The commodity market in a country like India is huge, with branding, especially in many categories of food and drink still in a nascent stage.
Today, branded tea accounts for only 50 per cent of the market, which is estimated at around 680 million kg.
Regional brands play an important role in the market, especially as consumer tastes vary from state to state. Some of them have made significant inroads into the territory of national brands - in 2003, regional brands accounted for a share of 28.3 per cent of the market, according to ACNielsen's retail audit.
Hindustan Lever's Brooke Bond is the largest brand in the market, but has been in decline for the last two years. Its market share and overall sales have been dropping sharply - HLL beverage sales fell from US$340 million in 2000 to $270 million in 2002. HLL's market share in the branded segment of the tea market dipped to 33 per cent in 2003 - a year earlier, it stood at 34.6 per cent.
As 75 per cent of India's population lives in villages, the brand has been able to establish itself solidly in the rural hearts and hearths, and has the potential of emerging as a world leader in volume and brand-franchise terms. Every brand of toothpaste and tea alike strives to achieve this status.
Brooke Bond Red Label has come close to achieving the status of one of the largest mass brands in the country.
This has, in itself, created something of a problem for Brooke Bond, however. The brand Red Label is so mass that it is now "everything to everybody".
The brand is close to generic status in the commodity ocean of tea. Every new brand that enters the category benchmarks on Red Label and, of course, every brand eats into its share.
Competing brands use Red Label Tea as a benchmark for pricing, which has come under more and more pressure, as commodity tea prices have been falling, allowing unbranded teas, as well as smaller local players, to enter at cut prices. The challenge is one of how to maintain a brand at a premium, in a market where commoditisation is gaining ground.
VITAL SIGNS
Red Label third quarter financial results (Rs million)
2001 2000
Operating income 702,514 751,493
Pre-tax loss 371,548 457,318
Maxim 315,102 321,947
Loss per share 233,653 283,359
New customers 142,162 132,185
Source: The Economic Times.
DIAGNOSIS - Harish Bijoor Brand-domain specialist and CEO, Harish Bijoor Consults
Red Label has committed the ultimate brand sin. In a maverick and dynamic consumer mind, the brand has remained static in its orientation.
It's time to jog this image a wee bit, and time to make the brand specific in its appeal. Purist brand managers will not want to move away from the brand positioning statement they have been endowed with as part of the brand's heritage - but it's time to break out of this paradigm.
The Brooke Bond Red Label was once a niche brand in a commodity sea.
It then grew in strength and size and became the sea itself in many ways.
It's time for the brand to once again become a distinct island, not a generic sea. The brand needs to take a stance - and it must be specific.
The basic brand proposition needs to seek a sharper definition. It's time to venture out and seek a sharper positioning - one that has Red Label positioned even on a psychographic trait, that is on the Indian woman.
My definition of a brand is simple: the brand is a thought - a thought that rests in the consumers' heads. The brand needs to pack dynamism into its perception.
Remember, the consumer's mind is dynamic, not static. The brand, in turn, can't be static in the mind of the consumer.
DIAGNOSIS - Santosh Desai, President, McCann-Erickson India
Red Label has been the archetype, popular-priced tea brand for many years, but while its red pack is burned into the collective unconscious of the Indian consumer, it is a struggle to remember any advertising associated with the brand.
What we have seen is a series of unconnected campaigns, the last of which was apparently an attempt to infuse some energy and youthfulness in a staid, fuddy-duddy brand.
The problem is that it is a brand that has always been afraid of its own significance. Instead of establishing a strong connection with a fundamental consumer motivation, it has operated on the margins of the consumer's life, content to define itself in narrow product terms.
In fact, tea as a category has not articulated its larger role in the lives of its consumers. It therefore appears to be lacking in modernity, but the real problem is one of continued relevance in a changing world.
Red Label in particular with its mass middle-of-the-road character and frequently changing campaigns is a brand to which marketing has added little value.
Overall, this is a brand that needs to define the role it plays in consumers' lives and not merely in their teacups. Only then will it do justice to its own significance.
TREATMENT
Bijoor's prescription
- Red Label needs to position itself with clarity and take a stance. Red Label can clearly position itself as the tea that is witness to the tumult of the life and times of the Indian woman who toils in the kitchen, toils with the homework of her kids and toils in putting together a perfect home. Red Label is the Indian woman herself - a position that could help the brand mean something to somebody at least.
- The brand needs to be sharper - and it must be more specific.
Desai's remedy
- The brand needs to locate its point of connection with the consumer in terms of the role it plays in consumers' lives.
- Tea in India plays the role of 'harmoniser'. Red Label could be the brand that helps the middle class deal with a rapidly-changing world.
- The solution it has currently (Jagaye ras pyaar ke, or 'Awakens feelings of love'), is close in spirit to what the brand needs to do. However, the motivation is not central enough to the category for it to carry a brand of Red Label's stature.