Specialty teas - emerging trends about indian urban consumers

 https://www.linkedin.com/pulse/green-specialty-teas-emerging-trends-indian-urban-consumers-verma

The Indian tea industry is estimated to be at a whopping Rs 22000 crore annually (US $ 3.35 billion) and is steadily increasing. Indians are continuously seeking changes in their lifestyles and food habits and experimenting with cuisines and beverages. Green tea is now a brand in itself. It has established a segment of tea drinkers, who are more health-conscious, and also those who lead a lifestyle where a routine diet cannot be followed.

India stands third in the global tea industry in terms of retail volumes & traditional styles of tea consumption are gradually changing in Metro’s & A Class cities. Consumers are looking for unique tea varieties and tea-drinking experience & Specialty teas is the fastest growing segment in the industry. Current Trends in Specialty Tea in India are defined by: Shifting Demographics, Affluence, Education, youth, health consciousness & Social responsibility.

Specialty tea is attracting affluent, young, educated and health conscious consumers who like to experiment with unique and organic flavors. Young female & male students and professionals ages 22-35 who get their news primarily from internet sites, blogger. Also the profitability involved in specialty categories will attract more manufacturers & tea cafes.

The green tea category has been growing at around 30% plus year-on-year, compared with black tea that is growing at around two per cent. The specialty tea market is moving from a general hot beverage directed purchase into a purchase led by functionality and wellness benefits in products. The value-added category (tea bags / green & flavored teas) has about 4% share in terms of value which translates into Rs 1000 Cr annual turnover. 

The consumer preference moving from plain green tea onto flavoured teas. With 10 % of the total population in the 15-25 age group, new tea adopters from this age group have been the biggest growth drivers in the category. There are over 50 flavors in the market dominated by major brands: Taj Mahal, Tetley, Twining, Typhoo, Dilmah, Organic & many other regional brands.

The focus for specialty teas is to get people aged between 25 and 40 to drink tea, through Social media campaigns on Instagram, Facebook and Twitter. But real change is starting to happen as customers – especially online where they expect clear, transparent company information – dig deeper into where their tea.

The focus of few brands is on offering a Spiced Tea range enriched with health benefits of select spices like cardamom, clove, black pepper, cinnamon, ginger etc. The art is to redefine the concept of tea drinking by introducing flavors that are unique to the Indian consumer.

Recently Starbucks introduced Teavana specialty teas in 88 of its stores in India. It was already serving nine varieties of tea, and will double its tea offering with its new range. However, Starbucks is not alone in its race to get tea-drinkers into a cafe -- Chaayos, Chai Point, Tea Trails and Tea Point are have also opened tea cafes.

The largest consumption of tea is by people in the age group of 18-36, and on average they consume over 3 cups of tea daily. Tea has 90% penetration in India. 84% of all urban households consume only tea. Compared to this, coffee pales as it is consumed only by 1 in 12 urban households. In fact even in South Indian states, tea is consumed on an average four times more than coffee. This consumption pattern means a big future of specialty teas in the country.

The café industry has been dominated by coffee chains and continues to do so. There is very little activity as far as tea cafés are concerned with a very few organised chains running tea cafés Even the Tea café industry at large has been steadily going. Hence there is plenty of opportunity for tea cafés to prosper. Chayos & Chai point are two successful ventures in this direction.

The chaos in the ‘specialty’ tea market in India like in global market comes from the fact that no one, from buyer to seller, actually knows the value of the tea they are buying or selling, or how to clearly establish its value. Price is derived mostly from marketing — price is certainly not based on the quality of the tea. The specialty coffee industry has done an excellent job of establishing standards & that is needed in the specialty tea industry too here

Specialty Tea Marketers need to pay close attention to the following trends among the Indian consumers in order to expand & drive the category. The Indian consumer is demanding, value conscious and evolving. Consumers have a barrage of choices in front of them, leaving marketers scrambling to establish value, stand out and deliver. Marketers need ingenious ways to reach and increase brand appeal, and find their way into consumers’ shopping carts. Health and wellness foods, with a growth rate of about 10%, it is a promising segment for manufacturers to tap into. Categories that are in vogue like green teas, oats, noodles promise to drive growth.

They shop more FMCG in chemist stores than you would imagine. The chemist channel has been an outperformer for the FMCG market. FMCG categories like packaged tea that earlier were not even considered for sale in this channel are now flying off the chemist shelves. Brands like GAIA & Himalaya teas have focused in this distribution channel from the beginning

They are willing to spend a disproportionate part of their monthly budget on health, hygiene and wellness. Most of the specialty tea brands have positioned themselves on the wellness USP. 

They are more willing to experiment and try new products than ever before. 49% of consumers who shop in traditional trade and 59% who shop in modern trade say that they love to try new things. Modern trade outlets, specifically, have emerged as innovation laboratories for consumers who use such stores to experiment with new launches across categories. 

They increasingly prefer private-label brands. Private labels or store brands are becoming a big deal to shoppers. About 5% of all modern trade sales in India are store branded (versus 1% in China and 3% in Indonesia)

They want to be entertained first and educated second. Indian urban consumers have access to over 900 TV channels .The more than 300 million Smartphone users have access to content on their fingertips. Media habits are fast changing. Indian consumers now want to be entertained before educated. The first seven seconds in an ad have become more crucial than ever before. These crucial moments decide whether an ad will retain a viewer’s attention span. Therefore, content is key, and marketers should think long and hard about what content to take to which screen (across TV, online, and mobile). Consumers react best to larger screens for emotion but are more attentive to smaller screens.

They are willing to switch stores for the right promotion. Promotion sensitivity has increased meaningfully for FMCG in India. Consumers are actively looking for them, and promotions have the ability to influence 27% of consumer purchases in stores for FMCG categories.

They either already have a presence online or will have one soon enough. India now has an Internet penetration of over 425 million users & mobile user penetration is 32%. Up to 45% of online FMCG consumers access the internet as part of their pre-purchase ritual. This has huge implications for marketers, as influencing online consumers for either offline or online purchases will gain more importance with each passing year.

In fact, 43% of Indians, against a global average of 28%, said that Brand Origin is more important than any of the other purchasing criteria, with Quality and Functionality being two criteria on which Brand Origin was most important.

Brands are finding themselves increasingly challenged to capture consumer mind share. Digital media is a critical piece that can’t be ignored, digital ROIs to be twice as efficient as TV, and so for most brands, digital now needs to be an integral part of the media plan rather than a separate strategy web-based strategies are most effective alongside traditional ones, because shoppers are more inclined to buy online when they are already aware of a brand.

Numbers show that a staggering 60% of FMCG sales can be influenced at the store level. In fact, 30% of FMCG stores account for 80% of sales. Since presence at every store is financially unviable, the right store choice is the first step towards efficiency.

A meta-analysis across 15 categories and 155 brands reveals that overall sales effectiveness is primarily driven by availability and visibility. Finally, having the right placement and visibility of products can yield an additional 15-30% of incremental sales

Innovation Creates Opportunity for Growth - Packaging diversification has allowed manufacturers to be creative with their product packaging and sizing in order to combat declining sales. Consumers are willing to pay more because of the lure of the new packaging design. In a recent label analysis of 20 brands that utilized eye-tracking technology, 57% more consumers saw the most visible Pack than the least-visible pack within the first few seconds of looking. For this reason, manufacturers should assess to what extent their designs reflect the brand’s personality and effectively convey key messages. 

Where consumers buy, what they buy, how they buy and how they pay is changing fast. Online shopping, which was earlier considered as just another fad by most traditional players, has emerged as a strong channel that is becoming the preferred option of more and more consumers. Online retail is expected to grow at over 60%, although on a small base. There are over 30 Portals which are selling Specialty teas in the country including Amazon, Big Basket, Snap deal, Grofers, Tea box etc.

Some estimates put the total number of Internet users in India at as many as 550 million—40 percent of the population—in 2018. We expect the Internet to contribute $200 billion to India’s GDP (5 percent of total GDP) by 2020. In 2018, women will represent a third of all Internet users. The increasing gender parity will have a major bearing on the Internet economy—women control 44 percent of household spending in India.

2018, approximately half of Internet users will reside in smaller towns and villages. This shift will open up significant growth opportunities for those marketers and service providers that keep in mind the dynamics of the rural market in India—for example, using online distribution through e-commerce to ensure wider product availability.

Sachen Verma

Sr Vice President – International Marketing

JV Gokal & Co. Pvt Ltd

New Delhi, India

Nov 2, 2017

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