Reviewing

Lipton Yellow Label

Trade Marketing Channels




Submitted To:
Mr. Mubin Jaliawala


Group Members:
Muhammad Usman Badar 1235167
Sabeen Khan 1166119








Executive Summary

This project is about the gauging the performance of Lipton Tea Pakistan on trade channels. In
the this report we have analyzed the current state of the Lipton on the retail stores & how its
retail performance is leading the change in brand standing in the market

In adding to the analyzing part we have made a trade marketing plan for Lipton for the year
2013. In which we have suggested the way forward for the brand to regain its position in the
market.

























Category Introduction:

Thought tea the 3rth largest consumed beverage of the world, but in Pakistan the category is not
only considered as a beverage anymore, tea as a category has been an integral part of Pakistan
culture. Each day the category is consumed in almost 100% of Pakistan (25 Million Households
with an average family size of 7 people). The most often consumed occasions for the category
are breakfast & tea serving in evening.

Tea is a seasonal category with minimum sales of 10,793 tons per month to maximum sales of
12,901 tons. The category sales start to increase in winter months starting from (September to
January), on an average 42% of the category yearly volumes are purchased within the time span
of 5 months). Whereas as moving towards off season (summers) the category sales did not
declined significantly as tea is considers as daily consumed beverage among the households of
Pakistan.

The category turnover is around 140,000 tons per year among the households of Pakistan, in
which around 75% of the market share in owned by Branded Tea and 25% is Loose Tea. Each
month an average household purchases around 480 gram of tea.

Within branded tea segment, major competition is among three players
Unilever Pakistan
Tapal Tea
Eastern Foods

Brand Portfolio of three major players

S.No Unilever Brands Tapal brands Eastern Foods
Brands
1 Lipton Yellow label Tapal Danedar Vital Tea
2 Supreme Tapal FamilyMixture Surhan
3 A1 Karak Chai TapalTez Dum
4 Pearl Dust TapalChenal Dust

Among top three players the competition is very tough between Unilever & Tapal, whereas
Eastern food on the other hand is gaining share in the market through both of its brands Vital &
Surhan. Through catering the rural markets and lower SEC groups in urban area of Pakistan.








Introduction to Lipton

At current stage Lipton own 6% volume share in the total tea category, whereas each month
almost 10% of the Pakistani household use the brand on the monthly basis (indicative brand
incidence). With an average purchases of 300 gms of Lipton tea. Among Lipton brand
households, brand own 69% share of the total category purchases reflecting high level of
exclusivity towards the brand among it user households and rest 31% of the category purchases
by Lipton user households are owned by competition brands ( brands used in conjunction with
Lipton Tea with in tea category)

Positioning:

Lipton is one of the worlds greatest refreshment brands. Its the worlds best-selling tea brand,
has been established for more than 100 years, and is available in more than 100 countries.

Position their product as
High quality
High price
Great aroma
New taste
Exciting and refreshing

Positioning Statement:
A sip of Inspiration

Target Audience:

Lipton has basically positioned itself as a brand catering the needs of SEC groups A & B. The
brand is basically targeting the urban areas and has concentrated on the upper and middle classes.
Lipton as a product is present in a different packaging & formats. Teabags are targeted towards
the organizations, while soft packs and jar packs are targeted towards home usage. In terms of
age and occupation the brand is mainly targeting age below 35 years (mainly towards the
working class of Pakistan)

Offering:

Lipton tea is available in different variants
Black tea
Green Tea
Flavored Tea

Whereas Black & Green are available for the local consumers, while flavored tea is only
available for the offices (very small portion of the total brand)
USP:

Enhances Tea Essence Rich Taste

SKU Offering:

On retail channel Lipton in available in following SKUs
27 Gms
95 Gms
190 Gms
475 Gms
950 Gms
Tea Bags packs in (50, 100 & 300 tea bags range)

SKU Wise Pricing:

27 Gms / Rs. 20 (Average Price)
95 Gms / Rs. 73 (Average Price)
190 Gms / Rs. 132 (Average Price)
475 Gms / Rs. 331 (Average Price)
950 Gms / Rs. 630 (Average Price)
Tea Bags packs in (50, 100 & 300 tea bags range) ( Very Small Contribution to Total
Lipton Sales among the Households of Pakistan)

SKU Pricing & Trade Margins:

The details of Distribution & Retail margins are very much confidential to the Business. The
only margin number they are comfortable in sharing is the overall trade margin that is almost
same for the whole SKU range.

27 Gms / Rs. 20 (Average Price)
95 Gms / Rs. 73 (Average Price)
190 Gms / Rs. 132 (Average Price)
475 Gms / Rs. 331 (Average Price)
950 Gms / Rs. 630 (Average Price)
Tea Bags packs in (50, 100 & 300 tea bags range)







7 %Total Trade Margin
Fast / Slow Moving SKUs:

190 Gms & 475 Gms (Jar / Pouch) of black tea are the fastest selling SKUs; following are the
SKU position in terms of sales contribution.

1. 190 Gms ( Contributing 33% of sales)
2. 475 Gms ( Contributing 25% of Sales)
3. 95 Gms ( Contributing 15% of sales)
4. 950 Gms ( Contributing 12% of sales)
5. 27 Gms ( Contributing 4% of sales)
6. Tea Bags ( Contributing 11% of sales)

Competitive Analysis

Tea is a seasonal category with fierce competition; the category is majorly divided among three
players

Branded Segment
Mushroom Players ( Small tea brands)
Loose tea

Branded segment is the most dominant segment with high competition among two players
Unilever & Tapal Tea, whereas over the period small players like Eastern Foods are also
catching up with its brand Vital Tea & Surhan Tea. Among branded segment Tapal dominates
the urban markets with its brands Tapal Danedar and Family Mixture, whereas for Unilever the
only brand whose volumes are urban skewed is Lipton Tea driving most of its volumes from
Karachi and Islamabad City. For rural markets Tapal is offering Tapal Tez Dum &Tapal Chenak
Dust, while Unilever Brook Bond Supreme is national brand having a good presence across the
Pakistan. Unilever is catering rural markets through Pearl Dust & A1 karak chai.

Being a FMCG category presence on retail channel is essential, as non-availability of the brand
might lead to brand switching. Among beverage categories brand switching due to non-
availability could result in permanent loss of customer base

Tapal tea is the toughest competitor on retail channel, one positive thing that Tapal have over
Lipton is its Loose Credit Sales Policy. Retailers have the leverage to pay back in the time
period of one month. Whereas for Unilever retailers are bound to pay back within 3 days of
purchases

Further with its loose credit sales policy Tapal is offering wide range of gifts to retailers, if they
buy certain amount of cartons, whereas Lipton on the other hand providing discounts of per
carton purchases.



SWOT Analysis of Lipton:

STRENGTHS:

Unilever is a multinational company
Powerful heritage of Lipton as present in the Pakistan market since 1948
Familiar with psychographics and demographics of the local consumers
Strong brand image and brand awareness in Pakistan
Market leader as it has a 8% market share in branded tea.
Larger sales force
Strong and long-term relationship with distributors, wholesalers and retailers.
Sound and experienced management.
Excellent marketing department assisted by a highly regarded marketing research unit.
WEAKNESSES:

Poor pricing strategy leading the volume share loss in Q4 2014
Low brand awareness to trial ratio
Only catering the urban Pakistan
Level of cannibalization with its own brand Lipton Mega Dane

OPPORTUNITIES:

focus towards the youth
Rising literacy
Decline in government taxes to the tea imports leading to room for increase in profit
margins

THREATS:

Threat from cheaper tea smuggled into the country via border areas of KPK and
Baluchistan seriously affecting Levers sales and earnings.
Possible increase of Tapal and loose tea market shares
Rising inflation, which reduces disposable income of consumers
Increasing import duties since a lot of raw materials are imported would raise the price of
its end products.
Liptons profit margin is exposed to rupee devaluation.








Trade Marketing Activities in 2012

Generally retailers earn rupees 3 on purchasing a carton of Lipton Tea, but in last 12 months
Unilever comes with a massive trade campaign, that they called Mega Trade Campaign
giving 20 Rupees Off to retailers on the purchase of one carton.

This Mega Trade campaign was initiated to counter its rival Tapal on trade channel that have
developed a reward program on the purchases of certain number of cartons. There gifts are as
follows

Motor Cycles
Free trips
Different gift as per the level of purchases

To counter Tapal, Unilever initiated Mega Trade Campaign to give incentive to retailers on the
purchase of each carton. This trade campaign increased the level of Trust on Unilever brand
Lipton. Through this strategy Unilever minimizes the Risk associated to retailers on purchases
high quantities of the brand.

Trade Channel Importance:

Hyper Star, Imtiaz &Metro are the direct consumers of Unilever Beverages. Unilever
serves them directly for Lipton through their ware house.

Other than that focus is on the following channels through distributers
1. Big General Stores ( highly focused)
2. Kiryana Stores
3. IMT & LMT

Geographic Presence of Lipton:

Following are the areas that contribute majority of Lipton sales volumes
Lahore
Islamabad
Jhelum
Central Punjab









Number of shops Covered:

Around 100,000 shops are covered directly through distributers and then the sales volumes are
carried forward for indirect services (Shops in small towns & very less number of shops in rural
areas)

Retail Channel Classification:

Global Norms AC Nielsen definition is followed for trade channel classification
































Phase 2 - 2013 Objective strategy & Action Plan:

Till 2012, Unilever Beverages have charged premium prices from the customers. As it is not
carrying forward the decline in taxes by the government on tea imports to the end consumer,
where as its competition Tapal have reduced its prices instantly after the decline in government
taxes leads to increase in purchases for its brands. In 1
st
quarter 2013, all brands of Unilever tea
faced decline in volume share due to its non-responsiveness to the cost changes

After encountering decline in level of sales for of its brands, Unilever starts giving discount offer
on its brand Lipton & Supreme Tea.

Since quarter 2 2013, Lipton is available at discounted prices (Reflective via recent Discount
Campaign for Lipton Tea)

The major objectives & action plan for 2013 are as follows for Lipton Tea:

1. Recapture the Lost Share in the Market (by giving discounts)
2. Increase brand consumer base by giving discounts on its trail generating packs
3. Increase the Lipton share among Lipton tea existing consumer base ( Dominating the
category purchases of its users)

Trade Campaign 2013:

We have selected all the SKUs under the Channel of General Trade, General/Modern Trade and
Modern Trade. The colors that we have chosen are Yellow, Green & Purple.

Yellow represents Extra Free campaign
Green represents Discount campaign
Purple represents Lucky Draw campaign

Lipton Trade Promotion Plan 2013
SKU Channel Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
27 Gms GT
95 Gms GT
190 Gms GT+MT
475 Gms GT+MT
950 gms MT
Tea Bags MT



Scale


Extra Free
Discount
Lucky Draw
Type of Campaign in 2013


General Trade

Lipton Trade Promotion Plan 2013 (SKU 27,95 & 950 Gms)
Promotional Items Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Posters 5625000 7500000
Buntings 3375000 4500000


Lipton General Trade Costing 2013 (SKU 27,95 & 950 Gms) Jan to Mar
Promotional
item
Cost/Unit Insertions Number of
Shops
Shops Covered Cost
Posters 25 3 100000 75000 5625000
Buntings 15 3 100000 75000 3375000


Lipton General Trade Costing 2013 (SKU 27,95 & 950 Gms) May to Aug
Promotional
item
Cost/Unit Insertions Number of
Shops
Shops Covered Cost
Posters 25 4 100000 75000 7500000
Buntings 15 4 100000 75000 4500000


Lipton General Trade Costing 2013 - Total
Promotional
item
Cost/Unit Insertions Number of
Shops
Shops Covered Cost
Posters 25 7 100000 75000 13125000
Buntings 15 7 100000 75000 7875000
Total 21000000






Scale


Extra Free
Discount
Lucky Draw
Type of Campaign in 2013



Modern Trade

Lipton Trade Promotion Plan 2013 (SKU 190,475 & Tea Bags)
Promotional Items Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Buntings 3000
Wobblers 10000
OCD 1500000


Lipton Modern Trade Costing 2013 (SKU 190 &475 Gms) May to Aug
Promotional
item
Cost/Unit Insertions Number of
Shops
Shops Covered Cost
Buntings 15 4 50 50 3000


Lipton Modern Trade Costing 2013 (Tea Bags) Oct to Dec
Promotional
item
Cost/Unit Insertions Number of
Shops
Shops Covered Cost
Woobler 50 4 50 50 10000
OCD 30000 1 50 50 1500000


Lipton Modern Trade Costing 2013 - Total
Promotional
item
Cost/Unit Insertions Number of
Shops
Shops Covered Cost
Buntings 15 4 50 50 3000
Woobler 50 4 50 50 10000
OCD 30000 1 50 50 1500000
Total 1513000




Scale


Extra Free
Discount
Lucky Draw
Type of Campaign in 2013

Total Cost

Lipton General Trade Costing 2013 - Total
Promotional
item
Cost/Unit Insertions Number of
Shops
Shops Covered Cost
Posters 25 7 100000 75000 13125000
Buntings 15 7 100000 75000 7875000
Total 21000000

Lipton Modern Trade Costing 2013 - Total
Promotional
item
Cost/Unit Insertions Number of
Shops
Shops Covered Cost
Buntings 15 4 50 50 3000
Woobler 50 4 50 50 10000
OCD 30000 1 50 50 1500000
Total 1513000

Lipton Trade Promotion Costing 2013 - Total
22513000





Thank You