2012 Alejandro Briceno 29/02/2012 Tetley’s Business Strategy
Aug 29, 2014
Alejandro Briceno
29/02/2012
2012Tetley’s Business Strategy
Content
Executive Summar
y
Vision statement.................................................................................................................- 1 -
Business model...................................................................................................................- 1 -
Goals and Objectives..........................................................................................................- 2 -
Current situation.................................................................................................................- 3 -
Products offered.................................................................................................................- 3 -
Tetley Hot Tea................................................................................................................- 3 -
Tetley Cold Tea..............................................................................................................- 4 -
Infusions.....................................................................................................................- 4 -
How did Tetley get here?...................................................................................................- 5 -
Available options................................................................................................................- 6 -
Tetley’s loose leaf tea.....................................................................................................- 6 -
Breakfast companion......................................................................................................- 7 -
Fitness tea.......................................................................................................................- 8 -
Hot tea Infusion..............................................................................................................- 8 -
Expected Outcomes............................................................................................................- 9 -
Future objetives..................................................................................................................- 9 -
APPENDIX 1 Appendix..................................................................................................- 11 -
Bibliography.....................................................................................................................- 13 -
Executive Summary
Tetley Canada Inc. is a subsidiary of Tata Global Beverages (TGB), previously Tata
Tea, since global acquisition of Tetley in 2000. The brand has been present in Canada since
the early 1900s but the company was established in Toronto on the 1960s.
Tetley is the tea industry leader in Canada with 34.4% share of value and 38% in
volume. It offers a variety of hot bagged teas (appendix 1) being the current leader in each
category. Canada currently serves TGB as a launch platform for new products, which
pressures Tetley Canada Inc. to innovate in products and marketing strategies.
TGB current strategy is focused on brands and products development and
improvements, distribution, process, people, and sustainability in order to become the
leader in good for you beverages.
More recently the company has successfully enter the RTD single serving tea
beverages with its Infusions product line gaining 14% market share during the year of
launch. It has also reclaimed leadership in the herbal tea category after an effective
marketing and advertising campaign carried out from 2008 to 2010 in which the company
reinvents its value proposition for the segment.
In order with the global strategy, the goals for the initiatives in this paper are to
increase brand value, awareness and profitability. As well as creating strategies that if
successful can be replicated in other markets.
Products where developed for the segments that are expected to have mayor growth
rate in future years and better correlate with consumer expected demands and current
product offering. Loose leaf premium tea, fitness tea, hot infusions are initiatives that
address consumer’s sophistication, health, and convenience expectations, respective.
Vision statement
“Tata Global Beverages is an integrated beverage business with a vision to become
global leader in good-for-you beverages through innovation, strategic acquisition and
organic growth.” (TATA Global Beverages )
In order to make this possible, the group currently base its strategy in six pillars:
brands, distribution, process, product, people, and sustainability.
(TATA Global Beverages, page 9 )
Business model
Tetley operation began in Canada as a global exporter in the early 1900s, when
Hudson Bay Stores made occasional orders to the UK office. By the late 1960s Tetley
Canada Inc. established offices in Toronto, with the objective of solving distribution and to
have a better understanding of the market. Two key elements in the objective of capitalize
on the great brand acceptance in the country.
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BrandsStrengthening and extending the portfolio of brands with consumer relevant differentiation
DistributionIncreasing penetration of our brands and product portfolio in identified non-stronghold markets such as USA and Russia
ProcessHaving process that work efficiently to deliver our strategic objectives with innovations as a key differentiator
ProductBuilding a portfolio of good-for-you beverage products with a focus on consumer relevant health and wellness, convenience and sustainability
PeopleBuilding an organization with clear differentiating capabilities
SustainabilityCreating competitive advantage and long term value creation through the development of a sustainable business model
In the year 2000, Tata Tea, former Tata Global Beverages, acquired Tetley and by
2003, the company started reorganizing worldwide operations. As the economic times
highlighted by that time “This varied market-specific international approach seems to be
paying off” (The Economic Times, par.3)
(Tata Brewing magic in Canada) According to the article, in the year 2005, Tetley
continued the outsourcing business model; having only 10 employees in Canada. As of
today, Tetley Canada Inc. serves as the launch platform for innovative products before they
become available worldwide.
Goals and Objectives
Increase brand value
Increase brand awareness
Position brand in segments with better margins
Avoid product seasonality
Increase use of tea in soft drinks preparations
Develop products that can be successful in USA and/ or Russia
We plan to utilize the available resources, local and global, to expand our leadership in
the Canadian tea market through the development of new products and joint ventures that
will target specific segments. By developing initiatives that will increase market share,
revenues and brand equity, as well as tea consumption in the country relative to soft drinks
consumption.
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Current situation
“When the shift toward tea culture started in Canada around 2000, Tetley's mission
was to systematically carve out leadership in every segment of hot tea” (Institute of
Communication Agencies, par. 1)
Tetley is the current market leader in Canada with 34.4% share by retail value, and
38% share in volume (TATA Global Beverages ). The outstanding results in Canada, is a
consequence of intensive research for new products. Effective marketing campaigns have
taken place in the last years maintaining the brand relevant.
Products offered
At the time Tetley offers 36 bagged tea varieties in the Canadian market, with a
product mix that includes: black, green, herbal, red, and white tea variants along with
specialty teas.
Tetley also RTD cold tea and infusions that can be mixed with water. These are
available in four different flavors, that combine green, black or white tea with fruit flavors
for a naturally sweeten experience.
Tetley Hot Tea
Varieties0%
10%20%30%40%50%60%70%80%90%
100%
10
9
6
542
Bagged Tea product mix CanadaWhite TeaRed TeaBlack TeaSpecialty TeaHerbal TeaGreen Tea
(Tetley Canada Website)
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Green tea selection is the largest taking 28% of the product mix. This selection is
suited since green tea market is expected to grow in the coming years (reference to Industry
paper)
Black Teas (14%) are stagnant and are mostly consumed by older women.
However, the specialty teas (17%), which are prepared with black tea as a base, currently
outpace regular tea sales by 4.21% (Nielsen).
Red tea (11%) is a relatively new segment for Tetley in Canada but has shown a
great potential base on its unique flavor and health properties.
White tea currently only has two variants in the product mix given slow contracting
demand for the tea in Canadian soil.
Herbal tea (25%) is the second largest selection in Tetley’s offering in the country,
and even when it is a category that has decreased in the last years, it is one that the
company wanted use as a platform for new costumers.
Tetley Cold Tea
InfusionsInfusions are natural brewed tea concentrates, commercialized in individual size to
be mixed with water (Tetley Canada Website). Infusions provide a flavorful alternative to
carbonated beverages. This is a product that has a great potential to introduce younger
audiences to the world of tea.
Tetley’s cold tea options also include RTD presentations in individual size and
family size. By having a selection of natural cold teas, Tetley can continue offering clients
all the healthy benefits of tea during the hot season and maintaining brand awareness all
year long.
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How did Tetley get here?
The brand has continued to expand the selection and follow industry trends by
offering customers exotic new flavors like mango and passion fruit, and adding superfruits
like pomegranate or acai to the blends. Tetley enjoys leadership in the black tea and
specialty segments (Tata Analyst report Q3 2011, p. 7), targeting 35 and older female
consumers and appealing to health properties of tea
In 2008 Tetley successfully introduced red tea in the Canadian market,
incorporating four different flavors to their portfolio. This move let the company capitalize
on a market that is shifting from black and white tea consumption.
From 2008 to 2010, the company also focused efforts in gaining leadership in the
herbal tea category. First of all, by better understanding, that consumer in this category
buys according to a specific need and not necessarily for the ingredients or flavors (Institute
of Communication Agencies). This way, Tetley’s herbal tea offering was reintroduced as
Tetley Color Therapy.
Tetley Color Therapy introduction represented a substantial difference in the way
herbal tea was commercialized, by offering clients a diverse selection for every mood.
Accompanied by an incredible campaign, doing conventional, online, and social advertising
to reposition their Herbal tea offering, resulting in gaining leadership in the sector, over
passing Celestial Seasonings, growing 22% in the FY 2010-2011 (TATA Global
Beverages, p. 9)
In addition to the success in the hot teas in Canada, the company expanded their
offering by including Tetley infusions, which are liquid tea concentrates to dissolve in
water and be consumed as an alternative to RTD teas and coffees, carbonated beverages
and powdered teas. Being commercialized first in the Canadian market achieving, the
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infusions won 14% market share in the single serve iced tea drink category within the first
year in the market (TATA Global Beverages, p. 13). Tetley is currently expanding Fusions
initial selection, expecting to grow market share in 2012.
The most-recent incursion by the Tetley's research department to reach the market is
Tetley Perk. A variant of the classical orange pekoe that incorporates naturally source
caffeine extracts to deliver the same caffeine proportion per cup as coffee. With this
offering, Tetley creates a more compelling alternative to coffee drinkers. Perk also reduces
switching cost for coffee consumers, at least caffeine wise.
Available options
The growing landscape of the Canadian tea industry offers us the possibility to
compete, not only by stealing market share from competitors, but to position Tetley as an
important player in non-carbonated beverages category.
Given Tetley’s history and brand leadership in Canada, we want the brand to carry
the torch for Tata Global Beverages in the country. With that in mind, we have developed
product strategies that will increase the market and increase the value captured by the
group.
Our strategy focus on: developing products for premium niche markets, associating
the Tetley brand to healthy and sport life, and increasing tea consumption occasions.
Tetley’s loose leaf tea
The Canadian tea consumer is expecting more value than that we can capture by
providing a hot cup of tea. Consumer sophistication is one, if not the most, relevant trend in
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the industry. Premium consumers are willing to pay more for an experience associated
with tea that involves: aroma, custom flavors, and quality.
Our Super-premium loose leaf tea product initiative consists of a variety of tea
blends, which will aim to capture this market. Taking advantage of our distribution
agreements throughout the country, we expect to become a more convenient option for this
segment by offering the premium quality, availability, and exclusive selection.
Tetley is already offering loose leaf tea in other countries but in a 32oz package
only available in two varieties. Our initial product offering will consist of 3oz to 5oz
packaging, available in 6 varieties.
With this collection we expect to capture during the first year 10% of the loose leaf
tea market and most important have a top of the line product where Tetley’s most
sophisticated customers can transfer to.
Breakfast companion
By leveraging on current strategic alliances with General Mills, we want to offer
samples of our current and new products along with their cereals. Along with advertising
campaign, this offers us the opportunity to increase brand awareness, attract younger
audiences, and associate tea consumption with breakfast.
This initiative is appealing given low cost associated due to already existing
products and apart from the advertisement effort; the only significant cost associated is the
variable cost according to the samples to be distributed.
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The breakfast companion represents a short term strategy that depending on success
rate can be replicated in the future in Canada or other countries.
Fitness tea
Functional beverages are the soft drink segment with mayor growth worldwide.
However, some drinks, have been put to question as not being harmful for teens (Tanner
2011). This offers the opportunity to generate partnerships with mayor functional beverage
players in the industry to integrate the health benefits of tea to their drinks.
The joint ventures will help us generate a product line that combines natural tea
with flavor and added functions. These partnerships are yet to be determined but initial
candidates will include: Red Bull, Gatorade and Canadian producers.
Fitness tea will generate a new consumption occasions, along with the participation
of Tetley in an industry estimated at $577.68MM
2006
2007
2008
2009
2010
2011
Estimated valuesActual value
Value(CAN $ MM) 442,00$ 466,31$ 491,96$ 519,01$ 547,56$ 577,68$ Avg. Growth 5,50%
Estimated values
(Agriculture & Agrifood Canada, par. 7)
Hot tea Infusion
Among the anticipated consumer demands upon the industry, are those of
convenience and individualization (Tea Industry Analysis, Anticipated consumer demands).
Tetley infusions have already proven to be a success in Canada and with this proposal; we
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want to target a younger audience that wants to enjoy a hot tea without having to deal with
the tea bag either carrying it on a backpack throughout the day or after preparation.
We expect hot tea infusions to become a star product among young tea drinkers who
want to try tea but don’t what to buy a 20 bag package. At the same time, Tetley will be
offering a more convenient, innovative way to prepare hot tea.
Hot tea infusions offer great synergies potential with the current infusions available
(marketing, advertising, commercialization, and distribution). We are also expecting to
charge a price premium associated with the novelty and individual presentation.
Expected Outcomes
Through the introduction of the product initiatives described above, the following
outcomes are expected within the first five years:
Increase of Tetley brand market share due to the inclusion of younger consumers
Increase of tea consumption compared to coffee by at least 2% by 2016
Increase Tetley’s brand awareness in the RTD cold tea segment and be on par with
Lipton iced tea (Appendix 1)
Future objetives
By taking action in the initiatives described, we are opening a door for future
products and alliances that can increment and in some cases disrupt Tetley’s business
model.
Future initiatives that had been considered as follow up, but not developed at this stage, are:
Tetley’s House of tea
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o Similar to Nespresso Stores (Appendix 2), providing customers a mayor
experience as selling point instead of final product
Tetley’s tea capsules for coffee systems on the market
o Hein Celestials already has capsules for the K- cup system 12.5% share of
K-cup capsules sold in 2011 (Appendix 3)
Tetley’s capsules system
o Development of own capsules systems for offices and service stations and
other commercial places
Tetley’s Hot & Cold tea vending machines
o System that can deliver all Tetley flavors available in hot and cold varieties
as well as infusions. The idea is based on the Coca Cola Freestyle machine
(Appendix 4)
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Appendix APPENDIX 1
(Lipton Tea Canada Website)
APPENDIX 2
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APPENDIX 3
http://blog.cdccoffee.com/index.php/tag/k-cups/
APPENDIX 4
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Bibliography
Agriculture & Agrifood Canada. AGR. 24 02 2012. 24 02 2012 <http://webcache.googleusercontent.com/search?q=cache:cU9t2JzDa4YJ:www.ats-sea.agr.gc.ca/can/4469-eng.htm+canadian+energy+drink+market&cd=1&hl=es&ct=clnk&gl=ca>.
Institute of Communication Agencies. "Warc." 2012. Warc. 23 02 2012 <http://www.warc.com.ezproxy.library.yorku.ca/Content/ContentViewer.aspx?MasterContentRef=3d8d39c9-c6fe-4857-bcd0-3935c08d1a84&q=tetley>.
Tanner, Lindsey. "msnbc." 14 02 2011. msnbc. 29 02 2012 <http://www.msnbc.msn.com/id/41577256/ns/health-childrens_health/t/energy-drinks-can-be-dangerous-teens-report-says/#.T06RgfEaN2A>.
Tata Analyst report Q3 2011. "TGB Q3 report." Analyst report. 2012.
Tata Brewing magic in Canada. "Tata." 09 2005. Tata. 24 02 2012 <http://www.tata.com/company/Articles/inside.aspx?artid=yYvTKApC34I=>.
TATA Global Beverages . "Annual Report and Financial statements 2010/2011." Annual Shareholders report. 2012.
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Tetley Canada Website. Tetley Canada. 23 02 2012. 23 02 2012 <http://tetley.ca/English/TetleyTeas/Products.cfm>.
The Economic Times. "Tata Tea realigning Tetley operations worldwide." 25 02 2003. 23 02 2012 <http://www.tata.com/company/Media/inside.aspx?artid=8XOfX4mgypk=>.
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