REVOLUTIONIZING TEA CONSUMPTION

A SMALL & MEDIUM ENTERPRISE CASE STUDY

(Marketing & Business Development)

Submitted in the partial fulfillment of the requirement for the

award of degree in MASTERS OF BUSINESS ADMINISTRATION

SUBMITTED BY: MR. MANOJ KUMAR A

UNDER THE GUIDANCE OF: MR.M SATYENDHRA KUMAR

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 AN UNTAPPED TEA MARKET

Change in every walk of life is the growth of human civilization. Every industry
has seen its growth like in fashion, technology, landscapes, automobiles, food
& beverages. The only industry which calls for a growth is tea industry. It is the
age of health conscious people; where people are more and more aware of
eating the right food and remaining healthy. Tea the most important beverage
had by large chunk of the Indians is neglected in the area of growth. There are
no proper changes brought in consuming tea. People are still having the old
tea with no developments. But we can find a lot of changes and growth in the
other substitute which is coffee. Giants like star bucks, CCD’s which are spread
everywhere have brought in different varieties of coffees and their flavors, but
the tea consumption market is yet to be tapped. The market has brought in
some innovations like Tata Cha which is a tea café that deals with different
flavors of tea. The only change in tea known to people is green tea which is a
negligible portion of growth. This change can be brought in my bringing in
more awareness in the people of the different kinds of teas, their benefits.
90% of Indians start their day by consuming tea. The first intake which goes in
the body should be healthy.

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Questions:

1. What are the factors that cause hindrance in bringing in changes in tea
consumption?
2. What changes can be brought in consumption of tea?
3. Will tea remain common man’s beverage if changes are made?
4. What do you think will be the future of tea market?
5. Why the market is remained untapped?
6. How to penetrate in the market?
7. How should the competition be tackled?

EXECUTIVE SUMMARY

This is an original and a deep case study of a small scale enterprise.

It is segregated into two parts.

Part A states the facts and the background of the prevailing

business and Part B will state how these challenges can be
overcome easily using implementation of strategies and bring
about a revolution in the consumption of tea in the coming
decades.

Tea consumption as per climate of India is wrong because India is a

hot country; this habit was brought in by the British who ruled us
for 200 years because they were used to drinking tea and their
country had a cold climate; so they could not be without tea in
India though India had a hot climate; they also inculcated this habit

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in Indians so that their health detorates, and the tea we have is not
healthy but this revolutionary tea consump tion will break the old
way of consuming and bring in a healthy lifestyle in our people.
The old tea consumption will always add on to acidity and gas
problems as it has the poison of sugar and tea powder which is
boiled a minimum of 100 times before given to consumers. Hence
this project is considered as the need of the hour.

PART A

CONTEXT

This small & medium enterprise belongs to Mr. M. Surendra S/O M.

Bhaskar Rao has completed Inter at Sarada college
satyanarayanapuram, Vijayawada and pursued his diploma in hotel
management at Hyderabad. After completing his diploma he
marched on to his first business which was catering in railways. He
used to supply meals to the passengers who book ed from trains
through Whatsapp at Bhubaneswar, Tadepalligudem etc. He carried
on this business for one and half year as it was a contract business.

He later moved on to Vijayawada to make his fortune. He has a

friend named Mr.Ganta Srinivas Rao, even he was also interested in
doing hotel business on a small scale. This made them go in search
of place which was suitable financially and on the basis of
residential locality and feasibility. Hence they found out a land at
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sitarampuram, Vijayawada and this made them start their
collaborative venture where Surendra took up the tea management
and srinivas focused on food which went on to be called as Hotel
ANJANI Tea & Tiffins. Surendra paid 3 lakh rupees as security
deposit and started with the rent 10000 rupees in 2016.

MR.SURENDRA at the centre

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 STRATEGIES IMPLEMENTED

Initially he promoted his business by selling only tea, coffee &

special tea. There wasn’t any strategy of particular at the
beginning. Hence his business wasn’t kicking as his competitor
“good morning” hotels had captured the market share of that area
and his expenses were also burdening him.

This made him form a strategy to capture the market share of

“good morning hotels”. So he did research to increase his business.
His research went on for 3 months which included his visit to
Bhubaneswar, Chennai and he also learnt the preparation of green
tea and all different varieties of teas. From that he observed that
he could work on such teas in Vijayawada. He formed a niche
strategy and thought of introducing various new kinds of teas and
the preparation of those teas should be unique, natural & healthy.

This was his strategy.

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 INITIAL CHALLENGES ENCOUNTERED

 Stiff competition from “Good Morning Hotels” and nearby

small tea vendors.
 Nil market share.
 Limited customer footfalls.
 Little consumer awareness.
 Initial challenges of positioning his tea stall.
 Only few choices of products.
 No unique selling proposition.
 Lack of branding activities.
 Minimal daily cash inflows.
 Meeting working capital issues.

CHALLENGES AT PRESENT

Even after he started to offer many varieties at present and the

response has been positive; he is equipped with some challenges
like

 Retaining the customers

 Majority of the customers are repetitive; no new customers;
challenge to extend market share
 lack of promotional activities

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 challenge to scale up
 no separate identity
 As his business is increasing; the expenses are also increasing .
 Has to maintain good relations with the hotel owner .

OUTCOMES OF ACTIONS IMPLEMENTED

 Now he has faced the competition successfully .

 He has the majority of market share of that area.
 More customer footfalls than his competitors.
 Now offers 30 varieties of products.
 His USP is the ingredients and the quality of offering.
 Earns good revenue.
 Branding problem not solved.
 Needs more awareness.
 Now he has positioned his tea stall with his varieties of tea .
 Negligible working capital issues.

OUTCOMES OF PRESENT CHALLENGES

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 Succeeded in retaining & increasing the customers.
 Promotion done only to limited number of customers.
 Not able to curb the expenses.
 Separate identity not formed.
 Still hasn’t expanded.
 Cordial relationship with the hotel owner.

PART B

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 MY RESEARCH

TABLE OF CONTENTS:

 Introduction of a small scale enterprise…………………………… .. 11

 Small scale industry in India……………………………………………….. 18
 About our Tea crazy nation…………………………………………………. 28
 History of tea drinking in India………………………………………… … 30
 Current trends in tea consumption……………………………………. 36
 Best leading Chai startups in India…………………………………….. 40
 Challenges of small scale tea owners …………………………………. 47
 Objective of the study..……………………………………………………… . 48
 Research methodology………………………………………………………… 49
 Data collection…………………………………………………………………….. 51
 Data analysis…………………………………………………………………………. 63
 Suggestions & recommendations ………………………………………… 87
 References……………………………………………………………………………….89

INTRODUCTION OF A SMALL SCALE ENTERPRISE

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  In India, the enterprises have been classified broadly into two
categories.
o Manufacturing
o Services
 Both categories have been further classified into micro, small
& medium enterprises based on their investment on plant &
machinery or on equipment.
 The government of India has enacte d the micro, small &
medium enterprises development (MSMED) act on June 16,
2006.

Manufacturing Sector

Enterprises Investment in plant & machinery

Mi cro E n t erp ri s e s Do e s n ot e xc e ed tw en ty fi v e lakh ru p e e s

Mor e th an t w en ty fi v e lakh ru p e e s b u t d oe s n ot e xc e ed fi v e
S mal l E n t er p ri s e s cro re ru p e e s

Me d iu m Mor e th an f i v e c ror e ru p e e s b u t d o e s n ot ex c ee d te n c ror e

E n te rp r is e s ru p e e s

Service Sector

Enterprises Investment in equipments

Mi cro E n t erp ri s e s Do e s n ot e xc e ed ten la k h ru p e es :

S mal l E n t er p ri s e s Mor e t h an t en lak h ru p e e s b u t d o e s n o t ex ce ed two c ror e ru p ee s

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Me d iu m Mor e t h an t wo c ror e ru p e e s b u t d o e s n o t e xc e ed fi v e c ro re
E n te rp r is e s ru p e e s

Share of MSME in Manufacturing, Exports and Employment

sectors in India:

Sector Percentage(%) share

1 Manufacturing 45

2 Exports 40

3 Employment 69

IMPORTANCE OF MSME

1. Creates large scale employment :

Since the enterprises falling in this sector require low capital to

start the business, it creates huge employment opportunities for
many unemployed youth. India produces about 1.2 million
graduates per year, of the total number about 0.8 million are
engineers. And, there is no economy in the world that can provide
jobs to so many fresh graduates in one year. MSME is t he boon for
many of these fresh manpower.

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2. Economic stability in terms of Growth and leverage Exports :

MSME is a significant growth driver in India, with it contributing to

the tune of 8% to GDP. As mentioned in the table, Exports sector in
India constitutes about 40% of contribution from MSME alone.
Looking at the kind of contribution of MSME to manufacturing,
exports and employment, other sectors are also benefitting from
MSME. MNCs today are buying semi-finished and auxiliary products
from small enterprises, for example, buying of clutches, and brakes
by automobile companies. It helps create a linkage between MSME
and big companies, even after the implementation of the GST
40% msme sector also applied GST Registration which increases the
government revenue by 11%.

3. Encourages Inclusive Growth:

About 50% of wealth in India in owned by just 100 people which is

due to unequal distribution of wealth. Inclusive growth is on top of
the agenda of Ministry for Medium, and Small, and Medium sized
enterprises for several years. While poverty and deprivation are a
deterrent to the development of India, including marginalized
sections of society is a key challenge lying before the Ministry of
MSME.

4. Cheap Labour and minimum overhead:

In large scale organizations, one of the key challenges is to retain

the human resource through an effective human resource
management professional manager. Bu t in case of an MSME, the

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requirement of labour is less, and it does not need a highly skilled
labourer. Hence, the indirect expenses incurred by the owner are
also low.

5. Simple Management Structure for Enterprises :

MSMEs do not require a huge capital t o start. With limited

resources available within the control of the owner, decision -
making becomes easy and efficient. As in case of a large
corporation wherein a specialist is required for every departmental
functioning because of complex organizational s tructure, a small
enterprise does not need to hire an external specialist for its
management. The owner himself/herself can manage it. Therefore,
it can be run single-handedly.

6. Plays an important role in making “Make in India” possible :

Post the inception of ‘Make in India’, a signature initiative by the

prime minister of India, the process of incorporating a new
business has been made easy. Since the MSME is the backbone in
making this dream a possibility, the government has directed the
financial institution to lend more credit to enterprises in MSME
sector.

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 CHALLENGES OF SME

1. Lack of Adequate Capital and Credit : One of the greatest

challenges which constrain the growth of MSMEs in our
country relates to inadequate capital and credit facilities.

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 Easy and timely access to credit is crucial factor to
development and growth of enterprises. The Report of the
Working Group on Rehabilitation of sick MSMEs by the
Reserve Bank of India has identified this situation as a crucial
reason for industrial sickness of this sector. Complex
collaterals instead by the banks, cumbersome sanction
procedures and delay in disbursement and high rate of
interest on term loans further worsen the situation.

2. Poor and Inadequate Infrastructural Facilities : Deficiencies in

the infrastructure and poor support facilities marked by
inadequate access to basic facilities like water, power supply,
road/rail connectivity etc. adversely affect this sector and
contribute to enhance their operational cost by rendering the
MSMEs less competitive in the challenging market situations.

3. Inadequate Access and Marketing Linkages : Poor marketing

linkages characterized by inadequate Government support
and patronage, lack of adequate marketing infrastructure/
network facilities continue to be a greater challenge for
marketing and sale of MSME products. In a non -cluster
situation, these enterprises get segregated and are unable to
ensure reduction in procurement cost from big companies and
fail to streamline the output-supply chain.

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4. Lack of Skilled Human Resources : Non-availability of skilled
workforce and better managerial/entrepreneurial expertise at
affordable cost near the location of enterprises is another
such big challenge for the MSMEs in our country. Lack of
managerial competence, absence of proper training on
resource planning and capital management etc. hinders the
growth of enterprises.

5. Lack of Access to New Technology: Most of the industries

today require application of advanced technology in their
operations whereas in the Indian context continuance of low
technology base results in low productivity by making these
enterprises uncompetitive in the e ver-widening market
contexts. Apart from enhancing productivity and quality, new
technology should be adopted for an overall transformation
and competitive edge.

6. Dilatory and Cumbersome Regulatory Practices :

Cumbersome and dilatory regulatory clearances relating to
sanction and disbursement of loans from commercial banks,
collateral securities/guarantees, for construction permits,
resolving insolvency and taxation etc. continue to be the
constraining factors for many MSMEs. Absence of a common
regulatory body and inadequate provisions for start -ups
affect the growth of such enterprises. Nonadherence to RBI

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 guidelines regarding revival/rehabilitation of seek enterprises
by the Banks is another such constraint that needs to be
addressed.

MSME- AN INDIAN PRESPECTIVE

Micro, Small and Medium Enterprises in India offer a

heterogeneous and varied nature of fabric in terms of the size and
structure of the units, variety of products and services, scale of
production and application of technology. These enterprises are
quite complementary to the large scale industries as ancillary
units. They contribute to the socio -economic development of the
country quite significantly. The MSMEs in India constitute about
80% of the total number of industries and produce about 8,000
value added products.

The growth and development of MSME sector in our country has

been consistent and remarkable over the preceding decades.
Statistics show that the number of such enterprises has increa sed
from about 1.1 crore in 2001-02 to 4.1 crore units in 2009-10 and
again to 4.48 crore enterprises in 2014 -15. The MSMEs produce
more than 7,500 products and also contribute to about 35% of the
India’s exports. MSMEs contribute 8% of the country’s GDP, 45% of
the manufactured output and 40% of exports (Prime Minister’s
Task Force on MSME, 2010).
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The Government of India has introduced several major policy
initiatives for support and promotion of micro, small & medium
enterprises in the country. These inc lude; establishment of Small
Industries Development Bank of India (SIDBI) in 1990 for promotion
and financing of MSME sector, Credit Guarantee Fund Trust of
Micro and Small Enterprises (CGTMSE) was in 2000 to offer credit
facilities to eligible borrowers a nd the Prime Minister’s
Employment Generation Programme (PMEGP) in 2008 to generate
employment opportunities in rural and urban areas through new
self-employment ventures / projects / micro enterprises.

Available data from the Fourth All India Census of M SME in 2006-
07, indicate that around 60 % of these enterprises are based in
rural areas of the country and 45% of total manufacturing output is
contributed by the MSME sector. The share of MSME sector in the
total exports of India is about 40%. Statistics reveal that the
number of such enterprises set-up, employment generated and the
investments made in the MSME sector in India has shown an
increasing trend over the years as evident from Table.

PERFORMANCE OF MSME SECTOR IN INDIA

SI NO. Year Total Employment Market

Working Generated Value of

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 Enterprises (In Lakh) Fixed Assets
(Rs. in
crores)
1 2006-07 361.76 805.23 868,546.79
2 2007-08 377.36 842.00 920,459.84
3 2008-09 393.70 880.44 977,144.72
4 2009-10 410.80 921.71 1,038,546.08
5 2010-11 428.73 965.15 1,105,934.09
6 2011-12 447.64 1011.69 1,182,757.64

7 2012-13 447.54 1061.40 1,268,763.67

8 2013-14 488.46 1114.29 1,363,700.54
9 2014-15 510.57 1171.32 1,471,992.94

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 GOVERNMENT SUPPORT TO SME

 The Credit Guarantee Fund Scheme for Micro and Small

Enterprises
The Credit Guarantee Fund Scheme for Micro and Small
Enterprises (CGMSE) was launched by the Government of
India to provide collateral -free credit to Indian MSMEs. Both
the existing and the new enterprises are eligibl e for the
scheme. The Ministry of Micro, Small and Medium Enterprises
and Small Industries Development Bank of India (SIDBI)

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 established a trust named Credit Guarantee Fund Trust for
Micro and Small Enterprises (CGTMSE) to implement the
scheme.
The scheme provides credit facilities in the form of term
loans and working capital facility of up to Rs. 100 lakh per
borrowing unit. The amount is contributed by the
Government and SIDBI in the ratio of 4:1 , respectively. The
scheme also offers rehabilitation assistance to sick units
covered under the guarantee scheme .

 Scheme for Technology Up gradation/ Establishment/

Modernization for Food Processing Industries
This Scheme covers the following activities: Setting
up/expansion/modernization of food processing industries
covering all segments via fruits & vegetable, milk product,
meat, poultry, fishery, oilseeds and such other agri -
horticultural sectors leading to value addition and shelf life
enhancement including food flavours and colours, oleoresins,
spices, coconut, mushroom, hops. The assistance is in the
form of grant subject to 25% of the plant & machinery and
technical civil work subject to a maximum of Rs. 50 lakh in
General Areas and 33.33% up to Rs. 75 lakh in Difficult Areas.

 Credit Linked Capital Subsidy Scheme for Technology Up

gradation (CLCSS)

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 Up gradation of the process as well as the corresponding
plant and machinery is important to help SMEs reduc e the
cost of production and remain price competitive in the global
market. To help SMEs flourish in international trade markets,
the Ministry of Small Scale Industries (SSI) runs a scheme for
technology up gradation of Small Scale Industries. Known as
the Credit Linked Capital Subsidy Scheme (CLCSS), it aims at
facilitating technology up gradation by providing the upfront
capital subsidy of 15% (limited to maximum Rs.15 lakhs) to
SSI units for credit availed by them for the modernization of
their plant and machinery. All sole proprietorship,
partnership firms, cooperative, private and public limited
companies are eligible for this scheme.

 Government Subsidy for Small Business from NSIC

NSIC provides two basic subsidies. Such as raw material

assistance and marketing assistance. Raw Material Assistance
Scheme aims at helping Small Scale Industries/Enterprises by
way of financing the purchase of Raw Material (both indigenous
& imported). This gives an opportunity to SSI to focus better on
manufacturing quality products. Under the Scheme, marketing
support is provided to Micro, Small & Medium Enterprises
through National Small Industries Corporation (NSIC) to enhance
competitiveness and marketability of their products. To know
more about the scheme.

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 LIST OF MSME SECTORS IN INDIA

 Textiles & paper

 Service industries
 Automotive components
 Food & beverages
 IT
 Tobacco and wood/furniture
 Pharmaceuticals
 Electronics
 Agriculture
 Sports goods
 Meat products
 Plastic products

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 ABOUT SOLE PROPRIETORSHIP

A sole proprietorship, also known as the sole trader or simply a

proprietorship, is a type of enterprise that is owned and run by one
natural person and in which there is no legal distinction between
the owner and the business entity. The owner is in direct contr ol of
all elements and is legally accountable for the finances of such
business and this may include debts, loans, loss, etc.

The sole trader receives all profits (subject to taxation specific to

the business) and has unlimited responsibility for all loss es and
debts. Every asset of the business is owned by the proprietor and
all debts of the business are the proprietor's.

Key Features of Proprietorship Firm

 1 Person Required as Single Entrepreneur.

 Single Owner of the Business.
 Easy to Start and Easy to Close.
 Complete Control.
 Lower Cost of Formation and Compliance.

Disadvantages of Proprietorship Firm

 Lack of Resources.
 Unlimited Liability.
 Lack of Credibility.

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  Cannot raise funds easily.
 Cannot add Partners.

HOW TO REGISTER YOUR SOLE PROPRIETORSHIP FIRM IN INDIA

GST Registration which is required in below anyone conditions -

1. Deal interstate sales or services.

2. Ecommerce or internet based business.

3. Trader or Retailer or Mfg or Aggregator

4. Within state have more than 20 lakh rupees turnover .

Turnover limit of the GST is applicable only in within state.

MSME Registration Certificate + Chartered Accountant Business

Certification. (It’s accepted by only some co operative and small
banks. Confirm with your bank for the same).

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 DOCUMENTS REQUIRED FOR REGISTRATION

#1 Pan Card Copy of the Proprietor.

#2 Aadhar Card Copy of the Proprietor.

Alternative on Aadhar Card: Voter Id | Passport | Driving License.

#3 Firm Address Proof: Electricity Bills copy or gas bill or phone bill
etc. (No issues if it’s on other name)

For the GST Additional:

#4 Passport Size Photograph

#5 Personal Bank Account Cancel Cheque or Bank Statement or

Passbook Front Page anyone.

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 ABOUT OUR TEA CRAZY NATION

“If you are cold, tea will warm you;

if you are too heated, it will cool you;
if you are depressed, it will cheer you;
if you are excited, and it will calm you.”

― William Ewart Gladstone

 Tea falls under the food & beverages category.

 With 3000 varieties, tea is now the world’s second most
popular beverage, after water.
 Tea is India’s most popular drink & Indians love their cup of
tea.
 The importance of tea drinking in India cannot be confined to
words, Indians have to have their cup of hot steaming tea
first thing in the morning in order to stimulate their senses
and refresh themselves.
 Tea is popular all over India mainly as an evening drink as
well as breakfast drink but nothing complements a family get -
together or a college reunion more than an endless supply of
tea throughout the day.
 In fact it is so popular that it is a cultural norm tea to offer
tea to guests and visitors instead of alcoholic drinks.
 Remove tea drinking from India and you remove the basic
essence of this vibrant and lovely country.

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 India is the world’s largest produce r of tea and most of the
tea production in India takes place in West Bengal and Assam.
 India is the largest consumer of tea with 750 grams of
consumption per person every year.
 Our country consumes 837,000 tonnes of tea every year .
 Tea business in India is about 33000 crore.
 The market grows at the pace of 15 percent annually.
 90% percent of consumption through small vendors.
 The tea market is largely unorganized.

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 THE HISTORY OF TEA DRINKING IN INDIA

 Tea drinking in India dates back to 750 B.C.

 According to a very interesting legend, the history of tea
drinking in India began with a saintly Buddhist monk about
almost 2000 years ago.
 It so happened that this monk who later became the founder
of Zen Buddhism, decided to spend seven sleepless years
contemplating the life and teachings of Buddha. While he was
in the fifth year of his contemplation and prayer, he almost
fell asleep. He took some leaves from a nearby bush and
began chewing them.
 These leaves revived him and enabled him to stay aw ake as
he chewed on them whenever he felt drowsy. Thus he was
able to complete his penance for seven years. These were the
leaves of the wild tea plant.
 As per the history of tea drinking in India, local people used
to brew and drink tea using the leaves o f the wild native tea
plants. Since that time, different varieties of tea have
emerged; the most famous among them is the Darjeeling tea.
 In the 16th century, the people of India prepared a vegetable
dish using tea leaves along with garlic and oil and the boiled
tea leaves were used to prepare a drink as well.
 The first Tea Garden was established by the British East India
Company by the end of the 19th century after the Company
took over tea cultivation in Assam, a region in the North
Eastern part of India.
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 One of the most popular snippets related to the history of tea
drinking in India dates back to the 19th century when an
Englishman noticed that the people of Assam drank a dark
liquid which was a type of tea brewed from a local wild plant.
 In the year 1823, a Singpho King offered an English Army
Officer tea as a medicinal drink.
 Tea drinking has evolved in different ways over the years in
India and differs from region to region. First thought of as the
drink of the Royals, tea has now become the favourite of the
common man as India leads the world in tea drinking.
 From the humble roadside tea stalls and the railway platforms
to the boardrooms of corporate India, tea is easily available.

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 POPULAR TEAS IN INDIA & THEIR HEALTH BENEFITS

Masala Chai

Add some Indian spices such as elaichi, cinnamon, ginger,

cloves, and herbs to your everyday black tea and what do you
get? Masala chai! This aromatic and flavourful beverage
originated in India but is now popular in snack houses across
the world.

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Health benefits: Prevents body inflammation. Helps beat
fatigue.

Assam Tea

Assam tea, as its name suggests, is a black tea native to

Assam. The tea is known for its body, briskness and strong
malty flavour. It is not only popular in India but is also sold as
a breakfast tea in many other parts of the world.
Health benefits: Increases mental alertness. Can also help in
preventing certain cancers, such as ovarian and lung cancer.

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 Darjeeling Tea

Darjeeling tea is famous all over the world. It has many varieties,
including black, green, oolong, and white. Typically, Darjeeling tea
is thin bodied and has a distinct aromatic smell. A tea that soothes
the senses, you could say.

Health benefits: Helps prevent obesity. Has the additional

benefit of preventing gastric ulcers.

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 NILGIRI TEA

Nilgiri tea, also known as blue mountain tea, is grown in the

Southern part of the Western Ghats. It is a dark, flavourful
and extremely aromatic tea. Just like the Darjeeling and
Assam teas, the Nilgiri variety is also very popular around the
globe. It makes great iced tea too.
Health benefits: It helps reduce weight and fi ght diabetes. It
also helps improve oral health, which means fewer trips to
the dentist.

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 CURRENT TEA TRENDS IN INDIA

The greatest shift in the last decade has been the movement
towards green tea. While tea tastings are rather rare compared to
coffee, teas are often found in various flavours all over the
country. The green tea has now taken the flavoured route with
more and more combinations coming up. Known for its health
benefits, green tea is now the new health fad among tea drinkers,
especially the younger generation tea drinkers .

Tea that is still extremely premium and quite rare is the white and
yellow variations of tea. These have not yet caught up in the Indian
market.

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Green coffee is in its very early stages of adoption with the
potential health benefits of Chlorogenic acid being marketed quite
aggressively in the health segments. While the health benefits are
still yet to be entirely proven, the market has just taken off and
only time will tell if it becomes as popular as green tea.

Yellow and White teas are currently super premium. With green tea
having the maximum health benefits, these teas have the potential
to be positioned in the premium space with the focus on flavour
rather than health benefits.

 Green te a continues to grow at 50-60% YOY

 The consumer preference is moving from plain green tea onto
flavoured teas.
 There is a disproportionate rise in consumer preference for
flavoured green teas, with honey lemon green tea leading the
category.
 Today, 35% consumers aged 16-17 years consumed tea daily.
 Demand for green tea is growing at 17% per annum against
only 3% for black tea
 With a population of 1.3 billion India is growing as a power
house to the green tea market.

37 | P a g e
 VARIOUS NEW FLAVOURS OF TEA

Pomegranate tea grapefruit Indian spice tea hathikuli tea

&

Honey tea

English breakfast black tea grey black tea chai black tea mist green tea

Mint citrus green tea youth berry tea latte green tea latte

White tea

38 | P a g e
 Ice green tea latte ice chai tea latte hibiscus infusion chamomile herbal

Mint blend matcha espresso iced matcha & espresso honey black tea

Iced black tea iced pomegranate tea

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 BEST LEADING CHAI STARTUPS OF INDIA

Tea, although is the top beverage in India, lacked a quality place

where it would be served.

Hence, many aspiring entrepreneurs are grabbing the opportunity

and starting chai start-up.

Despite hundreds of elegant coffee places around, ‘Desi Chai’ is

irreplaceable.

Labelled as the most favourite beverage among Indians, it was

lacking a proper place in the market. With the number of
establishing start-ups hitting the notch, chai was a mandatory
business to step in.

Therefore, here are the top chai start -ups of India

1. Chai Point

Founder – Amuleek Singh Bijral

Headquarter – Bangalore

Year of establishment – 2010

Investors – 8 road ventures, Saama Capital,

DSG investors

Total Funding – $12 million

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Operating states – Bangalore, Pune, Delhi

The first chai start-up of India; started by a Harvard ex-student,

Chai Point is one of the most flourishing tea cafe chains of the
country. It provides a separate counter for the smokers, outside
the café, which is the major attraction. With introducing the on
delivery, the system in less than 30 mi nutes Chai Point makes itself
stand out of the box. Garnering the funding of $10 million recently
after a previous funding of $2 million by Saama Capital, Chai Point
has shown some great development and achievements in its
journey in becoming one of the be st leading chai start-ups of the
country. The company also deals in chai and coffee dispensers,
which is another unique aspect.

Chai Point has 16 outlets in the Delhi/NCR region and is looking

forward to expanding, the venture to Mumbai and Bangalore as
well. Its founders plan to open kiosks at prominent metro stations
in order to give tough rivalry to the chai as well as coffee players in
the business.

2. Chaayos

Founder – Raghav Verma and Nitin Saluja

Headquarter – Gurgaon, Haryana

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Year of establishment – 2012

Investor – Tiger Global Management

Total Funding – $5 million

Operating cities – NCR (Delhi, Gurgaon, Noida,

Faridabad)

Established by two IITian engineers, Chaayos is the fastest growing

Chai Café Start-up of the country. The company also offers the
feature of online delivery, attaining its fame for the various
experiments on Chai flavours. The company serves 1200 different
types of tea brewing. They step into the market claiming to be
providing the most sophisticated place for tea lovers; similar to
what is Starbucks doing for coffee lovers.

The seller of thousands of teacups per day, the start-up has

established a great reputation for itself in the cities it is
established. Chaayos aims at getting its customers their own
personalized flavour of tea; for its founders know the fact that in
India everyone has a unique liking when it comes to tea which is
phrased as, ‘Meri Wali Chai’. Their special flavours include black
pepper, rose cardamom, Mirchi, and mint flavoured chai. Chaayos
has built a strong ground for itself in a short time.

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 3. Tpot Cafe

Founder – Asad Khan, Robin Jha, Atit Verma

Headquarter – New Delhi

Year of establishment – 2013

Investors – Ashish Gupta, co-founder

Evalueserve

Total Funding – Undisclosed

Operating cities – Delhi-NCR

Another tea start-up from Delhi NCR delivers its customer the best
quality at the lowest price. Snacks, and tea, the trio dived into the
business cosmos striking on the ‘daily obsession’ of Indians.

Leaving the high paying job, its founder Robin Jha chose to risk his
investments and hard-earned money in starting his own business.
Evaluating the current market and people’s demand, Jha came up
with the very idea of Tpot.

CEO Robin Jha, who was recently in talks for the inauguration of
the 20th café of the Chai Nashta (tea with snacks) chain, has a plan
to take his endeavour to greater heights in the next few years.

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With the opening of two new outlets at Connaught place, Tpot has
flourished with its variety of chai and nashta. From their specialty
hibiscus tea to the ordinary masala cha i, they have it all with the
exotic nashta range that is present at an affordable rate. Probably,
that is the reason tpot has become one of the most successful chai
start-ups of India!

4. Chaipatty Teafe

Founder – Chirag Yadav

Headquarter – Bangalore, Karnataka

Year of establishment – 2010

Funding – Self-funded

Operating places – Bangalore

An electronics and communication engineer basically, Chirag,

having to be a multi-talented person himself, he has enriched his
business with the diversity. The criteria that lead him to this idea
were the marvelous Bangalore weather, and it is an incredibly
nurturing environment for new ventures. Having to be working in
the marketing field earlier, with a number of MNCs after which he

44 | P a g e
planned to start a business. After leaving the job, he became a
Salsa instructor, which was followed by him starting a branding and
social media marketing firm. After which came Chaipatty!
Chaipatty is one of the most promising tea startups of the country
with four ‘Teafes’, as they call their cafes, all across Bangalore. The
special Handmade Kullad tea is infamous for the traditional
authenticity it brings.

Being an art store, it greets its customers with beautiful

classic ambiance, dipped into the great culture that our Indians
have inherited with every generation.

5. Chai Thela

Founder – Pankaj Judge and Nitin Chaudhary

Headquarter – Delhi

Year of establishment – 2014

Investors – Quarizon Venture

Total Funding – 1.5 Crore INR

Operating Cities – Delhi NCR

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Renowned for its simplicity, Chai Thela was the initiation of an
IITian, which serves you tea in its classic way. They have installed
kiosks or, thellas as we commonly call them, just the way it has
been so far. The best part is that their clients do not really have to
increase the budgets, as they can get tea in most hygienic
conditions with least price.

Pankaj said, “He doesn’t confuse his customer by providing

hundreds of chai brewing options, he loves the simplicity and
serving only 25 types of tea and adrak wali chai is their major
attraction.” The dramatic story of Pankaj Judge in establishing the
business named Chai Thela followed by a venture, which closed,
but many people have read about it.

It is never an easy task to establish a successful business; there are

losses, bankruptcy, dealing with reluctant investors, high risks, and
what not.

The firm has so far installed numerous Tea selling kiosks across
Delhi NCR region.

Judge and Chaudhary met through a mutual friend and decided to

make a living from their mutual passion and love for chai. Today
the Chai chain has six outlets in the NCR region al ong with a
footfall of 500-600 cups per outlet. Chai Thela has planned to reach
urban hubs like Ahmadabad and Delhi this year.

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 CHALLENGES A TEA STALL FACES

 Lack of identity and a dull competitive edge

 No branding
 Motivating staff

 Letting go of responsibilities
 Team work
 Growing the business
 Keeping motivated
 Hiring & firing
 Training
 People leaving without notice
 Procurement
 Competition
 Hygiene.
 No growth
 Consistency
 No clarity
 Old techniques
 Equipment
 Retaining customers
 wastage

47 | P a g e
 OBJECTIVE OF THE STUDY

I have researched that there are lot of new start -ups of coffee
shops and I have also observed that they have good ambience and
infrastructure and lot of creativity brought in coffees like this

But I don’t find changes brought in tea consumption; hence my

objective is to reform in tea consumption by supplying healthy
varieties of teas and also giving the same or better ambience to the
people. I hope in the coming decades there will be a lot of re form
in tea consumptions. And to compete with such big enterprises like
star bucks, coffee day etc. it has already started among the people;
it just needs an opening of such startups in Vijayawada; people will
immediately throng to such a place. This vis ion to happen needs a

48 | P a g e
good planning preparation investment and implementation . This is
the vision of Mr. Surendra.

RESEARCH METHODOLOGY

Problem identification: Tea the most important beverage had by large chunk
of the Indians is neglected in the area of growth. There are no proper changes
brought in consuming tea. People are still having the old tea with no
developments. But we can find a lot of changes and growth in the other
substitute which is coffee. Giants like star bucks, CCD’s which are spread
everywhere have brought in different varieties of coffees and their flavors, but
the tea consumption market is yet to be tapped.

Objectives of the research:

 To find out the problems faced by small tea stall owners.

 To reform in tea consumption by supplying healthy varieties
of teas and also giving the same or better ambience to the
people.
 To compete with such big enterprises like star bucks, coffee
day etc.

Sampling unit: Shopkeepers and consumers who visit the stall have been
selected for research.

Sampling technique: Convenient and random sampling has been used for the
purpose.

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Sample size: A sample of 3 popular tea stalls has been taken for the study.

Type of research: It is an analytical type of research which tries to find out the
problems and at the same time provides solution for it.

Research tools and techniques

Statistical tools like percentages graphs, charts have been used to analyze the
data.

Limitations of the research

 The study is confined to a limited area of Vijayawada only.

 Non serious and biased response of the respondents.

 Time and resource constraints.

My research methodology is done in two parts; mostly collecting

primary data through visiting the tea stall frequently, my mission
was to learn the business through doing.

“There is a common proverb; if you want to be a master of any

skill, be a servant first.”

Hence I involved myself in doing this, participating in the

preparation different varieties of tea, observed human relations
techniques used and required, observed the daily cash inflows and
totally the nuances of the business.

Also visited the main areas of the city to know the number of tea
stalls, the different varieties of teas supp lied by them, there
competent rates, and their taste & quality maintained.

50 | P a g e
Secondary method of collecting data was to know the recent
trends, to have a glimpse of the history of tea and to talk about the
tea consumption, market share; just to broaden the k nowledge .

DATA COLLECTION

Enterprise Name - Anjani Tea & coffee

Name of the Proprietor - M. Surendra

Registered No. -

Contact No. - 8008412800

Address - Vemula Symala

Devi Street,

Sitarampuram

Centre

Vijayawada

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Nature of Business - Food & Beverages

DAY 1

Product & pricing observation:

Products: price

Tea 8/-

Black tea 20/-

Filter coffee 15/-

Bru coffee 15/-

Black coffee 20/-

Badam tea 15/-

Pista badam tea 20/-

Green tea 15/-

Lemon tea 15/-

Zeera lemon tea 15/-

White lemon tea 15/-

Pineapple lemon tea 20/-

Masala lemon tea 20/-

52 | P a g e
Sabja lemon tea 20/-

Beetroot lemon tea 20/-

Carrot lemon tea 20/-

Ginger lemon tea 20/-

Strawberry lemon tea 20/-

Elaichi tea 20/-

Pepper tea 20/-

Sp tea 15/-

Ginger zeera tea 20/-

Salt lemon tea 15/-

Pepper lemon tea 20/-

Beetroot milk tea 20/-

Carrot milk tea 20/-

Milk 15/-

Horlicks 20/-

Boost 20/-

53 | P a g e
 DAY 2

Preparation of Indian chai:

1. 15 litres of water & 500 grams of tea powder are mixed in the
big tea pot and boiled for half an hour at 5am
2. 42 litres of milk is boiled early in the morning as well; out of
which 30 litres is used for chai
3. For one 90ml of cup there goes 30 ml of decoction & 60 ml of
milk along with one spoon of sugar.
4. When the customers arrive they mix the p roportionate
amounts of ingredients and serve.

Approx sale of indian chai in a day: 500 cups

So the requirements for 500 cups of chai:

1. 30 litres milk
2. 15 litres decoction
3. 400 grams of sugar
4. Tea powder 500 grams

54 | P a g e
 DAY 3

Preparation of filter coffee:

1. For one 90 ml of cup they pour 70 ml milk and 20 ml coffee

decoction
2. 1.6 litres of decoction is prepared in the filter cofee machine
by adding 160 grams of coffee powder
3. 6 litres of milk is required daily for filter coffees
4. Approx consumption of filter cof fee per day-80 cups
5. 160 grams of sugar is also utilised.

Preparation of bru coffee:

1. Approx consumption of bru coffee is 40 cups per day

2. In each cup 2 grams of coffee powder, one table spoon of
sugar and 80ml milk is utilized.
3. So for 40 cups, 80 grams of sugar and 1.2 litres of milk is
used.

55 | P a g e
 DAY 4

Preparation of green teas & lemon teas:

Ingredients used:

1. Lemon water
2. Jaggery
3. Mint leaves
4. Dry dates powder
5. Rock sugar lumps

 320 lemons are used daily from them 3 ½ litres of lemon juice
is derived and 60 more lemons are used as dressing
 50-60 litres of water is used daily
 4 kgs of jaggery, rock sugar lumps etc are used and mixed in
water daily.

Preparation method:

 First the sweet water is boiled of 5 litres in a big vessel.

 To make one 120 ml of green tea , 120 ml of sweet water is
taken from the big vessel and poured in a pan, then zeera
powder, cloves are added and boiled for one minute.
 And later taken into a cup and lemon juice of one table spoon
is added.
 2-3 mint leaves are dropped in the cup and a sm all slice of
lemon is put on top and served.

56 | P a g e
Preparation method of lemon tea:

 The method is same like green tea excluding the zeera

powder and 2-3 drops of tea decoction is added per cup.

57 | P a g e
58 | P a g e
 DAY 5

Preparation of carrot lemon, beetroot lemon

Carrot tea:

 For one 120 ml of carrot tea 60 ml of carrot juice and 60 ml of

sweet water is mixed and 2 teaspoons of lemon juice is mixed
and served.
 Carrot juice is prepared in the carrot grinder.

Beetroot tea:

 For one 120 ml of beetroot tea one slice of beetroot is

grinded and added along with sweet water and 2 teaspoons of
lemon juice is also mixed.

59 | P a g e
 DAY 6

Equipments used:

 Coffee machine
 Microwave Owen
 Juice grinder
 Large tea pot
 3 large vessels, 6 pans, 6 glasses
 60 glass cups
 Dozen saucers

60 | P a g e
  Tea filters
 Induction stove
 Lighter
 Wash basin
 Hand gloves
 2 gas cylinders

DAY 7

Layout & the design of the shop:

 Land in sq.ft of the tea stall = 150sq.ft, 20 yards

 East facing
 It’s a small part of the hotel.
 Have tea tables to stand & sip or rectangular seating
arrangements.
 Working hours : 4am to 10.30pm
 No of employees: 4
 They are tea master, cashier, and 2 cleaners.
 Daily wage for tea master = 850/-
 Cashier = 350/-
 Cleaners = 2x200=400/-
 Bonus of 500/- for each on special festivals.

61 | P a g e
 DAY 8
Organizational structure of the tea stall

Mr. surendra
top level (owner)

middle
tea master cashier
level

bottom cleaner 2
cleaner 1
level

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 DATA ANALYSIS:

I have done qualitative analysis of the data based on observations

and interviews.

First part of data analysis was on what item has more number of
sales in that tea stall.

Percentage of Sales

5%
10%

GREEN TEAS & LEMON TEAS

45%
CHAI & COFFEE
CARROT & BEETROOT
BADAM TEAS
40%

 A reason for higher percentage of sale of green teas & lemon

teas is the taste and the quality it possess, because they use
natural ingredients.
 And also the current trend among people to lead a healthy
lifestyle, where green tea provides energy and helps in weight
loss.
 Reason for 40% consumption of chai & coffees is that many
people are addicted to it and it has become a habit of
consumption.
63 | P a g e
  15% for rest of the categories is that they fall under the niche
category and people of Vijayawada here are not very much
open for experimentation. They are conservative.
 Approx consumption of green teas and lemon teas in a day =
500+
 Revenue from green teas : 500x15/ - = 7500/-
 Cost he incurs on these :
o 400 lemons = 600/-
o Dry dates powder 1kg = 550/-
o White jaggery 1kg = 50/-
o Rock sugar 1kg =400/-
o Dark jaggery 1kg=120/-
o 50-60ltrs of water = 80/-
o Total cost = 1800/-
o So gross profit = 5700/-

Second part of analysis was on the pricing pattern he maintains

PRICING PATTERN
16
14
12
10
Axis Title

8
GREEN TEA & LEMON TEA PRICE
6 CHAI PRICE
4 COFFEE PRICE
2
15 8 15 12 10 12 15 10 12 12 8 12
0
ANJANI GOOD IRANI TEA BLUE STAR
MORNING
Axis Title 64 | P a g e
and inspection with that of the competitors.

 I have picked 3 samples of tea stalls in the surrounding areas

along with the anjani tea stall and compared prices of the
items.
 The numbers in the graph are the prices
 From the chart the prices of green tea & lemon tea at anjani
tea stall and the irani café are similar. But there’s a wide
variation in taste, preparation method and the quality.
 Anjani tea stall has natural method of preparing tea and the
rest of them all utilize the tea powder and the tea bags which
might have side effects.

STP ANALYSIS OF THE TEA STALL

STP stands for segmentation, targeting & positioning

Segmentation: It is a process of viewing heterogeneous market as a group of

small homogeneous markets.

Segmentation is done on the basis of

 Geographic segmentation: area, land, climate, culture, location etc.

 Demographic segmentation: age, gender, occupation, income etc.
 Psychographic segmentation: personality, lifestyle etc.
 Behavioral segmentation: values, believes etc.

65 | P a g e
Coming to the tea stall the analysis is based on

 Geographic segmentation which is hub of many hospitals and

small shops and connecting to the main road.
 Demographic segmentation based on occupation where there are
more working class people and considering age factor also from
15-64 yrs.

Targeting: A target market is the market a company wants to sell its products
and services to, and it includes a targeted set of customers for whom it directs
its marketing efforts. Identifying the target market is an essential step in the
development of a marketing plan.

In this case the owner has targeted the people at hospitals and nearby small
vendors and people passing through the main road.

Positioning: Market positioning is creating a place in the minds of customers

and making them remember your brand in the way you want them to
remember it.

The Anjani tea stall has positioned itself as famous for green teas & lemon
teas.

66 | P a g e
 PRODUCT LIFE CYCLE (PLC)

PRICE

GROWTH
PROFIT
DEVELOPMENT

INTRODUCTION

DECLINE
MATURITY
LOSS

The product life cycle is an important concept in marketing. It

describes the stages a product goes through from when it was first
thought of until it finally is removed from the market. Not all
products reach this final stage.

Introduction

Introducing a new product where it's unknown and products are

small. The price is often higher as distribution is limited, and
promotion is personalized.

67 | P a g e
Growth

Here, the product is being bought and with volume, the price
declines. Distribution increases and promotion focuses on product
benefits

Maturity

Here, the product competes with alternatives and pricing drops.

Distribution becomes intense (it’s available everywhere) and
promotion focuses on the differences to competitors’ products.

Decline

The product is reaching the end of its life and faces fewer
competitors. The price may rise and distribution has become
selective as some distributors have dropped the product.
Promotion aims to remind customers of its existence.

Products like green tea, lemo n teas are on the growth stage of the
lifecycle.

New products like carrot teas, beetroot teas, pineapple teas,

strawberry teas are on the introductory stage of the lifecycle.

68 | P a g e
Third part of the analysis was on the location of the tea stall.

 Sitarampuram is the hub of many hospitals and also to many

small business vendors and provides reside ntiality to
thousands of people and is a connecting road to one of the
main roads of Vijayawada which is Eluru road.
 Thus he has the advantage of the location because he can
expect a large number of customers to his tea stall.

Fourth part of the analysis was the financial analysis of the tea
stall:

Revenue part :

 Approx sale of chai per day (500x8) = 4000/ -

 Approx sale of coffee per day (120x15) = 1800/ -
 Approx sale of green & lemon teas per day (500x15) =7500/ -
 Approx sale of beetroot & carrot teas per day (30x20) = 600/ -
 Approx sale of badam teas (30x15) =450/ -
 Approx sale of pista badam teas (10x20) =200/ -
 Approx sale of boost, horlicks & milk (10x20) =200/ -
 Total revenue per day = 14950/- x 30 =4,48,500

Costs part :

 Consumption of milk daily (42 ltrsx54) = 2268/ -

 Consumption of sugar (1kgx40) = 40/-
 Tea powder 500 grams = 270/-
 Water (80ltrs) = 80/-
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 Coffee powder 160 grams = 42/-
 Bru coffee powder 80 grams = 125/-
 Lemons 400 = 600/-
 Dry dates powder 1 kg = 550/-
 Jaggery 1 kg = 50/-
 Rock sugar 1 kg = 400/-
 Dark jaggery 1 kg = 120/-
 Beetroot 1 kg = 60 /-
 Carrot 1 kg = 60/-
 Tea master wage = 850/-
 Cashier = 350/-
 Cleaners 2x200 = 400/-

Total expenses per day =6265x30 =187950

Revenue-cost = 448500-187950

Gross profit = 260550

- Electricity charges = 3500

- Gas (660x5) = 3300
- Rent = 35000
- tax = 10597
Net profit = 2, 01,353

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 OPERATING CYCLE

“Operating cycle is the time duration involved in the acquisition of resources,

conversion of raw materials into work- in-process into finished goods,

conversion of finished goods into sales and collection of sales.”

CASH

RECIEVABLES RAW
MATERIALS

FINISHED
WIP
GOODS

The operating cycle of tea stall is daily and the circular flow is very quick as it
generates quick return of cash from the debtors because of the nature of the
business. So there are no issues of the working capital management.

Speedy cash collection techniques are followed and payments are converted
into cash

Raw materials: milk, water, lemons, sweet materials, etc.

Work-in-progress- preparations of teas

Finished goods-teas, coffees

Receivables- cost of teas.

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 ABC ANALYSIS TECHNIQUE OF INVENTORY MANAGEMENT

Inventory is the raw materials, work-in-process products and finished goods

that are considered to be the portion of a business's assets that are ready or
will be ready for sale

ABC analysis is an inventory categorization method which consists in dividing

items into three categories, A, B and C

A being the most valuable items, C being the least valuable ones. This method
aims to draw managers’ attention on the critical few (A-items) and not on the
trivial many (C-items).

Inventory optimization is critical in order to keep costs under control.

It is efficient to focus on items that cost most to the business.

The Pareto principle states that 80% of the overall consumption value is based
on only 20% of total items

The ABC approach states that, when reviewing inventory, a company should
rate items from A to C, basing its ratings on the following rules:

A-items are goods which annual consumption value is the highest. The top 70-
80% of the annual consumption value of the company typically accounts for
only 10-20% of total inventory items.

C-items are, on the contrary, items with the lowest consumption value. The
lower 5% of the annual consumption value typically accounts for 50% of total
inventory items.

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 B-items are the interclass items, with a medium consumption value. Those 15-
25% of annual consumption value typically accounts for 30% of total inventory
items

Through this categorization, the supply manager can identify inventory hot
spots, and separate them from the rest of the items, especially those that are
numerous but not that profitable.

A Class category item of the tea stall: milk, water, lemons, tea & coffee
powder, sugar & sweet materials.

B class category items of the tea stall: stove, cylinders, glasses, cups, saucers
etc

C class category items of the tea stall: biscuits, samosas, ladoos, badam tea
powders etc.

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

A class B class C Class

category category category

73 | P a g e
The graph indicates on x axis we have the category of items and on y axis we
have the percentage of consumption of the items.

INVENTORY MANAGEMENT POLICIES

Policies based on ABC analysis leverage the sales imbalance outlined by the
Pareto principle. This implies that each item should receive a weighed
treatment corresponding to its class:

A-items should have tight inventory control, more secured storage areas and
better sales forecasts. Reorders should be frequent, with weekly or even daily
reorder. Avoiding stock-outs on A-items is a priority.

Reordering C-items is made less frequently. A typically inventory policy for C-

items consist of having only 1 unit on hand, and of reordering only when an
actual purchase is made. This approach leads to stock-out situation after each
purchase which can be an acceptable situation, as the C-items present both
low demand and higher risk of excessive inventory costs. For C-items, the
question is not so much how many units do we store? But rather do we even
keep this item in store?

B-items benefit from an intermediate status between A and C. An important

aspect of class B is the monitoring of potential evolution toward class A or, in
the contrary, toward the class C.

74 | P a g e
Fifth part of the analysis was the prime times of the tea stall:

1. Morning 5am-8am
a. mostly consumed- green teas & lemon teas
i. consumed by walkers and people into fitness
2. 9am-12pm
a. Mostly consumed- chai & coffee
i. Consumed by working class people & people who
travel from one place to another.
3. 4pm-10pm
a. Consumed all varieties of teas .

PORTER’S FIVE FORCES:

Porter's Five Forces is a simple but powerful tool for understanding

the competitiveness of your business environment, and for
identifying your strategy's potential profitability.

This is useful, because, when you understand the forces in your

environment or industry that can affect your prof itability, you'll be
able to adjust your strategy accordingly. For example, you could
take fair advantage of a strong position or improve a weak one,
and avoid taking wrong steps in future.

The tool was created by Harvard Business School professor Michael

Porter, to analyze an industry's attractiveness and likely

75 | P a g e
profitability. Since its publication in 1979, it has become one of the
most popular and highly regarded business strategy tools.

Competitive Rivalry. This looks at the number and strength of your

competitors. How many rivals do you have? Who are they, and how
does the quality of their products and services compare with
yours?

Where rivalry is intense, companies can attract customers with

aggressive price cuts and high-impact marketing campaigns. Also,
in markets with lots of rivals, your suppliers and buyers can go
elsewhere if they feel that they're not getting a good deal from
you.

On the other hand, where competitive rivalry is mi nimal, and no

one else is doing what you do, then you'll likely have tremendous
strength and healthy profits.

Supplier Power: This is determined by how easy it is for your

suppliers to increase their prices. How many potential suppliers do
you have? How unique is the product or service that they provide,
and how expensive would it be to switch from one supplier to
another?

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The more you have to choose from, the easier it will be to switch
to a cheaper alternative. But the fewer suppliers there are, and the
more you need their help, the stronger their position and their
ability to charge you more. That can impact your profit.

Buyer Power Here, you ask yourself how easy it is for buyers to
drive your prices down. How many buyers are there, and how big
are their orders? How much would it cost them to switch from your
products and services to those of a rival? Are your buyers strong
enough to dictate terms to you?

When you deal with only a few savvy customers, they have more
power, but your power increases if you have many customers.

Threat of Substitution: This refers to the likelihood of your

customers finding a different way of doing wha t you do. For
example, if you supply a unique software product that automates
an important process, people may substitute it by doing the
process manually or by outsourcing it. A substitution that is easy
and cheap to make can weaken your position and thre aten your
profitability.

Threat of New Entry: Your position can be affected by people's

ability to enter your market. So, think about how easily this could
be done. How easy is it to get a foothold in your industry or

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market? How much would it cost, and ho w tightly is your sector
regulated?

If it takes little money and effort to enter your market and

compete effectively, or if you have little protection for your key
technologies, then rivals can quickly enter your market and weaken
your position. If you have strong and durable barriers to entry,
then you can preserve a favorable position and take fair advantage
of it.

threat of
new
entrants

rivalry
bargaining
power of
among bargaining
power of
buyers existing suppliers

competitors

threat of
substitutes

Threat of new entrants:

 Time and cost of entry

 Specialist knowledge

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  Economies of scale
 Cost advantages
 Technology protection
 Barriers to entry

The impact of these factors is relatively high for Anjani tea stall
because it’s easy to venture into this industry and can implement a
better business model.

Threat of substitutes:

 No. of substitutes available

 Substitution performance
 Cost of change
 Perceived level of product differentiation

The effect of these factors are also relatively high because in

beverages we have coffee, milk, badam milk, badam tea etc and
cost of change is almost the same.

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Bargaining power of suppliers :

 Number of suppliers
 Size of suppliers
 Uniqueness of service
 Your ability to substitute
 Cost of changing

The effect of these factors is relatively low because suppliers in

milk, water, and coffee & tea powder are many and the demand is
also huge and he can shift to a new supplier if he increases the
price not undermining the quality standards.

Bargaining power of buyers:

 Number of customers
 Size of each order
 Differences between competitors
 Price sensitivity
 Ability to substitute
 Cost of changing.

The impact of these factors is more because customers have to be

satisfied. When Anjani becomes the buyer his bargaining power is
high because it’s going to regular demand for his raw materials,
but when anjani becomes supplier, he has to follow the same, he

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has to reduce the price when a company gives him a big order but
he need not do that if the quantity ordered is less.

Rivalry among existing competitors :

 Number of competitors
 Quality differences
 Customer loyalty
 Costs of leaving market
 Industry growth

The impact of these factors is also high because there are many
number of tea stalls and tea has also fixed price everywhere and
the quality is more or less the same and the growth of the industry
is also increasing.

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 BCG MATRIX OF ANJANI TEA STALL

QUESTION MARKS
STARS
RELATIVE GROWTH RATE

Beetroot tea, carrot tea,

Green tea & lemon teas
pineapple tea, black tea

CASH COWS DOGS

Chai & coffees

Boost, horlicks, badam teas,
milk, osmania biscuits,
samosas,

RELATIVE MARKET SHARE

STARS: high market growth rate, high market share

QUESTION MARKS: high market growth rate, low market share

CASH COWS: low market growth rate, high market share

DOGS: Low market growth rate, low relative market share

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Boston Consulting Group (BCG) Matrix is a four celled matrix (a 2 * 2 matrix)
developed by BCG, USA. It is the most renowned corporate portfolio analysis
tool. It provides a graphic representation for an organization to examine
different businesses in its portfolio on the basis of their related market share
and industry growth rates. It is a two dimensional analysis on management of
SBU’s (Strategic Business Units). In other words, it is a comparative analysis of
business potential and the evaluation of environment.

According to this matrix, business could be classified as high or low according

to their industry growth rate and relative market share.

BCG matrix has four cells, with the horizontal axis representing relative market
share and the vertical axis denoting market growth rate.

The four cells of this matrix have been called as stars, cash cows, question
marks and dogs. Each of these cells represents a particular type of business.

Stars- Stars represent business units having large market share in a fast
growing industry. They may generate cash but because of fast growing market,
stars require huge investments to maintain their lead. Net cash flow is usually
modest. SBU’s located in this cell are attractive as they are located in a robust
industry and these business units are highly competitive in the industry. If
successful, a star will become a cash cow when the industry matures.

Cash Cows- Cash Cows represents business units having a large market share in
a mature, slow growing industry. Cash cows require little investment and
generate cash that can be utilized for investment in other business units. These
SBU’s are the corporation’s key source of cash, and are specifically the core
business. They are the base of an organization. These businesses usually follow

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stability strategies. When cash cows lose their appeal and move towards
deterioration, then a retrenchment policy may be pursued.

Question Marks- Question marks represent business units having low relative
market share and located in a high growth industry. They require huge amount
of cash to maintain or gain market share. They require attention to determine
if the venture can be viable. Question marks are generally new goods and
services which have a good commercial prospective. There is no specific
strategy which can be adopted. If the firm thinks it has dominant market share,
then it can adopt expansion strategy, else retrenchment strategy can be
adopted. Most businesses start as question marks as the company tries to
enter a high growth market in which there is already a market-share. If
ignored, then question marks may become dogs, while if huge investment is
made, and then they have potential of becoming stars.

Dogs- Dogs represent businesses having weak market shares in low-growth

markets. They neither generate cash nor require huge amount of cash. Due to
low market share, these business units face cost disadvantages. Generally
retrenchment strategies are adopted because these firms can gain market
share only at the expense of competitor’s/rival firms. These business firms
have weak market share because of high costs, poor quality, ineffective
marketing, etc. Unless a dog has some other strategic aim, it should be
liquidated if there are fewer prospects for it to gain market share. Number of
dogs should be avoided and minimized in an organization.

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 SWOT ANALYSIS OF THE ENTERPRISE

SWOT Analysis is a universal analytical technique focusing on the evaluation of

internal and external factors affecting the success of an organization or any
other evaluated system. Most often, SWOT analysis is used in the strategic
management of an organization in the evaluation of a strategic intention. The
author of SWOT analysis is Albert Humphrey, who designed it in the sixties of
the 20th century.

Internal and external factors within the SWOT analysis are evaluated. Internal
factors include the Strengths and Weaknesses of the organization/system.
External factors include Opportunities and Threats which are related to the
surroundings of the organization/system. SWOT is an acronym formed by the
first letters of the designations of the individual factors.

Strengths:

- Area
- Natural ingredients
- Green & lemon tea
- Quick delivery
- Preparation method
- Taste & quality
- Cleanliness & ambience

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Weakness:

- No separate identity
- No promotional activity
- Lack of awareness of right consumption of tea
- Small space of the shop.

Opportunities:

- More awareness to people regarding health

- Can take it to a medium scale or large scale
- Millennial consumers mindset for different flavors

Threats:

- New fast entrants

- Threat of the hotel owner
- Threat of his employees leaving

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 SUGGESTED BUSINESS MODEL & RECOMMENDATIONS

 First he cannot have his vision achieved when the tea stall is
associated with the hotel.

 He has to select a shop only exclusively for different varieties

of tea.

 It’s all about being fast and not first.

 He needs to be obsessive of his vision.

BUSINESS MODEL

 First he has to learn many more varieties of teas to fill his

menu card, at least 30-40 types of teas which are natural &
healthy.
 Then decide on his unique selling proposition. I suggest him
lemon flavor to be his USP.
 Then decide how much area does he require ; I suggest him
preferably 800-1000 sq ft to hire on lease agreement for 2-5
years minimum.
 Then decide on shop area which is close to the raw materials
market.

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 Designing should be on a natural ambience surrounding the
tea house with plants, and using modern infrastructure and
technology.
 He requires an investment of 10-15 lakhs, so I suggest him
partnership, so that he can comfortably take the financial
burden and management burden, he should also seek a
partner who has an interest in the same venture.
 Then he should hire people & train th em.
 As the venture grows he can add on creatively in many ways
by offering takeaways of teas, also deliver healthy teas to
different businesses. Pay through PayT m, maintain healthy
relation with customers, find out their requirements of tea,
maintain effective customer service & hygiene.
 He can allow the customers to see the preparation of tea so
that they can be 100% satisfied about their beverage.
 He can maintain kiosks for self filling of some models of tea.
 As the new venture grows he can even create a website & sell
tea online by appointing delivery boys.
 He can also serve a few special breakfast and snack items by
not suppressing the tea menu

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 REFERENCES

 https://msme.gov.in/know-about-msme
 https://www.businessalligators.com/best-leading-chai-startups-india/
 http://host.fieramilano.it/en/coffee-and-tea-trends-india
 http://www.tea.in/history
 https://www.forbes.com/sites/krnkashyap/2017/07/21/starbucks-is-
the-company-to-beat-in-indias-30-billion-tea-market/#239b666b37a5
 http://www.fnbnews.com/Interview/green-tea-continues-to-grow-at-
5060-40142
 https://www.greatlakes.edu.in/herald/pdfs/march-2017/article-5.pdf

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