Abstract
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive
environment
Product coverage
Coffee; Other hot drinks; Tea
Executive summary
"Chai" continues to be the most popular hot drink
From official conferences to railway station, tea remains the favourite hot
beverage among Indians. The widespread availability of tea through the
organised players, with different price points depending on the quality and
the blend, has contributed to this position. Following the fall in production
in the major tea growing regions in the world, prices have risen, although
with little impact on the domestic market for tea in India. Despite the fall
in the price of tea at auction during 2006, branded organised tea prices saw a
price hike due to new launches and more innovative packaging. Awareness of
speciality tea and tea bags remains concentrated among well travelled and high
income consumers, while the consumption of loose black standard tea is
preferred among the masses.
Consumer base for coffee expanding
Fresh coffee remains more popular than the instant format in off-trade volume
terms. The South remains the largest consumer of fresh ground coffee. However,
the increase in the number of chained outlets and social gatherings is
boosting sales of instant coffee in the non-coffee drinking regions, and
expanding the consumer base. Nestlé India Hindustan and Lever dominate sales
of instant coffee, accounting for 95% of value sales in 2006.
Other hot drinks perform steadily backed by health consciousness
New launches by leading players in malt-based hot drinks, which cater to the
dietary needs of health conscious adults have contributed to steady growth.
Manufacturers are actively developing products to fulfil consumers'
nutritional requirements, suitable for the young, old and the sick. Improved
retail distribution has aided in the growth of other hot drinks.
Threat from the unorganised sector in tea gradually reducing
Unorganised players constitute the major threat to organised players in tea
and coffee. However, increasing consumer attention to the quality of products,
growing brand loyalty and active promotions by manufacturers reflect a shift
from unbranded to the branded products. Multinationals lead, with share in tea
and coffee of over 60%, with the rest shared among regional players like
Duncans and Wagh Bakri, which are striving to maximise volume sales by
offering products at lower price points and with attractive promotional
schemes. Their regional focus also offers advantages in terms of their ability
to tailor products to local demand.
Rural consumption increasing marginally
With most of the population residing in rural areas, expanding the
distribution networks to the rural areas offers opportunities to increase
sales of branded hot drinks, particularly since the urban market for products
like tea is saturated. Trial packs offered at low price points and promotions
through village fairs and targeting the women folk have helped drive sales in
the rural areas.
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