Tata Tea reduces Agni prices

Move likely to mark the beginning of an interesting trend in retail tea prices

KOLKATA: The almost Rs 4,000 crore packet tea market seems to be hotting up, albeit differently. Tata Tea, the single-largest tea brand in the country and the world’s second-largest global branded tea operation, has dropped prices of its largest economy brand, Tata Tea Agni, in a market which is seeing an increase in the commodity prices after five years. 

Tata Tea has reduced Agni prices across all formats. For a 250 gram pack, the price reduction is Rs 5, whereas on a 100 gram pack, there has been a Rs 3 reduction. The idea behind the strategy seems to clearly dominate the economy segment through Tata Tea Agni, by offering greater value to customers.

This move is likely to mark the beginning of an interesting trend in retail tea prices and unleash competition in the economy segment, which is almost 40% of the branded tea market in value terms and registering growth over the last few years. Tata Tea has a 5% marketshare in this segment. A large number of semi-regional and local players also operate in this segment of the tea market.

For big national and large regional players, like Tata Tea, HLL, Goodricke, Girnar, Wagh Bakhri, Jivraj, it’s been hard work to build on brands in the economy segment of the market.

With a distinct movement away from the typical commodity status of tea in the economy segment, product differentiation became very important for most companies. Taking advantage of the growth in the economy end of the tea market, Tata Tea had migrated its Agni brand to the branded segment of the economy market a few months back.

Tata Tea Agni is the second-largest brand in Tata Tea’s portfolio in volume terms and has a presence in more than 22 states. Some of the competing brands in this category include Mohini, the Kadak family, Today, Taaza, Camel, Zabardaast, Sanan etc.

Sangeeta Talwar, executive director, marketing, Tata Tea Ltd, said, “Tata Tea Agni is our vehicle to target the economy segment, where the bulk of the volumes of the tea market lies. The key success factor in this segment is value for money.”

“The first part of our strategy was to provide value through Tata Tea endorsement, differentiated product and packaging that we brought to the table. This proved a winning combination. In keeping with our two-pronged strategy, we are keeping all elements of the mix unchanged and putting value upfront through price reduction to the end consumer. Trade margins are left intact to ensure channel partners’ enthusiasm in our effort,” she added.

Industry analysts tracking the retail segment told DNA Money, “It seems that a realignment will happen at the bottom-end of the market. There are still a large number of local brands but are growing at a slow pace and their ability to compete on price will get eroded once big players drop prices in the economy segment.”