Tea Industry Analysis

attention ANALYSIS Indian laternoon afternoon afternoon afternoon tea leaf leaf leaf leaf leaf date leaf leaftime leaftime assiduity The tea persistence in India is around 170 years old. It occupies an near-valu able place and plays a actu on the wholey create use offul part in the national economy. Robert Bruce in 1823 disc everywhereed tea plants development wild in upper Brahmaputra V eithithery. In 1838 the first Indian tea from Assam was sent to United Kingdom for public sale. at that placeafter, it was extended to early(a) separate of the soil surrounded by 50s and 60s of the lead century. However, owing to certain particular soil and climatic requirements its close was confined to lone(prenominal) certain parts of the boorish.Tea plantations in India be mainly located in artless hills and backward aras of North-eastern and southwardern States. Major tea mystifying atomic number 18as of the realm argon c erstntrated in Assam, West Bengal , Tamil Nadu and Kerala. The different beas where tea is cock-a-hoop to a sm exclusively extent are Karnataka, Tripura, Himachal Pradesh, Uttaranchal, Arunachal Pradesh, populaceipur, Sikkim, Nagaland, Meghalaya, Mizoram, Bihar and Orissa. Unlike most(prenominal) other tea producing and exporting countries, India has dual manufacturing base. India produces both CTC and Orthodox teas in summing up to green tea.The weightage lies with the source repayable to domestic consumers preference. Orthodox tea merchandise is balanced prefatorialally with the export have. overlapion of green tea in India is small. The competitors to India in tea export are Sri Lanka, Kenya, China, Indonesia and Vietnam. Tea is an agro-based commodity and is subjected to vagaries of nature. disdain inauspicious agro climatic condition experienced in tea growing areas in many years, Indian Tea Plantation Industry is subject to maintain substantial growth in relation to volume of Indian tea mathe matical merchandiseion during the last one decade.There has been a outstanding tilt in tea disposal in favour of domestic merchandise since fifties. While at the time of Independence only 79 M. Kgs or about 31% of total production of 255 M. Kgs of tea was carry for internal breathing in, in 2006 as such(prenominal)(prenominal) as 771 M. Kgs or about 81% of total production of 956 M. Kgs of tea went for domestic use of goods and services. Such a massive augment in domestic consumption has been due to make up in population, greater urbanisation, plus in income and standard of living etc.Indian tea export has been an serious foreign swop wage wage earner for the country. There was an inherent growth in export earnings from tea over the years. Till 70s, UK was the study buyer of Indian tea Since 80s USSR became the big(p)st buyer of Indian tea due to representence of the affair agreement between India and erstwhile USSR. USSR happened to be the major buyer of Indian t ea explanation for more than 50% of the total Indian export till 1991. However, with the chemical decomposition reaction of USSR and abolition of Central Buying Mechanism, Indian tea exports suffered a pile back from 1992-93.However, Indian Tea exports to Russia/CIS countries recovered from the setback since 1993 under rupee Debt Repayment Route facilities as too due to long end level off agreement on tea entered into between Russia and India. De inviteed scenario again started since 2001 due to change in consumption pattern, i. e. switch over from CTC to Orthodox as per consumer preference and thus India has lost the Russian grocery store. A nonher reason for crepuscle in export of Indian tea to Russia is offering of teas at bring down monetary fosters by China, South Asiatic countries like Indonesia and Vietnam.The major matched countries in tea in the public are Sri Lanka, Kenya, China and Indonesia. China is the major producer of green tea while Sri Lanka and Indone sia are producing mainly Jewish-Orthodox varieties of tea. Kenya is basically a CTC tea producing country. While India is confront emulation from Sri Lanka and Indonesia with touch on to export of orthodox teas and from China with regard to green tea export, it is facing competition from Kenya and from other Afri piece of tail countries in exporting CTC teas.Because of absence of large domestic base and due to comparatively small range of foodstuffable items, Sri Lanka and Kenya cast off an edge over India to offload their teas in any planetary commercialises. This is one of the reasons of nobleer(prenominal) volume of export by Sri Lanka and Kenya compared to India. A nonher important point is that, U. K has substantial interest in tea cultivation in Kenya. Most of the sterling companies, after Indianisation due to implementation of FERA turning started tea cultivation in Kenya. So, it makes billet sense for U. K. to buy tea from Kenya and Kenya became the largest su pplier of tea to U.K. Tea is an essential item of domestic consumption and is the major deglutition in India. Tea is in any case considered as the cheapest beverage amongst the beverages operational in India. Tea Industry provides gainful send troth to more than a one thousand thousand workers mainly suck inn from the backward and socially weaker section of the society. It is besides a substantial foreign replacement earner and provides sizeable amount of revenue to the State and Central Exchequer. The total overturn of the Indian tea exertion is in the vicinity of Rs. 8000 Crs. Presently, Indian tea industry is having (as on 31. 12. 2006 ) 1655 registered Tea Manufacturers, 2008 registered Tea Exporters, 5148 trope of registered tea buyers, cardinal tea Auction centres. The Indian tea industry is witnessing a sweat movementious revival of fortunes with exports rising and domestic consumption gearing up. The industry axiom an impressive 8. 8 share increase in to tal tea auction prices in the five months ended August 2004. The tea industry is one of the oldest organized industries in India with a large network of tea producers, retailers, distri just straightawayors, auctioneers, exporters and packers. Tea is grown in more than 32 countries among which India is the largest producer.The industry provides direct employment to more than a million workers of which a sizeable number are women. More than two million heap derive their financial backing from ancillary activities associated with production, measure out addition and grocerying of tea. The tea trade is a major contributor to the countrys economy. Substantial foreign exchange earnings with negligible import contented, contribution to the State and Central exchequers, preserving a pollution free biosphere and soil conversation are nigh of the important features of the tea industry.Tea Exports increase overdue to global summate imbalance, tea exports from India during the Jan- Au g 2004, period increased to 107. 7 million kg against 92. 4 million kg in the corresponding period last year. However, the average price realizations dropped to Rs 83. 20 per kg in 2004 from Rs 100. 51 per kg in 2003. The stand in export volumes has been boosted by higher take aim from Pakistan, Iran, Iraq and other gulf countries.The unconventional destinations like Japan, Germany, Singapore, Australia, USA and Canada have emerged as latent destinations in novel months where Indian tea is being exported in greater volumes and has preserve 88 percentage growth in the first five months of calendar year. The all-India average export realization tumbled drastically by 17. 2 percent to Rs 83. 20 per kg in the five months ended August 2004, from Rs 100. 51 per kg in the corresponding previous period. The fall in the average export realization was relatively modest at 5 percent to Rs 118. 8 per kg in north India, while it was steeper at 16. percent to Rs 58. 61 per kg in south Indi a. Even as exports rose, imports too, jumped sharply. There was a 225 percent increase in tea imports to 17. 83 mn kg in the five months ended August 2004 compared to 5. 47 mn kg in the corresponding period last year. drawframe Tea is indigenous to India and is an area where the country can spot a lot of pride. This is mainly because of its pre-eminence as a foreign exchange earner and its contributions to the countrys GNP. In all aspects of tea production, consumption and export, India has emerged to be the world leader, mainly because it accounts for 31% of global production.It is perhaps the only industry where India has carry its leadership over the last 150 years. Tea production in India has a very interesting history to it. The range of tea offered by India from the original Orthodox to CTC and Green Tea, from the aroma and flavour of Darjeeling Tea to the powerful Assam and Nilgiri Tea- remains unparalleled in the world. Tea trading in the domestic merchandise is done i n two ways- Auction and Private Selling. mart Reports are received from the six major auction centres in India, namely, Calcutta, Guwahati,Siliguri, Cochin, Coimbatore and * infestation ANALYSIS GLOBALLY *( u. k tea market ) Political Factors The UK political sympathies supports the fair trading commitment for both the local anesthetic consumers and foreign producers (News BBC, 2005). This is discovered by a requirement on labeling that a stamp of Fairtrade must be included in the products for consumer reference. This is a way to give the buyers a chance to patronize those companies that are producing tea responsibly. However, this as well as shows that the UK Government do not have strict policies on fair trade.Due to this, the recent calls of Indian workers for the UK Government to act against Unilever due to unfair trade acts and the inability of the latter to act speedily on the subject area have wayward consequences on future exporters. If big and global companies such a s Unilever manage to rip profits un-scaled with the source plantation ab pathway, the competitiveness of crude entrants would be reduced. For example, Unilever can engage to price wars as well as ascertain substantial growth funds. To address this scenario, prospective exporters are expected to draw a niche market to go away with direct competition with large companies.In 2004, the calls of EU Com delegacy against the UK Government to implement the tea break law concretized the significant role of tea in the country as well as the Union as a unit of measurement (BBC News, 2005). In contrast but in support to the increasing importance of tea in the UK, the Government used the gesture of providing free to all British to motivate them to go to the cherished Millennium Dome. Also, tea boastful is too used to foster cohesion among British especially in 2005 where terrorist attacks plague the country (Watley Website).Throughout the UK political history since the introduction of t ea in Britain by Catherine of Braganza and rationing of tea to UK soldiers of First World War, tea played a major role in government affairs. Thus, it can be concluded that the approach of the Government to tea imports are coercive. However, on that point is still a question of protecting their local producers. Specifically, imports will only be allowed if local production is under shortage or if the country cannot get the internal benefits greater the cost of doing business with foreign tea manufacturers (Tea Website).In contrast, in that respect are correspondent adverse actions that the Government compel on tea campaigns (BBC News, 2007). For example, the Advertising Standards Authority apprehended the UK Tea Council, for dis-informing the market about the benefits of tea. Even though the Council cited some(prenominal) papers to prove that the press release is facts, the Authority argued the lack of substantial evidence. More importantly, the Authority cute the council to avoid making ill-supported ads that may run counter to the health policies of the Government. Due to this, it can be said that the Government does not have a firm stand about the health benefits of tea.In effect, future ads to increase the market for tea may have weaker impact to consumers due to absence of full government support. However, as history suggests which includes events dated back as far as Opium Wars, UK Government places a substantial importance in tea trade. But the role of exporters such as Chinese merchants pull down as UK have established its own tea fields in UK areas such as Cornwall. Economic Factors Comparing the UK tea prices of today and 1977 licks, supermarkets are selling tea bags much cheaper compared to several decades ago (Telegraph Website).This is a mature opportunity for exporters because the natural resources as well as cheap labor in their home countries can be used to engage in price competition in the UK. However, in that respect is a pitfal l. This is true when the price of exported teas is so low that the operations of the exporters are in jeopardy once the market continuously put pressure on tea prices. There are several risk factors that influence of price reduction in of UK tea which can include competitive policies of retailers to as far as the weak US dollar.Due to this purlieu, exporters might not have much incentive in selling in the UK given that there are trade constraints and disincentives coupled with heavy competition. Ultimately, exporters have to battle with volume quite an than graphic symbol. In contrast, there is an advantage of exporters who can offer innovative products. In this way, the market will not rely on price factors to make their finiss rather to the qualities of tea products which is also the source of loyalty. There are numerous characteristics of UK that makes it an attractive destination for exporter goods.Being the second largest economy in Europe, UK is also one of the most globa lized advanced economies the world (UK Statistics). There is an opportunity for exporters to lick the inclusion of UK in the EU and the latter influence in the trade agreements of the former. When this is enforced, entry to UK market may serve as a window of opportunity to infiltrate EU state members. Free market is also the main framework of UK institutions which limits the influence of UK in trades. According to National Statistics, UK also has low inflation, unemployment and interest rates and ranked one of the most superscript economies in the region.With this in mind, exporters can easily attached bulk of positive issues to the production, start-up and marketing environment in the country. In the contrary, UK still has enigmas in diminution income ine tonicity. Although not a good sign in aggregate, exporters can use niche marketing to exploit this bottleneck. Competition, thus, is reduced when direct rivalry is gap over the income boundaries of the people. With respect t o some concepts on tea business, influx of tea exports can reduce the capacities of monopo appoint but this can result to wild rivalry (Market Trade Fair).Thus, exporters can reduce the competitiveness of local producers. With cheaper labor and known abundant natural resources in developing countries, UK tea industry may not have the ability to coupe with them. Further, switching costs of tea products are low which makes customers have the higher bargaining especially in terms of price and property. Considering this, exporters that have the upper hand in saving broader sorting of teas compared to local producers. With Asian touch to the products, the market may also feel that exports have higher nutritional rank than local counterparts.However, there is a very high risk of failure in the industry especially if the location is UK. Profits margins are low, fixed assets are high, enumeration are perishable and local producers may have been embedded. This is to exclude adverse cor porate responsibility that may result to low margin such as the example of Unilever criticized approach in Indian tea farms. accessible Factors It is internationally cl patterned that tea is the second most popular drink after water (Rico Magda Research, 2006). There are at least 800 million cups of tea that are consumed in a global scale.Of this figure, UK is the country that has the highest share per capita on a daily basis. Without demographic restrictions on the market regarding their preference of tea (i. e. at all ages), the UK tea market loomed to at half a billion value with everyday motive of tea at one hundred sixty million cups. According to Mintel Report, green tea is preferred by the market apart from red and black variants of tea because of green teas relatively higher pleasurable taste and health benefits. As the country is on the jacket crown of its becoming a cafe society culture (Elopak Website), numerous tea-makers all over the world saw opportunity of this tr end.Not only is the basic qualities tea encouraging UK market to buy them. As a matter of fact, several new entrants that introduced different varieties and innovations on tea products are also becoming booming. Specialty teas such as those with spicy flavors are hugely-accepted. The UK market continues to support tea-makers and retailers as long as they are able to address the health, safety and taste needs while innovation serves as a good foundation to introduce new products. If accepted, these innovations can make a demand shift from ordinary tea features to creative ones. Another congresswoman is the changing lifestyle of the UK market.The preceding features can also be successful if they are able to make tea as a design of the ones consuming them. This is when stylish tea from niche players became critical. Thus, the growth in of tea industry in the UK is expected to be at least 7%. Delving to other health products, UKs consumption of oatmeal including porridge from 2003 t o 2005 significantly increased at least 20% (Baker Website). This indicated that the health consciousness of consumers have revived several years ago. The interesting part is the large part of UK consumption of these products is sourced from cafes shops similar to teas.Convenience in eating as well as render for salutary diet is two of the primary motivation of the consumer of their increased support. parallel of latitude to iced tea, the positioning of cold cereal market is good with annual increase of at least 10%. This means that the typical ingestion of healthy products is changing (Food Quality News). With the aid of governmental information efforts, more UK people are developing the habit of evaluating the nutritional content of each product label before actual purchase. This improvement is an extension of 2000 shifts on health beliefs of the population.There are many benefits of tea from the Asian tests and experiences that are not yet as many as UK (Info Cancer Website). In fact, there are minimal UK studies to confirm that Asian evidence of cancer-minimizing capabilities of green tea. However, the UK market as well as some UK analyst has concluded that the Asian benefits are yet to be acquired by the country simply because the former is relatively consuming less quantities of tea. On the other hand, there are UK laboratory test that observed that tea has higher caffein content than regular cola, energy drinks and chocolate.Caffeine is a substance that has positive personal effects to people such as increased alertness, treatment of asthma and assist blood flow. To be in safe takes of consumption, a person should not exceed 6 cups of tea in a day. Finally, increase caffeine consumption would lead to inability to sleep, nervousness and frequent palpitation of the tinder (Tea Website). There are also studies that showed increased risk of bone illnesses such as osteoporosis and adverse effects on pregnancy if caffeine intake is not regulated. Tech nological FactorsIn European standards, UK agri ethnic production and its level of technology is efficient and highly-automized. As illustration, only 2% of its labor is in required to support sixty percent of its agricultural sector (Nutri-Ingredients). However, the list of main agricultural outputs of the country excludes tea. This is because that tea is abundant and typical to Asian regions. There are private companies such as Unilever that are able to re-produce tea in the UK. But this is generally limited in variety and in texture.For example, in 2003, White tea became a successful product introduction in the UK because it is an exotic plant to the consumers. Obviously, the advantage of producing and selling exotic teas in the UK is that it is a good hedge in any technical advancements and efficiency in production of developed countries. Also, medicinal value is believed to be redeemed for products that do not undergo intensive technological application. To this part, exporter s would be encouraged to enter and compete the UK market because what they are offering are singular products.Historically, unique products have the ability to run against market trends (e. g. scheme of dishonor prices). UK is one of those developed economies that maintained the role of agriculture in the economy despite radical shift of sectors towards service and manufacturing industries (IATC Website). In fact, the country is one of the leading nations that produce safe and efficient harvests. The quality of UKs products is reflected in its consumer protection against low quality and sometimes foreign foods. This can be a source of weakness against tea products from developing countries.The good issues are that China is a close trading partner of UK. The apexography of UK includes fertile farmlands, sociable climate, pioneering breeding practices and application of science. However, these features may as well highlight the competitive advantage of Asian tea which is derivin g in tralatitious, religious and cultural uniqueness. Even if some varieties of Asia teas are being able to be re-produced and propagated in UK, the impressions of healthy and effective may not be synonymous to all UK customers. ConclusionThe PEST analysis above showed that Chinese tea exporters have a good opportunity in the UK market. The tea sector in the country has variety of advantages against exporters. This includes regulatory compatibility, consumer familiarity, efficient production practices, arable lands and high purchasing power of the people. On the contrary, Chinese exports have also its advantages such as traditional approach to production, unique land setting, embeddedness of tea as cultural medicine, competitive prices and a new look to tea products.The last feature and the health value Chinese tea exports would be the most critical factors for todays slowing tea sector. To address this issue, iced tea is the answer. This will frustration UK-based products especia lly if the Chinese exporter can offer cold and unique convention of tea. Specifically, the ability of its product to be preferred by customers as earnest or cold can be an indispensible characteristic to increase its market share abruptly. drawframe drawframe Silver flavour Exports is a trading and packaging companionship that specializes in high quality INDIAN TEASRICE SUGAR WHEAT FLOUR vision To be indias foremost tea exporters. ACHIEVE MARKET THROUGH lead FOR BRANDED TEA WORLD WIDE. TO BE PERCIEVED AS MOST modernistic IN TEA BASED BEVERAGES LONG TERM PROFITABLE reaping VALUES RESPONSIBILITY- Be responsible and sensetive abiding all the norms regulations of various countries. Product portfolio Tea ( primary) Rice ( secondary ) Sugar( secondary) Service portfolio Packing for reputed groups like - Goplajee commit life consumer care MANAGEMENT SUMMARY Management comprises of highly adapted mangers at all the levels of the organization, experienced managers and consultants along with strong market look team forms the strong base for SILVER STEP EXPORTS. pinch centering has the clear vision to achieve and form the policies and strategies and take the organization to new heights . SWOT ANALYSIS STRENGHTS Real strength of SSE lies in its capacity and capability to produce any kind of tea in any quantity with best possible quality. The capability and expertise of top management enables the organization to take quick and effective decisions.With a all-inclusive variety of product to offer SSE enjoys a premium part of customers to which it supplys with best quality product. Strengths at a glance Superior quality Best prices Standardized product Total quality management programs tractableness and adaptability. Innovation WEAKNESS Organizations operate in an economic and social environment which are to be taken care of by the organization itself, weakness Is not merely due to one specific factor but aggregate of many , Main weakness lies in, is of i nventory a wide variety of tea ( approx. 30 flavours ) are available in the market keeping all the stock ready at one point of time is sometimes risky as thw quality may detoriate over a period of time. Hence, piling up inventories is sometimes a problem for the organization. Inventory management Price fluctuations ( industry based factor) OPPORTUNITIES Tea is an improbably ancient beverage. For thousands of years leaves have fallen into the cups of great rulers, philosophers and spiritual leaders. Man has learned the way of the leaf. We have made this revered beverage a central part of almost every world culture.Can there be anything new to add? Its a question I job every year. And, at the beginning of every year here I sit at the computer like a cartoon figure with an angel on one shoulder and a tiny baffle on the other, a victim of my own conflicting opinions. With increasing demand for tea worldwide and with innovation taking place every now and then creating new and better p roducts SILVER STEP EXPORTS aims to achieve a high growth rate capturing new markets in DOMESTIC as well as INTERNATIONAL markets.With the ever increasing demand for tea SSE has a long way to go adding new products to its wicket and creating new and bigger markets globally. SSE also has RICE AND SUGAR in its baskets which also has a very high market and potential to grow even better so SSE can also aim at exporting these products along with the excellence in tea trade. OPPORTUNITIES AT A GLANCE. Capturing more market share. Domestic market capturing Exporting tea Exporting rice and sugar. Creating new trade names. THREATS There has been a significant value erosion in the tea market, with regional players offering mediocre products at low prices or with ttractive promotions Despite the fact that tea is the most traditional and affordable beverage in India and probably because of as well it is perceive as being old fashioned and less functional than some substitute products. Wit h increasing delicacy it is difficult to retain customers for using quality products as the duplicate products are of cheaper quality and therefore are available for low prices Increasing local players. Duplicacy Cheap quality at lower prices General competition level Consumer taste and preferences.BUSINESS MODEL merchandise plan & its strategies makes product race incompetitive situation and executes brand image, which givesloyal customers to the company. It helps the product to make its independent identity offer diverse brands after taking local tastes into account. Our products vary in terms of blend, pricing and packaging formats to cater to the unique needs of each segment. strategy is to invest in long-term brand building for sustained growth. Strengthen our business in existing geographies elaboration into new geographies New product development and building business in Black Tea Fruit and Herbal Infusions Ready to Drink Teas come on of home Building operational cap ability to enable the commercial business to achieve growth Management Strength Increase market share. bring back brand awareness within consumer draw a bead on market and business target market. The road ahead promises plenty. The goal is to move the brand portfolio from its current 19 per cent value share to a 25 per cent value share in the medium term drawframe diffusion PLAN drawframe drawframe COMETETIVE ANALYSIS monetary PERFORMANCE Organization has grown at a rapid grand capturing new markets in a very short span of time of its operation. *KEY SUCCESS FACTOR & strategies*. Success mantra for SILVER STEP EXPORTS lies in the Procurement of raw materials . Suppliers Manpower No compromise on quality. Top level management of SSE allows the organization to work in the most effective and efficient manner . SSE believes in providing best value to its customer, Hence no compromise on quality. Market segmentation It consists of a group of customer who share similar set of wan ts Geographically South India, southeast India, southwest India, north india , J&k , Punjab and haryana Social relegate** Working class, middle class, upper middle class FINDINGS AND OBSERVATIONS Training was undergone in the field of marketing wherein a detail study of tea market was carried out as in what type of product is liked in various parts of the world. SSE has a very wide cooking stove in the domestic as well as international market A strong hold in domestic markets like J&K , Punjab , Haryana, U.P serves SSE as a base , an opportunity to build on its market and create a name for itself by securing more customer base This is possible on through the supply chain The Super stockiest , agents, wholesalers and retailers Which has been a strength for SSE. SSE has been a market leader in flavoured tea market. KEY LEARININGS IN THE ORGANIZATION During the score of my internship I gained a lot from the organization way of working , its mission , objectives and methods adopt ed to accomplish it, Some key learnings are Brisk decision making Creating harmony among the levels of organization.Effectively control the supply chain. No company owned retail outlets. No direct reach to the consumers. CONCLUSION The road ahead promises plenty. Tea market has a very wide potential to grow with wide variety of tea available and increasing demand of tea worldwide, Tea Trade has emerged as a new proportionality of trade to the world with ever increasing rise in consumption of tea it has opened a wide new markets to explore and cater to their demand. Besides the domestic consumption a surplus is found to exist in the end which can be used to cater demand of other countries so that