MARKET TRENDS & OPPORTUNITIES

Pakistan imported about 8178.88 metric tonnes (MT) of black tea worth
$16.1 million during March 2009, as compared with 9096.48 metric tonnes in
March 2008 worth $18.5 million. According to these numbers provided by
PTA, imports witnessed a decline of 10 percent. The apparent reason for the
decreasing value of decline was a hike in the prices of commodities and
petrol prices in general; it is significant to mention over here that the
international tea prices also witnessed their peak in the past few months.
Probably that is the reason why the existing importers in the country could
not import the expected quantity of tea.

This decline did not really affect the consumption pattern of the population
as people consumed tea like they did in the past; the change in consumption
pattern did not show a descending trend because of the existence of
smuggled tea.

Pakistan’s per capita consumption of tea is 1 kg per annum, but the country
relies almost completely on imported tea. Its import volume is third highest
behind Russia and the United Kingdom. Pakistan imports tea from 21
countries and the major portion is imported from Kenya. During March, 58.81
percent of the total quantity of imported tea was bought from Kenya as
compared with 49.63 percent imported in the corresponding period last year.

According to an interview given to Daily Times by the President of Pakistan

Tea Association (PTA) Hanif Janoo, legal importers of the commodity are
facing a critical situation because of increase in smuggling over the past few
years. The country’s annual consumption of tea stood at 170-175 million kg,
the third highest in the world. Mr. Hanif Janoo also stated that only 100
million kg of tea is brought into the country through legal process while the
rest is smuggled under the garb of Afghan Transit Trade.
It is to be noted that the government is annually losing Rs 5 billion to Rs 5.5
billion revenue due to smuggling. This loss could easily be neutralized by
making the legal trade regime easy and by placing minimum duties on
regular imports as is the practice in almost all the tea-importing countries.
The set of solutions suggested by Mr. Janoo included the reduction of import
duty from 10 percent to zero, placing the black tea in negative list or putting
a quantity quota like India-Nepal agreement. Other than the suggestions
mentioned above regarding the steps that could be taken by the
government, it is imperative to mention that in-house production and
cultivation of tea leaves would also help us add more money to our local
exchequer. If we spend approximately Rs. 20 million just for the cause of
importing tea every month, we can easily calculate the amount we would
save by initiating the local production in the coming few years. The import
quantity would hence only increase with the increasing population.

PEST ANALYSIS:

The external macro environment in which a firm operates can be expressed

in terms of the following factors

Political
Economic
Social
Technological

PEST analysis is used to describe a framework for the analysis of these

macro environment factors.
POLITICAL FACTORS:
These factors and government interventions can make or break the industry.
The political factors have played a very benign role for the tea industy. The
political arena has a huge influence upon the regulations of the businesses,
and spending power of consumers and other businesses. The political
environment of Pakistan is relatively unstable in the current situation. The
investors are not willing to invest in Pakistan. However, WTO and trade
policies encourage the import of raw materials for Tea industry.

Tea Import Quota

It is an important consideration. Each year there is a certain quota on tea
import in total imports of Pakistan. Each player is given quota to import and
manufacture so one can say that it is a very regulated industry.

Diplomatic Relations
The relations with the tea producing nations and Pakistan play a vital role as
large part of imports comes from Kenya, but now Pakistan is also importing
tea from India.

Unstable Geographic Conditions

Pakistan is situated at a very critical and geographically strategic location.

Due to the uncertainty new investors are not ready to invest in Pakistan.
ECONOMIC FACTORS:

Economic conditions of an environment have a direct impact on the

development of any industry. The recent economic recession in the world has
had an impact on Pakistan’s economy as well.

Pakistan's economy mainly encompasses textiles, chemicals, food

processing, agriculture and other industries. In 2005, it was the third fastest
growing economy in Asia. Since the beginning of 2008, Pakistan's economic
outlook has taken a dramatic downturn. Security concerns stemming from
the nation's role in the War on Terror have created great instability and led to
a decline in FDI from a height of approximately $8 bn to $3.5bn for the
current fiscal year. Concurrently, the insurgency has forced massive capital
flight from Pakistan to the Gulf. Combined with high global commodity prices,
the dual impact has shocked Pakistan's economy, with gaping trade deficits,
high inflation and a crash in the value of the Rupee, which has fallen from
60-1 USD to over 80-1 USD in a few months. For the first time in years, it
may have to seek external funding as Balance of Payments support.
 Inflation
Inflation remains the biggest threat to the economy, jumping to more than
9% in 2005 before easing to 7.9% in 2006. In 2008, following the surge in
global petrol prices inflation in Pakistan has reached as high as 25.0%. The
central bank is pursuing tighter monetary policy while trying to preserve
growth. Foreign exchange reserves are bolstered by steady worker
remittances, but a growing current account deficit - driven by a widening
trade gap as import growth outstrips export expansion - could draw down
reserves and dampen GDP growth in the medium term.

Social Factors
The social and cultural influences on business vary from country to country. It
is very important that such factors are considered. People are socializing
more may it be events or casual visits to friends and family. Tea has always
been an integral part of Pakistani culture and rituals. It is understood that tea
would be present at all events.

Changing Trends
As work environment is becoming more stressful, people require different
forms of refreshment and intakes to increase their energy levels. This further
increase the intake of tea at workplaces, tea is not only just available to the
employees when needed but is also served twice a day in order to keep them
going. On the other hand, media expansion, growth of advertising as a
separate industry has resulted in greater exposure of all the brands and
masses. Hence social factors and changing mindsets have positively affected
this industry

Tea has always been acceptable in all social classes because of its usage.
Green tea has recently gained a lot of popularity due to health reasons and is
largely consumed. Another factor is the emergence of ice tea which is
indirectly competing with soft drinks.
TECHNOLOGICAL FACTORS:
Technology is important to gain an edge over competitors and it drives
globalization. Technology helps companies to reduce cost and achieve
economies of scale. Technology also leads to the development of new
products and sometimes even segments.

Tea manufacturers like Unilever and Tapal already manufacture tea of the
highest quality and they achieve it by the state of the art production facility
that they have. Lipton has also installed its own plant of Danedar tea
production.

PORTER’S FIVE FORCES:

Micahel Porter provided a framework that models an industry as being

influenced by five factors. The strategic business manager seeking to
develop an edge over rival firms can use this model to better understand the
industry in context in which the firm operates

C
O MPE
TI TIVE

RIVALRY
The intensity of competition in the tea industry is fairly high. There are few
established names like Lipton and Brooke Bond in the market. Now Tetley has
also been introduced in the market. So Tapal is competing with all of these
and also “Khulli Chai” as well. Talking about Lipton and Brooke Bond they are
brands of Unilever which is known to be a giant in the FMCG industry. It
seemed impossible that any local brand would even survive when competing
with them but Tapal proved them wrong through smart advertising and high
quality product it has already given Brooke Bond a run for its money and now
facing Lipton.

The rivalry can be observed when we look at the ad spend of these

companies. All of them advertise heavily to gain a competitive advantage
over the other.
THREAT OF NEW ENTRANTS
Threat of new entrants is high. This is evident by the immense growth in the
industry and government policies are also encouraging new Tea houses to
emerge on the scene. The taxes on import of tea are reduced thereby
decreasing the cost of production. It can be taken as positive sign by a
prospect player.

Initially it was thought that no company would survive against the giants of
Unilever but since Tapal people have started thinking that local brands can
do well and new players might decide to come into this market.
THREAT OF SUBSTITUTES
In this case tea will always remain an integral part of our culture. Having said
that there is a low switching cost associated with the trade off of substitutes.
In case of tea substitute is coffee and even cold drinks in some case.

It can easily be assumed that the demand for tea is nothing but increasing.
Currently majority of the consumers have not developed the taste for coffee
so it cannot be seen as a potential threat. Change in patterns can be
observed because consumers are shifting from normal tea to green tea but
again the broad category of the product remains the same.
BARGAINING POWER OF BUYERS
The bargaining power of buyers is low because of the high demand. Although
due to increased competition prices remain competitive but buyers have
little or no bargaining power. In case of tea an element of brand loyalty is
also associated so a consumer would want to use a same brand which gives
in his bargaining power. Also with tea people prefer quality over its price.
BARGAINING POWER OF SUPPLIERS
Bargaining Power of supplier is high because there are few suppliers of tea.
The reason why there are few is because there is a specific taste of tea that
consumers like so the manufacturers are forced to choose from few options.
In Pakistan tea is imported majorly from Kenya and Srilanka so the supplier is
at power to influence the price due to the limited availability of the raw tea.
In Pakistan recent plantation of tea farms may favor the local manufacturers
and foreign suppliers may find a reduction in their bargaining power.

BCG MATRIX:
STARS:
Lipton and Tapal have been placed as stars because they not only have
higher market shares as compared to the rest of the brands but also because
their business growth rate is higher and they believe in continuously
investing in their businesses for expansion purposes.

CASH COW:
Supreme is a cash cow because business growth wise, its progress is pretty
slow but as far as the market share is concerned, it absolutely has a greater
market share than Tetley or Vital for that matter; but at the same time its
share is not comparable to that of Tapal or Lipton. Therefore the option for
them to invest further in the business is also limited hence limiting their
growth opportunities.
QUESTION MARKS:
Tetley and Vital, both have the worst cash nightmares because they have the
least market share with demand still existing which could be met. The low
market share is an issue at their end and if they do not work on improving it
they might end up in the dog category in the near future. It is important for
them to further diversify their businesses if they want to sustain themselves
in the current market scenario.

CUSTOMER NEEDS
TARGET MARKET

The broad category of target market for Tapal would be all tea lovers.
However their diversified product line caters to various segments of
consumer who have varied taste preferences.

The most generic product can be the Tapal family mixture and specific would
be “Tapal Tez Dum” which is for the consumers who like strong color and
 flavor. Tapal Danedar provides the finest quality and is for the people who
like quality tea.

On the other hand Tapal Green Tea is for the health conscious consumers. So
we can say that Tapal is catering to almost all categories of Tea drinkers.
Their recent addition is Tapal iced tea which has not been very successful
because the consumers have not developed the taste for it.

In order to further understand the target market and their characteristics

below is the AIOD framework which provides a comprehensive overview:

AIOD FRAMEWORK

NEED/BENEFIT ACTIVITY INTEREST OPINION DEMOGRAPHICS COMPETITION

Refreshment Business TV shows, Friends, Age 18 onwards Brooke Bond,

, Sports, Magazine Relatives Gender: Male & Lipton and
Shoppin s, Female Tetley
g Communit
y
Health Sports, TV shows, Health Age 40 and Lipton and
Club Family magazin onwards Tetley
member Oriented, es, Gender: Male &
s, Job Communit friends Female

y
Energy College Family, Friends, Age 16 onwards Brooke Bond,
going Communit Families Gender: Male & Lipton and
y and Female Tetley, Vital
services, magazin
Eating out es
Socialization Social Magazine Relatives, Age 20 onwards Brooke Bond,
events, s, Fashion, Families, Gender: Male & Lipton and
Parties, Picnic TV Friends, Female Tetley
Club Futuristic
member
s

COMPETITIVE LANDSCAPE

COMPETITION:

LIPTON TEA
Lipton is one of the world's best-known and best-selling brands of both hot
leaf and ready-to-drink tea. It is currently owned by Unilever. Being one of
the world's greatest tea brands, making a big splash in the global beverages
market; it is the epitome of international quality. Lipton Yellow Label's
assurance of quality has helped it become the world's largest selling tea
brand.
Lipton is the global market leader in both leaf and ready-to-drink tea, giving
a global share of all tea-based beverages. In total non-alcoholic beverages,
Lipton is the global number two brand in terms of volume consumed per
annum.
Due to its size, Lipton is also a dominant player in tea expertise in the world.
The company's Lipton Institute of Tea researches tea's various health and
mental benefits, as well as tea growing, processing and tasting.
Apart from black leaf teas (with the long-standing Lipton Yellow Label brand),
the company also markets a large range of other varieties, both in leaf tea as
well as ready-to-drink format. These include green teas, black flavoured teas,
(herbal) infusions, Lipton Linea ('slimming tea') in Europe and Lipton Milk Tea
in various Asian markets. Apart from Lipton Ice Tea, none of their products
are available for retail in the United Kingdom. In a number of markets,
including Japan, Russia and Australia, the company is advertising the
benefits of theanine (which is naturally present in Lipton teas), which is said
to have psychoactive properties.
LIPTON PRODUCTS:
Lipton's main pillar brands are Lipton Yellow Label and Lipton Iced Tea. Lipton
Yellow Label has been sold since 1890 and is sold in 150 countries. Lipton
Iced Tea has been sold since 1972 and is available in more than 60 countries.
Its ready to drink canned and bottled varieties are marketed through two
joint-ventures with Pepsico International. In 2008 the brand launched Lipton
Linea in Western Europe, a green tea variety with a higher level of catechins,
which the company claims can help one to lose weight.

Lipton Yellow Label sachet

Lipton Yellow Label pack

Jar

Lipton green tea

VITAL TEA:
Vital tea is a key brand of Eastern products Pvt.ltd. The company was
established in 1991 by Haji Mohammad Yasin. It began with a small tea
factory and has developed into a local giant on the bane of a single promise,
which is consistent quality. At the core of the group’s success is the sincerity
and dedication of its team of highly qualified technical, financial and
marketing expert.
Vital Tea is increasingly becoming popular among tea-drinkers in Pakistan
due to its quality and comparatively lower prices. Its product range only
includes black tea.
The mission of the company is to produce the most reliable and valuable
products and services and to build core competency in the blending and
packaging technology. To increase sales in the existing markets, they are
focusing on providing customers with better value and to penetrate new
strategic business areas.
BROOKE BOND SUPREME:
Tea drinking is a social occasion in the context of Pakistani culture,
traditionally enjoyed with family and friends. It is the universal panacea
which relaxes and refreshes at the same time.
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.
TETLEY TEA:
Tetley, a fully-owned subsidiary of Tata Tea Limited, is the world's second
largest manufacturer and distributor of tea. Owned by India's Tata Group,
Tetley's manufacturing and distribution business is spread across 40
countries and sells over 60 branded tea bags. It is the largest tea company in
the United Kingdom and Canada and the second largest in the United States
by volume.
After Tetley was purchased by the Tata Group in 2000, most of its business in
Asia has been integrated with Tata Tea and the company plans to completely
integrate its worldwide business with Tata Tea by 2006. The new merged
group, Tata Tea Group, is the second largest tea brand in the world after
Unilever.

SWOT ANALYSIS:
 Strengths Weaknesses Opportunities Threats
1. Strong 1. 1. Relying 1.Decrease in 1.Competito
brand name excessively imports by rs gaining
2. Strong on Sindh cultivating tea on market
distribution sales their own lands share in
network locally other
2.Neglecting some
3. Extensive provinces
of the brands in the
product line
portfolio; e.g. 2. Marketing
4. Consistent
“Gulbahar Green in rural 2. Due to
quality
Tea”, Jasmine Green areas the black
5. Loyal
Tea, Chenak Dust market,
customer
etc. 3. Overseas smuggled
base in
Growth tea is
Sindh
through available at
6. Pioneers in
increasing cheaper
soft
export of prices
packaging
Tapal in
many
countries

4. Sponsorshi
ps

LIPTON 1. Global 1.Reduction in R & D 1. Changing 1.Decrease

brand 5. consumer in revenue
recognition preferences
2. Strong 2. Increasing need 2.Tougher
relationship for healthy business
with products climate
retailers
3. Economies
of scale
 FINANCIAL REVIEW

COMPANY PERFORMANCE:

During the year 2008, Tapal’s market share has increased. The market share
has risen as Tapal has won customers due to its strong taste and aroma
backed by innovative products, for instance, in the same year; Safari was re-
launched with the aim of ‘revolutionizing the taste buds of consumers with a
stronger blend of tea’1. Tapal has engaged in extensive promotion of its
products. Another factor driving sales is relatively less prices.

The increase in market share is evident from its increase in sales. Tapal has
shown an increase of about 29% in sale revenue. This has been primarily

1
Daily News, Tapal tea brand safari launched in Pakistan, Available from www at
<http://www.daily.pk/business/businessnews/3434-tapal-tea-brand-safari-launched-in-
pakistan.html>
brought about by the rise in the sales volume. The gross profits will be
affected by import duties and taxes. The international increase in tea prices
will hit the cost of production. Similarly, the costs will rise due to higher cost
of electricity and fuel. Since Tapal engages in quite a few marketing
campaigns, the operating costs will include a higher outlay for advertising
and promotion. Apart from this, Tapal is continuously innovating so the R&D
expenditure will jack up operating expenses. Further, distribution costs will
be another major expenditure. All this will determine the profits for the year
which may be moderate due to increased sales revenue and might even
show an increase compared to the previous year’s profit.

PRODUCT PERFORMANCE:

The performance of Tapal’s products can be gauged from the fact that they
are independent and established brands bringing in revenues for the
company from their respective target markets. More than the price, the
brands are driven by the quality of tea. Though the prices are comparatively
less, there is no compromise on quality.

After Tapal’s unique Family Mixture became Karachi’s largest selling brand,
the company was encouraged to innovate further. As a result an entirely new
category brand called Danedar was created and launched. Tapal Danedar
became the country’s largest selling tea brand with a loyal following, which
shows that Tapal has been successful in creating a strong Brand Image
amongst its consumers.

Tapal’s Iced Tea was, however, not an instant success. People were not
inclined towards the taste and concept of iced tea. Still the company
continues to invest hope in the product line and has recently introduced an
iced powder tea. As opposed to this, Green Tea has been a massive success
mainly because people are getting health conscious. Perhaps this aspect of a
shift towards a healthier lifestyle is what has driven Tapal to invest more
resources in the Iced Tea segment.

Tapal also ensures that there is greater availability of its products which will
then ensure satisfied customers (due to convenience provided) and smooth
sales. Thus the company caters to its customers by providing Tapal Danedar
and Family Mixtures to more than 140,000 outlets in Pakistan, which include
superstores, department stores, general stores, medical stores, paan walas,
grocery stores, merchants, etc. grocery stores and merchants. Together
these provide 80% volume of the tea sales2.

CORPORATE STRATEGY

Company Introduction

At the time of partition in 1947, Mr. Adam Ali Tapal bought a tea store in Jodia
Bazar from a Hindu who was then migrating to India. At the time of
establishment, Tapal faced furious competition in the industry from Lipton,
Brook Bond, M. Isphany and loose tea available in Jodia Bazar. However Mr.
Adam Ali Tapal stood steadfast against this tough competition and
uncertainty (such as change in government setup, quota system, tea not
grown here, import restrictions etc) in the market because he saw an
opportunity for his company in the market.

The shop in Jodia Bazar existed until the 1970 when the third generation of
the Tapal family, Mr. Aftab Tapal, the current CEO joined the company. After
studying abroad, Aftab Tapal returned to Pakistan to introduce professional
management and unique production ideas to the business. A well trained tea

2
Report on Tapal Tea, Available at <http://doureport.com/index.php?topic=65.msg165>
taster and tea specialist himself, Aftab Tapal introduced new tea concepts
and developed a wide range of tea blends catering specifically to the tastes
of people throughout Pakistan. He believed that they should reach out to the
customers instead of the customers coming to them.

Making a modest beginning over half a century back, today Tapal has
become the largest, 100%; Pakistani owned Tea Company in the country. It
has modern tea blending and packaging factories, warehouses equipped with
state-of-the-art equipment and a team of highly dynamic professionals
headed by Aftab Tapal himself. He was the first to introduce soft packs in the
country. He developed an entirely new brand and category- Tapal’s Family
Mixture (the mixture of tea & dust). Mr. Aftab Tapal was the first to invent the
highly successful brand Danedar Leaf Blend.

In December 1997, Tapal Tea became the first Pakistani Tea Company to earn
the ISO-9001 certification: a symbol of the highest international quality
standards. Again in December 2000, Tapal acquired the ISO-9001: 2000
certification, making it one of the first few companies in the world to achieve
this milestone. In addition to the standard requirements, the ISO-9001: 2000
certification system includes requirements for environment improvement,
concepts of TQM (continuous improvement) with major emphasis on
consumer requirements and satisfaction.

Even today, the company looks out for opportunities prevailing in the
market. Very recently, they decided to diversify into cold beverages and seek
to make this a separate business unit of the company.

VALUES AT TAPAL:

As far as creativity is concerned, Tapal has been able to fulfill its commitment
because of introducing the creative products like Ice Tea and Ice Tea Powder.
By doing so they sure have also diversified into a business that actually
compliments their core business: Tea. Quality wise Tapal’s products have
always excelled within their range of competitors and they have been able to
sustain quite a lot of loyal customers.

In pursuit of commitment, there are asset of shared values that the

employees of Tapal adopt so as to fulfill their commitment to their vision &
mission.

• Trust in each other

• Outstanding quality
• Passion for creativity
• Leadership
• Together everyone achieves more

A commitment to quality3
"Never compromise on quality" has been the motto at Tapal since the very
beginning. This commitment to quality has resulted in a high level of
customer satisfaction and unflinching brand loyalty. In December 1997, Tapal
Tea became the first Pakistani Tea Company to earn the ISO-9001
certification: a symbol of the highest international quality standards. Again in
December 2000, Tapal acquired the ISO9001: 2000 certification, making it
one of the first few companies in the world to achieve this milestone. In
addition to the standard requirements, the ISO9001: 2000 certification
system includes requirements for environment improvement, concepts of
TQM (continuous improvement) with major emphasis on consumer
requirements and satisfaction.

TAPAL'S QUALITY POLICY

The Management and the employees of Tapal Tea (Pvt.) Ltd. are committed:

To produce products that meet the customer's requirements &

expectations.

3
http://www.scribd.com/word/full/13768143?access_key=key-2lzsu8nbokcw4cp95tzg
 To fulfill the requirements and effectiveness of the quality management
system through continual improvements.
By constantly reviewing / updating the relevant quality objectives of
products & processes.
To participate as teams or individually towards the improvement of
processes, personnel, environment & ethical values.

Leader in innovation

Always on the move, Tapal Tea is honored to have taken the lead in a number
of areas in the tea industry. Tapal has been:

The first to introduce soft packs in the country.

The first tea company to introduce metal-free tea bags.
The first to develop an entirely new blend and category-Tapal Family
Mixture (the mixture of leaf & dust).
The first to invent the highly successful brand Danedar Leaf Blend.
The first to market Kenya teas in Pakistan.
The first tea company to be awarded the ISO 9001/2000 Quality
Certification

Their commitment to quality and leadership skills can hence be judged from
the analysis presented above; Tapal is no doubt a national brand which has
been able to come up to the expectations of not only the consumers but the
management as well.

VISION

“To satisfy our stakeholders and as a guiding principle to our

business; be a benchmark for quality, creativity and ethical values.
To achieve leadership in all categories of our core business and
diversify in areas which compliment the core business.”

ANALYSIS:
The vision of Tapal clearly states its desire and commitment to innovation
and improvement in company practices and also in the way they serve their
customers. The core business of Tapal is manufacturing and selling of tea
products. They want to achieve excellence in all the markets in which their
products are competing. This shows their commitment to their focused
business area in which they want to achieve fineness and excellence.

CONS: The vision of Tapal tea does not state the company’s commitment to
satisfy its consumers through the provision of quality products in the market.
It does not explicitly explain the company’s mission to become the most
popular tea brand in the industry. The vision could also have stated that it is
a truly Pakistani company and thus remains committed to its Pakistani
consumers living in the country and abroad as well.

GROWTH PLANS
From its modest beginning as a family-owned retail outlet in Jodia Bazaar
Karachi, the biggest commodities market in the country, Tapal Tea (Private)
Limited today is the largest wholly-owned Pakistani tea packaging and
marketing company.
PHENOMENAL GROWTH
Tapal tea company has enjoyed a phenomenal growth rate particularly
during the last decade to expand its base in the branded market which for
long were dominated by multinational competitors. Tapal today enjoys over
17 per cent or 22 million kilogram share of the total tea market annually up
from 10 million kilogram in 1990. Tapal's envious growth has come at the
expense of its multinational competitors, Brooke Bond and Lipton brands,
whose combined market share has shrunk from 60 million kg to 45 million kg
during the same period according to the General Manager Finance and
Corporate Services of Tapal Y.H. Thara told PAGE.
Tapal Tea looks forward to even greater progress and innovation in the years
to come. It will remain committed to providing its consumers with the
highest quality products and improving their lives in whatever little way
possible.
INCREASE IN PRODUCT LINE:
Tapal has always been keen on introducing new products (tea) in the market.
The wide variety of teas available under the umbrella of Tapal are a sure proof
of this. Recently Tapal Iced tea in Lemon & lime and peach flavour was
introduced in the market.
As the product line of Tapal is wider than any of its competitors; Lipton, Brooke
Bond Tetley and Vital tea; Tapal should be able to keep up with this pace of
innovation in order to stay ahead of competition in the industry.

INCREASE IN PROMOTIONAL ACTIVITIES:

Tapal has always been proactive in marketing its products to its consumers
and hence the popularity of the brand. However with the increase in
competition and an increase in tea consumption the promotional activities
targeted directly at the consumers should be increased proportionately.
Marketing should be increased and the quality should be improved in the
form of Sales promotions, sponsorship of events etc.
INCREASE IN EXPORTS:
Tapal is already exporting tea to a number of countries and is recognized as
a quality brand internationally. However expanding its exports to many other
countries would bring substantial revenue to the company as well as
bringing global recognition to the company and its brands.
Tapal is already in the process of venturing into more foreign markets,
particularly those which have a sizeable population of Pakistani expatriates.
UAE and Dubai have proved to be profitable potential markets for the brand
as both these countries have huge numbers of Pakistan nationals living
there. The company is targeting many other markets in America and Europe
which show great demand for a brand of strong tea as such Tapal.
CULTIVATION PROJECT
Tapal leased about 5 acres of land for five years for the purpose of setting up
cultivation areas for tea in the year 2000. The land is located in the vicinity
of National Tea Research Institute (NTRI) Shinkiari, Mansehra. The company
paid the rent and bore the costs of developing these land the technical
support for which was provided by a company known as NTRI. Once the land
is developed, Tapal will hand the land back to the participating farmers and
treat development costs as interest-free loans to be payable over the next
five years. This project will encourage cultivation of tea locally and will result
in substantial cost cutting for the company. At present a huge amount of Rs
10 billion is spent in foreign exchange on tea import. The project will
certainly help reduce the tea import bill. Tapal intends to increase the area
of tea cultivation in the future.
 PRODUCT STRATEGY

PRODUCT FINANCIAL PLANS

The financial plans for Tapal for the net three quarters of the year 2009 as
forecasted by the group are given below:

Sales by Tapal in The market shares for both Unilever and Tapal are available for
2007 2007 while the actual sales for Unilever are obtained from its
financial statements of 2008. Sales for Tapal and Unilever are
assumed to be in the same proportion as their market shares;
sales for Tapal in 2007 have been derived by using the market
shares of the two companies and the stated sales figure for
Unilever.

Sales by Tapal in Since the performance of Tapal has picked up, its market share
2008 for 2008 has risen by 2 percent. Contrary to this, the share of
Unilever has decreased.

Forecasted In order to forecast Tapal’s revenue-based performance for the

Quarterly Sales year 2009, the quarterly sales are estimated according to the
for Tapal in 2009 prior data and apt seasonal demand. The sales figure for the first
quarter of year 2008 for Unilever is 3,130,276,000 which are
27% of the entire sales for the same year. Accordingly this
percentage is applied on the sales revenue of Tapal for the year
2008 and quarterly sales for the first year of the last quarter turn
out to be 3,238,576,329.

The base for quarterly sales is derived from the sales estimated
and calculated for the four quarters of the year 2008. Due to
fluctuations in seasonal demand, it is deduced that the share of
sales in the first quarter of year 2008 is 27% while in the second
quarter this share is estimated to fall to 25% with the arrival of
summers. However, as Tapal has iced tea brands, the share does
not fall significantly. During the third quarter, the share of sales
is. It is assumed that the same share of 27% will continue in the
last quarter as the consumption of tea increases during winters.
It has been borne in mind that the habitual trend in sales will
continue because there are loyal customers of Tapal who
consume tea regardless of the seasonal change.

In order to forecast sales for the first quarter of year 2009, it is

assumed that the previous quarter’s sales would increase by 2%
due to Tapal’s inherent competencies and the winter season. In
the second quarter, it is predicted that the sales will rise by 4%
since Tapal has introduced a new product especially apt for the
summer season: Tapal Ice Tea Powder. It is supposedly aimed at
health conscious individuals who can enjoy a refreshing and
nutritional drink. The sales will experience a greater growth in
this quarter as people would purchase the product
unprecedented in the market. The initial purchases will drive
sales growth. In the third quarter the sale percentage of 21%
increases by 5%. The sale growth is not phenomenal as it is
assumed that the product will not have consistent and increased
sales as earlier Iced Drinks have not been readily accepted by
customers. The customers have still not developed taste for iced
drink as they cannot relate to tea in that context. In addition to
this, tea consumption somewhat decreases during Ramadan. The
 last quarter is predicted to witness a rise of 7% in sales. This will
be attributed to the winter season. These increases are added to
the proportionate sales of the quarters for the year 2008. These
quarterly sales for 2008 are obtained from the earlier shares of
sales deduced for the same year. The overall increase is lower
than that of previous year as it is being assumed that with more
competition in the form of Tetley, the growth will not continue as
had in the past.

ASSUMPTIONS

The above financial plans ave been formulated keeping in mind some assumptions
which are h=given as below:

Demand for tea is expected to rise.

It is assumed that the prominent change in the sales is due to the
difference in sales volume rather than sale prices.
Unilever and Tapal are compared as they take up a major chunk of the
market and jointly own the biggest share of the branded market. This is
evident from published data: 60 million kg out of the 70 million kg of
the branded tea market during 20004.
Market share is taken as the basis for predicting sales for the year
2009.

4
A. M. Syed, Tapal Holds Strong Market Position, Available from world wide web at
<http://www.pakistaneconomist.com/issue2000/issue46/i&e1.htm>
UNIQUE SELLING PROPOSITION

The main reason behind tapal’s success is that it has localized its taste. It
manufactures its product according to the taste and requirements of the
market it is catering.

Another 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.

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 i.e. floats, mobile kitchens
etc, Rural Development Programs, Weekly Bazaars, and Merchandizing of the
products.

PRODUCTS, THEMES & PRICING

PRODUCT:

Tapal has introduced new tea concepts and developed under its product
range, a wide range of tea blends catering specifically to the tastes of people
throughout
Pakistan. Today Tapal has become the largest, 100% Pakistani owned Tea
Company in
the country. The saga of Tapal tea started with its formulation of a unique tea
blend, which was later named Tapal family mixture, that led to the brand
name of Tapal tea becoming a hot favorite, and eventually the largest selling
tea brand in Pakistan.
The current product line of Tapal consists of the following brands:

TAPAL DANEDAR:

As evident by its name the blend consists of well made premium quality
Kenyan BP1s (granules). Each component of Danedar blend is carefully
selected to provide a lovely looking leaf appearance that is neat, black,
grainy and fairly even.

Danedar blend is an excellent combination of lively taste and distinct flavor

of world’s best high grown teas, which produces satisfying cup of tea for the
consumers who like aromatic/flavor tea.
The most important feature of this top quality Danedar brand is that the
characteristics of a brewed cup remain intact even after a long time.
Simply, Danedar is a powerful brand and a great value product and there is
no real substitute of it.
TAPAL FAMILY MIXTURE:
Family mixture is a blend of high grown Kenyan primary leaf and dust grades
awhich are carefully selected for their rich colour, distinct flavor and a light
golden appearance. The leaf and dust grades enhance a faster infusion
guaranteeing the consumer a rich flavoury cup within a quick brewing time.
Only tea leaves which are low in moisture content is selected for Family
mixture in order to guarantee a long shelf life and a longer liveliness period
of the brewed tea.
CHENAK DUST:
Chenak dust is an economy tea embracing high grown flavoured teas which
are proportionally blended with medium grown Kenyan golden leaves. This
gives an all round cup of tea at a reasonably lower price.
Chenak Dust infuses quickly and gives a strong cup of tea within a very short
time. This brand is popular with actual tea lovers who love drinking tea
several times a day because of its low price.
TAPAL GREEN TEA:

Tapal Shades of Green is an aromatic combination of the finest carefully

selected tea leaves and the tantalizing freshness of natural Jasmine, Elaichi
and Lemon.

•Jasmine Green tea

Infused with Jasmine flowers, Jasmine Green Tea opens a new window to your
mind. Its vibrant essence breathes new life into your sense with a distinct
soothing effect. Jasmine Green Tea is a winning combination of alluring
fragrance and health.

• Elaichi Green tea

The earthy flavour of Elaichi Green Tea has a pulsating nature that lifts your
body to a new level of clarity giving you more revitalization.

• Lemon Green tea

Lemon Green Tea with its rich taste regenerates your soul. It is your perfect
soul mate to indulge in a rejuvenating experience of its refreshing essence.

TAPAL MEZBAN:

Tapal Mezban Dust has an attractive neat, black and grainy appearance. It is
the finest quality dust blend which is carefully selected for its quick liquoring
characteristics.
Only high grown Kenyan teas are used for this blend due to their high
concentration of flavour and strength. Mezban Dust has a smooth, thick and
full cup with an irresistible aroma making it a perfect cup at any time of the
day.

A small quantity of Mezban Dust makes several cups of tea, which makes it
both suitable for domestic use but even more for the hot tea shop consumers
who prefer a quick and strong cup of tea.

TEZDUM:
Tapal Tezdum with the fine looking leaf appearance is specially designed for
those consumers who like strong and aromatic and full of flavour cups.

A superior blend of high liquoring premium quality Pekoe Fanning Tea that
produces quick liquoring, thick and coloury cups.
GULBAHAR TEA

Tapal Gulbahar, the Chinese premium quality Green Tea blend is the favorite
green tea among all age group. Due to its numerous health benefits,
Gulbahar has become the best selling Green Tea brand in Pakistan. Tapal
Gulbahar is also the first choice for the popular Kashmiri Tea consumers.
TAPAL SPECIAL TEABAGS
The unique flavor of high grown leaves especially selected from the finest
tea gardens in the world make Tapal Special Teabags a treat at any time. The
combination of an extra strong blend with the convenience of environmental
friendly metal-free tea bags has made Tapal Special an instant hit with
consumers.
TAPAL SAFARI
Tapal Safari is a tea which has been serving its consumers for almost a
decade. It is made from the finest Kenya leaf teas and provides extra
cuppage of great tasting tea to its consumers. Tapal Safari chai is basically
aimed at adventurous and brave people.
TAPAL ICED TEA:
The super market culture has changed consumer purchase habits and the
youth today has ample choices in front of them, even when compared to 5
years ago. Increasingly they are becoming a huge market on their own.
Tapal wants to increasingly cater to the youth market and has done so with
the launch of Tapal Ice Tea. With Tapal ice tea, Tapal has literally set a new
precedent in the market. Tapal Ice Tea is not a new product but it is a first of
its kind in Pakistan.
Tapal ice tea is made for today's generation which loves to enjoy their life at
its fullest and chill out. Thirst-quenching and delicious, Ice Tea is pure and
satisfying. Made from real tea, it combines the goodness of tea antioxidants
with no preservatives, no artificial colors and only a small percentage of
sugar which is less than most regular soft drinks. Thus tapal Ice tea is a
refreshing addition to TAPAL’s popular product line of traditional teas.

PRICE:

Tapal never wanted to compromise on its quality so they adopted a value

based pricing and low price strategy. As Tapal specifically catering to
different segments of the market so its prices are based on its effective value
to customers relative to other products. Also the prices are different for
different SKU’s.

PRICING STRUCTURE:

The pricing structure for Tapal products as quoted by local general stores is
given below:
 PACKAGE SIZE PRICE (RS.)

Hard Package (100gms) Rs. 45

Hard Package (200gms) Rs. 85

Hard Package (400gms) Rs. 180

Hard Package (500gms) Rs. 205

Hard Package (1000gms) Rs. 415

PROMOTIONS

Tapal has been very active in advertising for each of its products in the
product-line. It has been using both BTL(Below the line) and ATL(Above the
line) for the purpose of promotion. Through BTL Tapal is focusing on display
racks, sign boards etc. mainly placed to different retailers for heavy
promotion against their competitors. The specific term used by TAPAL is
the MODERN TRADE so that they have an eye contact of the product with the
customer. In this they are using shelves to display their product in big stores
like METRO and MAKRO. Through ATL Tapal is focusing on broadcast and print
media promotion by placing ads on T.V and placing newspapers ads as well.
The success of Tapal’s promotion can be gauged by the fact that red which
was originally associated with Brooke Bond is now associated with Tapal.
Through their packaging and promotion they have simply taken the color
from Brooke Bond.

PLACEMENT:
CHANNELS OF DISTRIBUTION
The channel of distributions according to this brand Tapal Danedar is simply
as shown by the diagram as manufacturer to distributors who vary according
to geographical dispersion and then to retailer to final consumer. Tapal has a
great channel of distribution not only to this brand but also all other brands
that vary geographically according to consumer needs.
TAPAL has 5 main warehouses in Pakistan which are located in the following
cities.
Karachi
Hyderabad
Sukkur
Multan
Raiwind
From these warehouses the product move to the distributors as only in north
they have 207 distribution channels. And from these distributors the product
move to the next, which is retailer and then to the consumer. This is also one
of their strengths that they have a strong distribution channels. Tapal has a
countrywide sales & distribution network; the company has over 400
distributors from Karachi to Khyber operating nationwide.
In the beginning the company sole aim was to capture the tea market of
Karachi, as they were already in tea business here, only and then
strategically build there network to other cities of Pakistan. Tapal caters to its
customers by providing Tapal Danedar and Family Mixtures to more than
140,000 outlets in Pakistan, which include superstores, department stores,
general stores, medical stores, paan walas, grocery stores, merchants, etc.
Grocery stores and merchants together provide 80 percent; volume of the
tea sales.
 PRODUCT ROADMAPS & RELEASES

SALES SCHEDULES

The sales for the next three quarters of 2009 have already been discussed in
the product strategy section. The sales schedules for Tapal have been
forecasted to be as follows:
SALES FOR TAPAL DURING 2007-2009

2007 2008 2009

Q1 Q2 Q3 Q4 Total
Unilever Tapal Unilever Tapal Tapal
Market Share 43% 41% 42% 43%
Sales 9,782,641,000 9,327,634,442 11,715,780,000 11,994,727,143 3,303,347,855 3,118,629,057 2,644,837,335 3,465,276,672 12,532,090,919

QUARTERLY SALES FOR TAPAL DURING 2008-2009

 Sales in Q1 of 2008 for Unilever 3130276000
Percentage of Total Sales 27%

Quarterly Sales for Tapal in 2008

Q1 27% 3,238,576,329
Q2 25% 2,998,681,786
Q4 27% 2,518,892,700
Q3 21% 3,238,576,329

Forecasted Quarterly Sales for 2009

Percentage Increases
Q1 2% 3303347855
Q2 4% 3118629057
Q3 5% 2644837335
Q4 7% 3465276672

ASSUMED SALES IN REGIONS

As discussed earlier Tapal has five warehouses in different cities. It is

assumed that majority of their sales come from the area of Sind reason being
that it is a Karachi based company and the concept of Danedar originated
from Sind. This fact can further be substantiated by the fact that 3 of their 5
warehouses are located in Sind. So we have assumed the distribution as
follows:
http://www.brandsynario.com/webcast/3/qashif-effendi.aspx

http://www.scribd.com/doc/49295/smallholder-tea