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Birth of India's fastest-growing tea brand
Govindkrishna Seshan | September 27, 2005
Daund, a taluka in Maharashtra's Pune district, has all the makings of an Indian ruralscape -- green fields, dhoti-clad villagers and grazing livestock. The only blot on the landscape: unlike most of rural India, villagers in this part of the country treat visitors from the city with suspicion. Why? The suave visitor could be an electricity board official out to expose power thefts.
It's hard to imagine the residents of this highly rural community taking kindly to something so citified as leaf tea -- dust tea is king in rural India. Yet, that's exactly what's happened, and that too, with a small, regional brand that's gone on to become the fastest-growing tea label in the country.
When the Sapat group, a Rs 80-odd crore (Rs 800 million) company that makes packaged tea, decided to establish its brand in these markets, it wasn't exactly a cup of tea. Yet Sapat managed to double market shares from 3.62 per cent in 1999-2000 to 7.3 per cent in 2004-05 and volumes shot up from 1,362 tonnes to 3,000 tonnes in the same period (source: ACNielsen ORG-MARG).
In the last fiscal, Sapat grew at 41 per cent and was labelled the fastest growing packet tea brand in India by AC Nielsen ORG-MARG.
The Nasik-based company made this feat possible by sticking to the rules of the hinterland. As the company launched its new brand of leaf tea, Parivar, in 1999-2000, it knew that villagers would not warm up to a company salesman. Other marketing initiatives would have little impact or be counter-productive.
"Television gives little reach in these regions. Products advertised on outdoor hoardings are perceived as costly," points out Vinod Habade, sales manager, Sapat.
Even without the added "burden" of an outdoor media presence, Parivar was an expensive brand. When the average market price for a 250-gm pack of tea was Rs 32, Parivar carried a Rs 43 sticker. The price justification: Parivar was a leaf tea brand. (After tea leaves are picked, they are dried and fermented to make granules. The bigger granules are packed as leaf tea while smaller granules are passed off as dust tea).
That was a problem. Because Sapat had been selling dust tea for over nine decades and the villagers liked it -- they believe that dust tea is kadak chai (strong tea). Retailers in Daund say that villagers are so sensitive to the strong element in tea that, when Brooke Bond A 1 Kadak Chaap was renamed A 1 Daana Taaza, sales took a hit.
Then, Sapat could not afford mammoth marketing spends. "We understood that we had to keep it simple and create rural resources at a rural cost," says Nikhil Joshi, managing director, Sapat.
The company found that each village had a population of youth with spare time on their hands. Sapat recruited these young men, all of whom met one simple precondition -- they had to pass their twelfth grade and possess decent communication skills.
The youth called CAs (communication agents) played the role of brand ambassadors in their villages. The company used its brand name, Parivar, which means family, to good effect. The CAs visited every house and welcomed residents to be a part of the Parivar.
Sapat created Parivar-branded nameplates on which the CAs wrote the household's name. Families who agreed to fix this nameplate on their doors were given a free sample pack of tea.
Soon, most families in a village wanted to have their names written on Parivar's metal nameplate. The company contacted close to 500,000 households across 1,600 villages in Maharashtra through this programme.
Sapat executives claim that this initiative earned them some brownie points. Villagers began to look at Parivar as a bonding factor, as the entire village started showing off uniform nameplates.
Having put its name on the doors, the company decided to get into the mind of rural consumers. This was best done through village schools, given that teachers and principals are largely appreciated by the community.
The CAs contacted school principals and handed them quiz sheets that were distributed to students. The questions covered subjects ranging from politics, mathematics and tea habits. Students were given erasers and sample packets of tea when they returned these questionnaires.
Simultaneously, company vans visited villages distributing discount coupons. Sapat also enlisted the support of its stockists and retailers with extra incentives. In all household deliveries, retailers were asked to deliver only Parivar tea packs.
The company solved the issue of consumer resistance by offering a money-back guarantee to dissatisfied customers. It backed this offer with a complimentary packet of Britannia's Tiger biscuits, as tea with biscuits is a perfect fit across the country. To ensure repeat purchases, used packs of Parivar tea could be redeemed at retail shops, for discounts on the subsequent purchase.
However, the initiative was not without its share of resistance. "The biggest hurdles were manpower monitoring and stockist alignment," says Joshi. The company had a tough time convincing stockists to supply goods on credit to retailers from smaller villages.
"Stockists felt that smaller retailers would default on payments. But as the product offtake increased, they realised the potential and agreed to support us," adds Habade.
To supervise the efforts of its CA network, the company established a team of auditors who verified the work of the CAs. These auditors were village elders.
At present, Sapat earns 60 per cent of its revenue from Parivar. In 2004, the company entered the markets of Madhya Pradesh and is planning to launch its products in Gujarat soon.For Sapat, the eighth largest tea-maker in the country, gunning for the top slot might be a distant dream. But for now, the villages in Maharashtra have given it enough reason to throw a tea party.