Tapal's journey to the top (case study)

Pakistan is a nation of tea drinkers. Despite a multitude of options available in the beverages industry, from detox smoothies, iced latts to laal sharbat, tea remains the second most consumed drink in Pakistan, both in rural and urban areas; only water has managed to stay ahead. It is hardly surprising then, that despite not growing tea locally, Pakistan has one of the highest per capita tea consumption statistics in the world (one kilogram, compared to the global average of 0.79 kilogram per capita, according to Dawn.com). This is because tea is not just a beverage in Pakistan; it is a part of our cultural identity. There are two interesting aspects of Pakistan's tea market. First, the taste preferences of consumers vary considerably across geographic zones. In the south, people prefer a rich color and strong flavor but up north, preferences shift to lighter concentrations. Second, people are unwilling to change the tea they have been using for generations and this is why, despite the increasing penetration of tea brands, unbranded, loose tea (khuli patti), still accounts for a 40% share of the tea market. Of the remaining 60%, Tapal is the undisputed market leader, Unilever's Lipton is a distant second, Eastern Tea Company's Vital has emerged as a significant third player and the remainder comprise small brands, strong in specific regions. Tapal's story is as old as Pakistan. It started in a small dukan (shop) in Jodia Bazaar, when Adam Ali Tapal began importing Ceylon teas and developed a specialized product called Family Mixture. This was a blend of leaf and dust tea and was sold in brown thelis (paper bags). Despite the fact that two essential elements, branding and packaging, were absent, this new product carved out a niche for itself. There were many Iranian cafs in Karachi at the time where tea was the largestselling commodity. According to family tradition, after completing his education abroad, Aftab Tapal, the third generation of the family, joined the business in 1975 and from there began a journey of innovation and transformative change. "Thanks to the time I spent at the Central Institute of Art, I had a natural eye for aesthetics. We were still selling high-quality tea in thelis and I realised that we would not be seen as a brand if we continued this practice." The move to a larger set-up marked a series of strategic changes. The company was looking to break through the duopoly of the multinationals that dominated the branded tea market at the time: Unilever's Lipton was the market leader and Brooke Bond's Supreme was the number two brand Marketing Management AIZA AZIZ QURESHI 1

(until Unilever bought it in the 1990s). For operational efficiency, Tapal imported machinery from Germany that allowed tea blending and packaging to be mechanized. On the distribution side, he decided to do away with the traditional depot system and used company-owned vans for retail distribution. However, as the brand's footprint increased, he realized that it did not make financial sense to have a fleet of vans distributing the product across the country; and so, a network of independent distributors was created in the mid-1980s. Today, the company relies on its distributors to ensure that their portfolio of more than 20 tea variants is available to customers across Pakistan, urban and rural areas included. Even while the business continued to grow in scale as a direct result of the changes he had introduced, Tapal's interest in discovering new teas did not diminish. His encounters with tea connoisseurs from across the world led to the diversification of his portfolio. It started with Chenak in 1984, a low-priced dust tea targeting the Thar district and positioned against Unilever's (now defunct) Red Rose. The year 1988 proved to be a landmark one for Tapal with the launch of two new brands. Recognizing the untapped potential of interior Sindh (where there was a growing middle-class), Mezban was brought to the market as a premium dust tea. It was not long before Mezban became the market leader, going well past Unilever's Pearl Dust, and now controls 90% of the branded dust tea market. As these changes were taking place within the company, Tapal says that the multinationals did not pay much attention to the new player that had entered the market and he believes this worked in his favour. "I continued worked on improving the packaging and blending of our teas and it was years before we c A point worth mentioning here is that the Kenyan teas that Tapal began importing were considerably expensive than the Ceylon teas that the market leaders were using at that time. Despite this, there was a conscious effort to ensure that the price points remained affordable for the average tea drinker. This meant that the company was working on very narrow margins compared to the competition. Tapal attributes the exponential increase in Tapal's sales to an "an unwavering focus on quality and continued innovation" and this is what helped Tapal become the largest-selling tea brand in Pakistan between 2008 and 2009. Despite becoming the largest-selling brand in Pakistan and exporting to over 20 countries, Tapal is not about to relax and enjoy being the best in the business; in fact, he has his eyes set on breaking through into new markets. He believes that there is still a lot of potential to grow within the tea category. With consumer preferences shifting from conventional teas to flavored and herbal green Marketing Management AIZA AZIZ QURESHI 2

teas, he is working towards diversifying his company's portfolio by introducing new formulations in the coming months. Should he decide to look at the rural market (the company has a limited presence there), he would end up with 50% of the entire Pakistani tea market, branded and unbranded combined.ame within striking distance of Lipton." 1. Discuss STP of Tapal throughout its active years. 2. Discuss Tapal's marketing mix strategies. 3. What are the growth strategies Tapal has adopted over the years? 4. What are the market offerings and how they have altered since then? 5. Discuss the promotional tools over the years. 6. Identify the key factors which are responsible for Tapal's sustenance in market saturation? 7. Since it's a leading brand, what do you think what could be the next move from Tapal to secure its position in the market? 8. Make a portfolio of Tapal including its brands, segments and their target markets. 9. Define its promotional tools and techniques. Marketing Management AIZA AZIZ QURESHI 3