Sri Lanka Tea Operations in Global Marketing

     Global Marketing Project

          Ceylon Tea-introduction to Canadian Market

                             Tornike Gabinashvili (08501028)

Table of Contents

Introduction        

Literature Overview        

Demographics        

Competitive advantage in value added tea marketing        

Marketing Mix        

Product        

Price        

Price Calculation        

Place        

Promotion        

Conclusion        

Bibliography        

Introduction

 Tea consumption has a long history and since then it has become one of the main consumed product trough out the world.

 Exists a legend that that tea was discovered by the Chinese Emperor, Shan Nong, in 2737 B.C.The Emperor had a habit of boiling his drinking water. One day while he was in his garden a few tea leaves fell by chance into his boiling water which then gave off a rich, alluring aroma. The Emperor, upon drinking this brew, discovered it to be refreshing and energizing.He immediately gave the command that tea bushes to be planted in the gardens of his palace. Thus the custom of brewing fresh tea leaves in hot water began and it quickly spread.

 Therefore origins of tea is connected with China. The Chinese originally called it “Kia”. As far as is know it was during the course of the 6th century AD that the name evolved into "Cha". On its arrival in the West it became “Té” which is still the name for tea in many countries.

 Nowadays besides China the top three tea producer countries are India, Sri Lanka and Kenya.

 Teas can generally be divided into categories based on how they are processed. There are at least six different types of tea: white, yellow, green, oolong (or wulong), black (called red tea in China), and post-fermented tea (or black tea for the Chinese) of which the most commonly found on the market are white, green, oolong, and black. Some varieties, such as traditional oolong tea and Pu-erh tea, a post-fermented tea, can be used medicinally.

 (teaguardian.com)

 The following project aims to discuss Sri Lankan green tea introduction to Canadian market. For the fact, that Sri Lanka Tea board decided to support their native tea producers for further extension on the foreign market, a country-Canada was selected based on Pest-Analysis and based on “Porter’s Five Forces”, that studied Canadian buyer power, Threat of New Entrants, Rivalry, Substitution threat and Suppliers Power.

 Literature Overview

 The tea sector in Sri Lanka has always been an important component of its economy. It is also the country's largest employer providing employment both directly and indirectly to over one million people. It also contributes a significant amount to Government revenue and to the gross domestic product.

 Sri Lankan tea types are: Green, Black, and White.

        Sri-Lanka's finest teas generally are produced from the bushes that grow 4000 feet above sea level. Most of the Ceylon tea gardens are situated at elevations between 3000 and 8000 feet. In the hot steamy plains and foothills, the tea bushes flush every seven to eight days and are picked all year round. Best time for tea gathering is from june to the end of August in the east and from February to mid-March in western parts of the Sri Lanka.

      The tea leaves are mostly hand plucked. When the plant is plucked the top two leaves and a bud are cut. To make one Kg of black tea, approximately 4Kgs of tea leaves are required. One tea plant produces about 70Kg of black tea per year. A tea plant will produce tea for about 50 years.

These Sri Lankan-So called Ceylon tea leaves are highly valued all over the world and Canadian market is not an exception.

Demographics

 Major cities - population

Toronto 5.377 million;
Montreal 3.75 million;
Vancouver 2.197 million;
OTTAWA (capital) 1.17 million;
Calgary 1.16 million

(indexmundi.com)

  Beside the fact that Ottawa is the capital of Canada the most populated City is Toronto therefore the market will be entered from Toronto and after the product gets popular with in the population the market  will be expended.

  If we trust to the data provided by web site “tea.ca”, it should be considered that:

• Tea is world’s most popular and consumed drink after.
• 9 billion cups of tea are drunk in each year in Canada.
• In 2009, the per capita consumption of tea in Canada was 66 liters. That equates to 264 cups for each Canadian. ( Food Statistics 2008 Statistics Canada)
• In 2009, the Grocery Canadian tea market was worth  $388,483,252 , hot tea sales represented : $181,394,906, ready to drink category represented $207,088,346(Nielsen)
• Approximate provincial breakdowns: (Nielsen)

• Ontario         $161,5 Million
• Quebec         $57,5 Million
• Maritimes      $25,5Million
• Man + Sask   $29.9 Million
• Alberta         $59,1 Million
• BC               $55,1 Million

• Specialty tea ($92,567,911) now outpaces regular tea ($88,826,995 million) sales in dollar (Nielsen)
• At the national and regional level, the total tea category has experienced strong growth versus the previous year, which is being driven by RTD tea.  This trend is consistent with consumers' need for more convenient choices.
• Restaurants in Canada served 380,000,000 cups of hot tea in the past 12 months and 202,000,000 of ready to drink tea (NPD Group)
• Tea Drinkers are about 55% more likely to consider “Healthy Choices” when choosing a Restaurant. (NPD Group)
• According to the Canadian Food Trends to 2020, a report commissioned by Agriculture and Agri-Food Canada, tea consumption is expected to jump 40% by 2020, as growing consumer interest in health and wellness has lead to increasing awareness of tea’s functional benefits.   

(tea.ca)

The driving forces that are shaping the consumer include:

•        Increasing demand for healthier food choices, with value-added health  benefits

•        Shift away from processed foods and toward fresh, natural and organic foods