Month: June 2011

Dubai Tea Trading Centre

June 23, 2011 / / 5 Comments

I just read something incredible, even if it isn’t really new: Dubai has opened in 2005 a Dubai Tea Trading Centre (DTTC).


Check their website and you will see, it is not a crazy idea I had in my head..

To help you understand it, here are some facts.
1.Dubai Tea Trading Centre registers 26 per cent growth in tea trade during the first half of 2010.
2.Overall tea trade through Dubai rises to 642,000 tons during the first half of 2010,
3.Dubai remains 2nd largest export destination for Indian and Sri Lankan teas

The first question I asked myself was why?
The official answer is: “Dubai’s strategic geographical location between the world’s major tea-producing and tea-consuming markets has positioned the emirate as the industry’s international gateway for tea trade.”
Really nice but it sounds so official that it is not really convincing.

Now, let’s see what services are being offered:
Teabag Packing
DTTC’s temperature-controlled tea bag packaging facility has the capacity to pack a variety of tea bags, including both paper envelopes and service types.
Loose Tea Packing
DTTC is able to pack from 50 grams to 1 kg of tea on Vertical Form Fill Seal Machines, for both crush, tear and curl teas, (CTC) as well as orthodox/leaf tea varieties. Larger sized packing is also carried out as per client’s specific requirements.
Blending
DTTC offers blending services through a 2 tonne blending drum system that can carry out blends of both CTC and orthodox/leaf teas.
Tea Tasting and Evaluation
DTTC offers in-house tea tasting and blending expertise to ensure that its members can develop the best product for their customers. The Centre has a centralised tea tasting room provided with tea tasting equipment and staff available to set up tastings.
Storage facilities (Warehousing)
The DTTC warehouse facility exists within the Jebel Ali Free Zone and has the capacity to store up to 5,000 metric tonnes of bulk teas at any given time. DTTC provides dedicated individual storage space as well as limited free storage to all its members. All consignments are palletised and stored within racks.
Office Lease
DTTC offers regional and international tea companies the option to lease space within its purpose-built premises. The units vary from approximately 250 square feet to 350 square feet, providing clients with the perfect space solution to their business requirements, as well as a unique clustering benefit of being located alongside other industry participants
Everything one might needs to be a good tea company.

What can we learn from this?
First, Dubai is clearly going through a diversification policy to prepare itself to the end of the oil business (and this is their main reason for offering these new services, their location being just an interesting “coincidence”).
Then, when they decide to go into a business, they do whatever is needed to succeed in it.
Last but not least, if Dubai goes into this business, it means there is potential in tea business.

Perhaps not now but in the future, perhaps your tea will come from there? Who knows?

How did Lipton conquer half the world (and is probably planning to invade the other half)?

June 14, 2011 / / 12 Comments

 

I know that after reading the title, I already lost half of my readers and that the other half will probably think that I am either sold to those you should not speak about or that I am totally crazy/out of my mind…

 

As usual, the truth is slightly different.

I just went in holidays and I found in the place I was staying at a January 2010 French magazine talking about Lipton and entitled: “Lipton, the art of making the whole world like tea”.

I sat there and I read through these three pages and found some facts that Teaconomics had to give others the opportunity to get access to these information.

Before I begin, let me remind you that this article was published in January 2010, written in December 2009 (at the latest) and that all the figures are from the period 2008-2009.

 

But first, just a couple of figures and data.

Lipton in 2009 sold 52 billions of tea bags in the whole world.

The company is also the second brand drank in the world (behind Coca Cola) and saw its turnover and profits increased in a huge way in 2008.

 

Now let’s have a look at Lipton’s situation in different countries…

  • In France, 1 out of every 2 tea bags sold is a Lipton. 2 times bigger than Twining, Lipton keeps on changing its products to fill the sales space.
  • In the USA, a special mix for iced tea. Lipton has a share of 30.7% of this market and made an unique recipe that can be used even with cold water.
  • In Saudi Arabia, Lipton’s colours can be seen in the whole country. Lipton became famous there by painting all the tea houses in yellow and red. It has a market share of 66%.
  • In China, Lipton is one of the few Western brands really known. To bring Chinese consumers to their black teas in bags, Lipton created a mixture ready to drink with powdered milk and sugar.

 

So the big question is: how is Lipton so successful?

First of all, they have a huge estate in Kenya (14,000 ha), with a total output equal to 10% of their yearly tea production.

Obviously, this also helps them to standardise the quality of their products (really important when you target the mass market).

 

Then, they have the Lipton Institute of Tea.

This unique facility (located in Sharnbrook, North of London) is home to a hundred biologists, nutritionists, aroma experts… (plus 40 scientists in Kenya and 50 testers in India, China, Japan and the United States).

Their mission? To drink 10,000 cups of tea per week but in a scientific way, much like an expert in oenology does when he tastes wine.

This allows them to change their teas really often (in 2008, 13 out of the 73 products sold in France under Lipton’s two brands were changed).

 

Lipton also focused on market areas that other mass market players (Twinnings and Tetley) had left open:

  • flavoured teas (with a new crystal bag and with natural products) allowing them to increase their prices,

  • dieting products (until now, it didn’t work well but Lipton is still there),

  • fair trade products (with their Kenyan estate being certified by a NGO Rainforest Alliance and in 2015 all the estates selling tea to Lipton will have this certification).

This costs money to Lipton but gives them an advantage as every certified estate sells their production to them at a premium price, giving Lipton access to non auctioned teas.

At the same time, Lipton invested in advertising and their sales force (going as far as helping the supermarkets to put the products into the shelves with Lipton’s products being the most visible ones).

 

With half the world yet to be conquered and a good tactic to invade new markets, it seems that the sun is shining for Lipton Yellow.