges.1 172. 98 40. C. and digital scales for quality blending.18 45.Some significant developments in Pakistan‟s tea industry during the last decade are follows:  Government slashed customs duty on tea import from 10% to zero in Federal Budget 2004-05 as remedial measure against smuggled tea. Advent of new machines for better blending and packaging have not affected industry in terms of consumption patterns. green tea and flavored tea. Tea bags have given convenience and . GoP. per capita consumption of tea in Pakistan is not increasing and some marketers say that its growth is stagnant.45 43.8 30.). SOCIAL ENVIRONMENT Tea is the cheapest and most popular beverage that is serve d at both professional and social gatherings all over the world. However. But it is yet to be finalized and implemented. In Pakistan it is counted as a staple food item of common man and is an integral part of our culture and heritage.69 32. All players have made use of new technology. The FTA framework agreement was signed by the two sides in 2002 during the visit of President General Pervez Musharraf to Sri Lanka.  Pakistan and Sri Lanka signed a Free trade Agreement (FTA).0 26. Population by selective age groups (in percent) Less than 5 yrs Less than 10 yrs Less than 15 yrs Pakistan 14. Import of tea from Colombo stood at $4 million during the year 2002-03. The tea industry is also under tremendous pressure from substitutes (coffee.07 Source: Population Census Organization. as described earlier. Advent of tea bags has really changed the consumption patterns. industry pie size. TECHNOLOGICAL ENVIRONMENT Technological advancements do not have as significant an impact on the industry as other external factors have. It is perceived as a „grand pappy‟ drink by youngsters. Pakis tan has agreed to a demand by Sri Lanka to bring down the customs duty on tea to zero in exchange for zero rate export of rice and potatoes to Sri Lanka under the proposed treaty. Tea is not very popular among teens. industry growth rate etc. Statistics Division. Social and cultural factors are also changing the shape of industry. like Dilatometers and Q.06 Urban 13.4 Rural 15. machines for attractive packaging. soft drinks etc. Stagnation of tea industry can be judged by lots of consumer promotions especially by Lipton and introduction of tea variants like iced tea. particularly for population under 15 years. and it enjoys a strong distribution network. After five years the leased and scientifically developed land would be ready to initiate tea growing. is the first tea company to be awarded ISO 9002 quality certification. Unilever. tea bags are more popular than soft packs and sachets. approximately 140 million kg of tea is marketed annually in the country of which 110 million kg is met by imports while the rest of the 30 million kg demand is fed by smuggled channels. Tapal will help farmers get the land leased and bear all other expenses for cultivation. will be used for tea plantation. whose combined market share has shrunk from 60 million kg to 45 million kg during the same period.hygiene to consumers. Tapal's envious growth has come at the expense of its major multinational competitors. enjoys over 17 per cent or 22 million kilogram share of the total tea market annually. Tapal and its multinational rival. Development and market position of TAPAL Tapal. Putting the per capita tea consumption in Pakistan at about one kilogram. Of the 110 million kg regular imports. Tapal & PARC Tea Plantation Project  About 5 acres of land in the vicinity of National Tea Research Institute (NTRI) Shinkiari. Tapal is one of the best organized companies. In few segments. up from 10 million kilogram in 1990. In the first phase the seedlings and technical assistance will be provided by the NTRI. 70 million kg is branded while the loose market makes up the rest of the 40 million kg. The tea will be processed at the processing plant to be set up by the NTRI. which show promising demand for tea. as far as the quality controls are concerned. leaving the remaining 10 million kg for a number of other smaller companies. The company has enjoyed phenomenal growth particularly during the last decade. particularly those having a sizeable population of Pakistani expatriates who look forward to having Tapal tea. . Tapal is in the process of venturing into foreign markets. Brooke Bond and Lipton. In Pakistan. Tapal will buy the raw tea to be processed at NTRI tea-processing plant Shinkiari. together enjoy the biggest share of the branded market — 60 million kg. After the successful completion of the first phase of the project Tapal will then add on to the land area for tea cultivation. Tapal. the international symbol of highest quality standards. The company has already appointed a distributor in the UAE and is targeting many other markets in America and Europe. Mansehra. today. Identify and elaborate the Drivers of Change for the Tea market in Pakistan. Evaluate the Tea Industry in Pakistan based on Porter‟s Five Forces Model of Competition .QUESTIONS (Based on the case study): 1. 2. 3. Construct an EFAS for Tapal.
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