Market war brewing as HUL  closes  gap with Tata Tea

Market war brewing as HUL closes gap with Tata Tea

Mumbai: Almost a year after Tata Tea Ltd overtook Hindustan Unilever Ltd (HUL) in the so-called packaged tea segment in terms of volume, the Indian arm of the Anglo-Dutch multinational has come back strongly.

In the first seven months of this year, HUL gained share in terms of both volume and value. According to data from market research firm AC Nielsen, it is now just 100 basis points or 1 percentage point behind Tata Tea in terms of volumes.

And it remains the leader in the business in terms of market share value and has increased the gap between it and Tata Tea.

“We have a long-term strategy in place. The strategy has (several) legs to it (and) one of them is to build strong focused portfolio. We led the thought agenda by innovating," said Vikram Grover, category head, beverages business at HUL, in his first interaction with the media after taking charge of a business that accounted for Rs1,532.78 crore of HUL’s Rs13,717 crore revenue in 2007 (the company follows the calendar year for accounting purposes).

Tata Tea’s executive director (marketing) Sangeeta Talwar isn’t convinced.

“We are still ahead of them," she said. That’s true. Nielsen data shows that in July, Tata Tea had a 20.5% volume share of the packaged tea market to HUL’s 19.5%. In January, Tata Tea’s share was 22.1% and HUL’s 18.7%. Talwar didn’t refute Nielsen’s data.

“I don’t know how to explain it because our volumes are going up as well. Unless, they are growing faster than the industry."

The size of the Indian packaged tea market in 2007 was estimated at Rs4,394 crore, according to AC Nielsen.

Tata Tea and HUL are the dominant players in this market.

The beverages business is an important one for HUL. It is the third largest contributor to the company’s overall revenue, after soaps and detergents, and personal care products.

The business is a critical one for Tata Tea too, which made one of India’s first large overseas acquisitions—that of UK’s Tetley Group in 2000 for £271 million.

The company has, in recent times, tried to diversify its portfolio and recently acquired Mount Everest Mineral Water Ltd, the company that makes the Himalayan brand of water. Tata Tea ended the year to March 2008 with Rs4,392 crore in revenue and Rs493 crore in profit.

The two companies have been jockeying for leadership in the business.

“Month on month changes occur, there are ripples in the market place. While they are important to us, we have seen that there has been a progressive trend in our business," HUL’s Grover said.

‘Unprofitable sales’

Tata Tea’s Talwar said that HUL had embarked on an aggressive promotion campaign in April, May and June. “I may be conjecturing but may be (that) this was their objective to pick up some volume. I think it was an unprofitable pick-up in volumes."

In contrast, she added, Tata Tea had been growing “in line with what was expected".

HUL’s Grover maintained that his company had adopted “a consistent approach to build brands."

The gains made by the company in recent months, he added, is a result of a long-term brand management strategy. “We have very focused brands."

Kunal Jeswani, senior vice- president at advertising agency Ogilvy and Mather Pvt. Ltd said that the new campaigns launched by HUL for its tea brands have helped enhance the company’s share in the business.

Jeswani, whose agency handles HUL’s tea business, added that the company has, since the beginning of the year, introduced new campaigns for its Taj Mahal, Tazaa and Three Roses brands.

Tata Tea, Jeswani said, moved to a master brand approach last year and started promoting only their main brand Tata Tea. “None of the individual brands are getting any attention."

Santosh Padhi, executive creative director, Leo Burnett India Pvt. Ltd, which doesn’t handle the tea business of either HUL or Tata Tea, said that he wasn’t sure if HUL’s gains could be attributed to better advertising.

Campaigns for both HUL’s tea brands and Tata Tea were similar, he added.

“Neither of the ads are something that would cause a serious mind-shift from the consumer point of view. Hindustan Unilever’s market share can be attributed to other aspects of marketing..."

Grover himself is hesitant to put a timeframe to HUL’s ascent to the head of the tea market by volume.

“We will take it one step at a time. We are gaining share, we are gaining market share and are profitable. I think progress will follow," he said.

“As a marketer we would like to do it next month."