Jasmine – A Case Study
On an afternoon in early January 1996, Peter Thomas, Senior Brand Manager of Biltek Tea (India) Limited (BTIL), was poring over the recent sales performance figures of Jasmine, a brand of premium dust tea that he was handling. The data for the fourth quarter of 1995 had just arrived, and the results were as depressing as they had been over the last few years. Although Jasmine was the market leader in the premium dust tea segment in southern India, the stagnant/low rate of growth was a cause for considerable concern to Thomas, being a significant contributor to the beverages profit center of BTIL, it was vital that Jasmine grew at a significant rate in the coming years to accelerate the beverages profitability.
In order to arrive at a reasonable understanding of the current situation and to obtain insights which would help in the process of decision making, the brand manager dug out the reports of several syndicated research and market research studies that he had commissioned in the recent past, Thomas knew that a sound diagnosis of the situation was essential before deciding on the appropriate marketing strategy for the brand for 1996-97.
The popularity of tea in India owes its origin to the long British rule in the sub-continent. By 1995-96, ‘’Black Tea’ was both the most popular and cheapest beverage in the country, accounting for a domestic consumption of 583000 tons out of national production of 780000 tons. Though per capita consumption was low at 0.63 kg/year/capita, the domestic consumption had been growing slightly higher than the population growth rate of 2%. The overall tea production in the country had however remained more or less static over the last five years.
Tea in India was grown in three regions – Assam, North Bengal (Dooars), and the Nilgiris (Tamilnadu and Kerala). Assam had the largest acreage under cultivation and accounted for close to 60% of tea production in India. Black tea was manufactured using two processes: a) Orthodox, and b) CTC (Crush, Tear, Curl) (Appendix I provides descriptions of these processes). CTC tea gave a stronger brew, and hence a higher cuppage (number of cups per a certain quantity of tea). Currently, most Indian tea was manufactured using the above process. Orthodox teas were made using a less rigorous manufacturing process and hence were lighter, less astringent and more flavour. Both CTC and Orthodox teas could be further classified as “leaf ” and “dust” on the basis of the leaf size. Broadly, the northern, eastern and parts of Western India consumed leaf tea while the entire south and some parts of Western India consumed dust tea.
BTIL was a leading player in the branded processed food and hot beverages industry, with several years of experience in marketing a whole range of successful food and beverage products/ brands. The beverages profit center of BTIL comprised of coffee and tea brands. The tea business of the company had several well-known national and regional brands catering to a variety of consumer segments. The company was the biggest licensed buyer in the tea auction centers of India, where processed tea were brought from the tea gardens for auctioning. Unlike Bata Tea, its formidable rival, BTIL did not own major tea gardens. However, the company had blending facilities where various grades of tea were blended and packaged for the various brands under the company’s portfolio.
Generally, there were two broad segments in the tea industry, households and hot-tea shops (HTS). The products of the company were distributed through Redistribution Stockists (RS) as well as distributors and dealers to various retail outlets and HTS’s. The prevalent margin that the company gave to the trade was 5% and the trade normally put a mark- up of another 5% while selling to the end-buyers (house hold or HTS).