Investment World
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Industry Analysis
Agri-Biz & Commodities
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Tea
Marketing
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Trends
Costly cuppa?
Anand Ram
RETAIL prices of most branded teas have marginally risen or remained stagnant. An analysis of the maximum retail prices of various tea brands in Chennai shows that between January 2001 and now, prices have increased 2-13 per cent.
The implication is that though tea prices at the commodity level (auctions) have fallen, the same have not been passed on to consumers.
Companies, however, counter that these cuts have been passed on in the form of other giveaways.
However, the unorganised sector has been gradually gaining market share at the expense of FMCG majors.
While big companies have to contend with brand image, retail price stability, margins and distribution considerations, regional players have no such problems.
Big companies also have to maintain some sort of a buffer between their procurement costs and retail price to hedge against fluctuating auction prices of tea.
Local players, on the other hand, sell teas with skimpier additions to the base commodity price and often, revise prices more frequently than their FMCG counterparts.
The migration of consumers is now for all to see.
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