Analysis of Tata Tea in Indian Tea Industry and Its Comparison With Hul

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analtsis of tea industry trends
    ANALYSIS OFTATA TEA ININDIAN TEAINDUSTRYAND ITSCOMPARISONWITH HUL   Indian Tea Industry:  The tea industry in Indiais about 170 years old. Itoccupies an important place and plays a veryuseful part in the nationaleconomy. India produces30% of the total teasupply of world. The totalturnover of Indian teaindustry is around 8000crores. India producedaround 945 Kilo tonnesof tea in2008 rising from 850 kilotonnes in 1999 HERFINDAHL INDEXOF INDIAN TEAINDUSTRY  Herfindahl index of Indian tea industry is0.07. This value is verysmall and it shows ahighlycompetitive monopolisticcompetitive market. Thecompetition in theindustry is mainly basedon product differentiation.Each company tries to  differentiate its product tocater different customers.Eg. Masala tea, leaf tea,dust tea, etc.There are alarge number of companies in the market Economic Analysis of Tata Tea  Tata Tea has a marketshare of around 15% andit lies at second place inthe market in terms of value.HUL is the market leader with 20.2% market sharewhile Mcleod Russel liesat 8%. (Figure 3)Tata Tea also suffered inthe period 2000-03 due toslowdown in the IndianTea Industry. Its saleswent down and profit became negligent. ButTata Tea came back strongly in 2004 whilestill other companies were fightingto survive. COMPARISON OFTATA TEA WITHHUL  HUL is the market leader in the industry with20.2% of market share(value). It operates under itstwo brands, Lipton andBrooke Bond under which it has several sub- brands like Taaza,TajMahal,Green Label, etc. Apart  from producing tea fromits own estates, HUL also purchases finished goodsfrom third party vendorsat cheap rates. Theaverage price at whichHUL sells its products isRs.170/kg which is aroundRs. 8 higher than that of Tata Tea which is one of the reasons why HUL hasgreater revenue than TataTea. CONCLUSION  Indian Tea Industry is agrowth industry and itsdomesticdemand/consumption isincreasing.India is consuming 75%of its total production indomestic market.Although the exports areon thelower side, but they areshowing signs of improvement. (Figure 8)The war between both teagiants will continue to bethere with bothcompanies makingstrategies to bethe market leader. HULhas entered into low endsegment with its new  product “Sehatmand” thuscovering whole of teamarket. It has also startedaggressive counter advertisement.Tata Tea is planning to  keep working on its “Jaago Re” campaign. It is targeting rural marketswherethere is large scope of growth as none of the brands is a lot penetratedin the rural market. TataTea isalso working to controlits costs and so far it hassucceeded to someextent. Another move isthat it is planning to integrate itscoffee and bottling business with tea business to achieveeconomies of scale.We have to wait andwatch who wins this war for market leadership intea industry.Reference:   comparison-with-hul#ixzz2d2mV91DU Company History - Goodricke Group Ltd.YEAR EVENTS 1977 - The company was incorporated on 14th June and the certificate of commencement of business was obtained on 27th June. It was formed to take over the Indian business and assets of 8 sterling tea companies comprising 17 tea estates.- In terms of the scheme of Amalgamation sanctioned by the Calcutta High Court the companyacquired the Indian undertakings of the sterling companies as a going concern with all their assets and liabilities as at the close of business on 31st December. The company carries oncultivation of tea and coffee plantations.- Eight sterling tea companies viz., The Assam-Doors Tea Co. Ltd., Hope Tea Co. Ltd., TheLebong Chulsa Tea Co. Ltd., The British Darjeeling Tea Co. Ltd., The Chulsa Tea Co. Ltd., TheLeesh River Tea Co. Ltd., The Danguajhar Tea Co. Ltd., and The Meenglas Tea Co. Ltd., wereamalgamated with the Company with from 31st December.- 14,43,000 No. of equity shares were allotted by the Company to Assam-Dooars InvestmentsLtd., U.K. and 7,77,000 No. of equity shares of Rs 10 each to Western-Dooars Investments Ltd.,
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