RESEARCH REPORT ON TAPAL

TEA PAKISTAN LIMITED

PREPARED BY

RAHEEL-QAMAR
BM-776

COURSE CODE:

PRESENTED TO

M. YOUSUF ALI

JUNE 2007

INSTITUTE OF BUSINESS & TECHNOLOGY

 CONTENTS

ACKNOWLEDGMENT 3

EXECUTIVE SUMMARY 4

TEA INDUSTRY

1.1 Introduction
1.2 Tea Industry in Pakistan
1.3 Tea Cultivation
1.4 Tea Import
1.5 Role of Tapal Tea
1.6 Indo-Pakistan trade of tea

THE TAPAL

2.1 The Tapal group

2.2 Vision & Mission Statement
2.3 Secret of Success
2.4 Tapal’s Quality Policy
2.5 Research & Development
2.6 Strong Distribution network
2.7 Brands
2.8 Tapal and community services
2.9 Tapal holds strong market position

MANAGEMENT DILEMMA

3.1 Research Question

3.2 Investigative Question
3.3 Secondary Data Exploration

CONCLUSION AND RECOMMENDATIONS

4.1 Conclusion

4.2 Recommendations
INTRODUCTION
Tea

Tea is a caffeine-containing beverage, an infusion made by steeping the dried leaves or

buds of the shrub Camellia sinensis in hot water for a few minutes. In addition, tea may
also include other herbs, spices, or fruit flavours.

Approximately 3 million tones of tea are produced on a global scale annually.

Discovery of tea

In 2727 B.C Chinese Emperor Shen-Nung was boiling drinking water when a few leaves of
a wild tea tree blew into the royal bowl. He discovered that the leaves imparted a delightful
flavor to his water; and so it became his favored drink.

It is probable that tea was first cultivated in China, though it is possible that people in
Thailand and Burma have used it for as long as the Chinese have. The China tea plant was
taken to Japan in about AD 800, where it was regarded as a medicine for several hundred
years, until green tea was developed to become a popular beverage. Tea was introduced
into England, as a gift from the British East India Company, in about AD 1660 and to rest to
Europe soon thereafter.

By the end of the 19th century, China still supplied the bulk of the world’s tea. In 1886 it
exported 136 million kg, of which 77 million kg went to Britain; while India produced 40
million kg. But within a few years India moved ahead of China in world trade. Ceylon (Shri
Lanka) emerged as a tea producer in 1867 and Java (now part of Indonesia) in 1878.

Today traditional tea growing countries of China India, Indonesia, Sri Lanka and Japan
have been joined by many others in South America (Argentina, Brazil, Peru, Ecuador) and
Africa (Kenya, Uganda, Tanzania, Malawi, Rwanda, and Mozambique).

Origin and dissemination of tea

The tea plant has been traced to China and possibly Southeast Asia; historically the origin
of tea as a medicinal herb useful for staying awake is unclear. China is considered the
birthplace of tea drinking with recorded tea use in its history to at least 1000 B.C. The use
of tea as a beverage drunk for pleasure on social occasions dates from the Tang Dynasty
or earlier.
Cultivation and classification

Tea is grown primarily in China, India, Bangladesh, Pakistan, Iran, Republic of Korea,
Sri Lanka, Taiwan, Japan, Indonesia, Nepal, Australia, Argentina, and Kenya. (Note
that in the tea trade, Sri Lanka and Taiwan are still referred to by their former names of
Ceylon and Formosa, respectively.

Divisions of tea by processing technique

The four main types of tea are distinguished by their processing. Camellia sinensis is an
evergreen shrub whose leaves, if not quickly dried after picking, soon begin to wilt and
oxidize. This process resembles the malting of barley, in that starch is converted into
sugars; the leaves turn progressively darker, as chlorophyll breaks down and tannins are
released. The next step in processing is to stop the oxidation process at a predetermined
stage by removing the water from the leaves via heating.

The term fermentation was used (probably by wine fanciers) to describe this process, and
has stuck, even though no true fermentation happens (i.e. the process is not driven by
microbes and produces no ethanol). Without careful moisture and temperature control,
fungi will grow on tea. The fungi will cause fermentation which will contaminate the tea
with toxic and carcinogenic substances. In fact, when real fermentation happens, the tea
must be discarded

Classification
Tea is traditionally classified into five main groups, based on the degree or period of
fermentation (oxidation) the leaves have undergone:

White tea Young leaves (new growth buds) that have undergone no oxidation; the buds
may be shielded from sunlight to prevent formation of chlorophyll. White tea is produced in
lesser quantities than most of the other styles, and can be correspondingly more expensive
than tea from the same plant processed by other methods. It is also less well-known in the
western countries, though this is changing with the introduction of white tea in bagged form.

Green tea the oxidation process is stopped after a minimal amount of oxidation by
application of heat; either with steam, a traditional Japanese method; or by dry cooking in
hot pans, the traditional Chinese method. Tea leaves may be left to dry as separate leaves
or rolled into small pellets to make gun-powder tea. The latter process is time consuming
and is typically done only with pekoes of higher quality. The tea is processed within one to
two days of harvesting.

Oolong Oxidation is stopped somewhere between the standards for green tea and black
tea. The oxidation process will take two to three days.
Black tea/Red tea the tea leaves are allowed to completely oxidize. Black tea is the
most common form of tea in the western countries. The literal translation of the Chinese
word is red tea, which may be used by some tea-lovers. However, red tea may also refer to
rooibos, an increasingly popular South African tisane. The oxidation process will take
around two weeks and up to one month. Black tea is further classified as either orthodox or
CTC (Crush, Tear, Curl, a production method developed about 1932). Unblended black
teas are also identified by the estate they come from, their year and the flush (first, second
or autumn). Orthodox and CTC teas are further graded according to the post-production
leaf quality by the Orange Pekoe system.

Health Effects of Tea

Tea, the miracle drink!

Through the centuries, tea has been popularly consumed in many countries as a good
source of antioxidants. Cathecins (part of the acidic acids), thearubin and theaflavin are
abundant. Further, black and green teas are comprised of approximately 15-16% of
flavinoids. Flavonoids also act as antioxidants, which assist in the prevention of cellular
damage, cardiovascular disease, skin disease and UV induced DNA damage. Further, it
acts as an anti-inflammatory and improves blood vessel function, and has been found to
prevent cancer. Not enough for you? How about the fact that it also has fluoride, potassium
and calcium? And manganese. And niacin. And finally, B vitamins.

Tea is high in caffeine, also known as teine. One cup contains about 20-70mg. Teine is
naturally present in the tea plant, camellia sinensis, acting a protective toxin of the plant.
Rather than improving circulation via the heart, though, it acts directly on the brain and
central nervous system as a natural stimulant. This is a result of the combination of tannins
which are also present in the tea. The caffeine bonds to the tannins and can only be
released until it reaches the intestine.

A cup of tea has about 8%-20% of tannins, depending on the type. It is also well known that
tannins exist in red wine and some other plants as well. They help calm the stomach and
cleanse the intestinal tract. The stain you see left on a pale colored tea cup or pot is
actually the result of tannins (called patina). This improves the aroma and a bit of the
flavour of your next brew, so don’t wash it off.
TEA INDUSTRY IN PAKISTAN

Pakistan is one of the world's largest importers of tea, spending $ 300 million annually on
the national beverage, but it is trying to save greenbacks with a green revolution.

There is no history of tea-growing in Pakistan, which depends on Kenya, Sri Lanka and
even India to ensure that its 145 million citizens have their daily cups. That could soon
change.

The recently set up Tea Research Institute of Pakistan (TRIP) is enticing farmers with cash
and other subsidies to dump vegetables and wheat in favour of the potentially more
lucrative tea.

At the picturesque village of Shinkiari, 90 kilometres (56 miles) North of Islamabad, the
institute has established Pakistan's first tea factory.

The Chinese-made plant inaugurated by President Pervez Musharraf in September 2001 is

expected to produce eight million kg of black tea this year.

This is modest by international standards, but for TRIP it is encouraging.

There is great potential to cultivate tea in the mountain slopes in the North West Frontier
Province (NWFP).The area we now have under tea will be more than doubled to 300
hectares next year.

It is estimated that about 150,000 hectares of land in the NWFP could be brought under an
ambitious tea project.

The districts of Mansehra and Batgram which lie along the Silk Route and Swat region of
the NWFP are immediate candidates for the tea revolution.

Pakistan is getting help from China, the home of the tea bush botanically known as
Camellia Sinensis. The bush was taken from China and popularised in other South Asian
countries by the British colonisers in the mid-19th century.

Chinese technology is used to make black and green tea and a combination of "Orthodox"
and "CTC", or cut, tear and curl, teas at the Pakistan TRIP factory.

The CTC teas are relatively poorer in quality than the Orthodox teas and used in tea- bags.

Sri Lanka is the world's largest exporter of tea, selling 295 million kg of mostly Orthodox
teas last year, when India was the world's biggest producer with a crop of 853.7 million kg,
much of it consumed at home.

Some of the Indian tea is smuggled to Pakistan through third countries, especially
Afghanistan, according tea trade sources. Pakistan legally imports about 12 to 13 billion
Rupees ($ 200 to 216 million) while another five to six billion Rupees ($ 83 to 100 million)
worth of tea is smuggled in.

The numbers show the merit of Pakistan growing its own tea. The Ministry of Food,
Agriculture and Livestock decided in May 2001 to offer more incentives to tea-growers.
In order to reduce the burden of import bill and to encourage establishment of orchards, the
Agricultural Development Bank of Pakistan started its program of lending to the tea sector.

The bank's figures show the bank has loaned 2.17 million Rupees to 22 farmers who have
cultivated tea on 35 acres (15.9 hectares) of land.

Multi-national tea company Lever Brothers has also set up a manufacturing plant in
Pakistan and started propagating tea in the mountainous regions conducive for the crop.

Lever Brothers have 236 acres under cultivation, but their plants are younger than those in
the 114 acres planted under the TRIP program.

TEA CULTIVATION

Commercial production of tea will start from 2004 as tea cultivation in the NWFP picks up,
following initial success of trial production undertaken by a multinational company.

A 159-acre of land has been earmarked in the NWFP for tea cultivation, while tea
processing plant has already been set up.

Director Beverages, Lever Brothers, Naeem Khokar, told Dawn that his company produced
two to three tons of tea this year.

Currently, tea production has been suspended as the planting season is restricted by
weather conditions to a few short months. He said the process required extreme care and
swift transfer of thousands of nursery plants to the fields and quick re-filling of the nursery
for future plantation. Lever Brothers is currently producing nearly a million cuttings annually.

The total area under cultivation — 159 acres — is expected to rise to 360 acres by the end
of this year and to 1,500 acres in the next five years.

A mutually beneficial agreement was made with farmers, who sell their green leaves to the
Lever Brothers at agreed prices.

Mansehra, Chitral and Swat were potential tea growing area and in order to grow high
quality tea. It is essential to have constant downpours and the temperature ranging
between 37 degrees centigrade during the day and 12 degrees centigrade at night.

The tea processing plant in the small town of Dhodial on 2.5 acres of land was inaugurated
recently. The plant, he said, was expected to process 50 kg of tea per hour or a ton of
made tea a day. The aggregate research and development, including those for the next five
years, will cost Lever Brothers an estimated Rs260 million. The total cost of the plant is
Rs11 million, whereas Rs12 million has been spent on the building and infrastructure.

A tea research report states that 1,500 kg of tea can be grown on one acre of land in
Pakistan as compared to 3,500 kg in Kenya, 3,000 kg in Tanzania, 2,320 kg in India, 1,340
kg in Turkey, 1,110 kg in Sri Lanka and 960 kg in Bangladesh.
Pakistan, a major tea importing country of over 110,000 tons per annum, was in the
process of becoming a producer of tea.

Pakistan raising tea with Chinese help

PAKISTAN has begun tea cultivation on a small-scale but going by the plans in the
pipeline, it could assume larger proportions.

This development comes at a time when India is once again looking to Islamabad as a
prospective buyer of its teas. Efforts made in 1998 to prevail upon Pakistan to buy Indian
teas yielded temporary results as only a small quantity was sold.
Then, Pakistan had compulsions to buy Indian tea as production in Kenya and Sri Lanka,
its main suppliers, was hit due to drought attributed to the El Nino factor, caused by
warming of the Pacific Ocean.

After that there had been no progress. But this year, faced with the compulsion to raise its
exports, the tea sector, particularly in the south, has been desperately looking to push its
tea to Pakistan.

However, Islamabad is now seriously trying tea cultivation in the Lower Swat Valley and
plains of the North-West Frontier Province (NWFP), bordering Afghanistan.

Helping Pakistan in this effort is China, which has recommended tea planting in 60,000
hectares (ha).

Media reports emanating from Islamabad say a complete survey had been done with the
Chinese cooperation and 2 lakh had been identified for tea cultivation.

The National Tea Research Institute of Pakistan (NTRI) feels 1 lakh ha is enough to meet
domestic demand.

As per the latest figures, Pakistan nearly imports 140 million kg of tea valued at around Rs
(Pakistani) 1,000 crore.

Pakistan has found the NWFP climate conducive to grow Chinese varieties and it is
planning to provide incentives to tea growers to achieve self-sufficiency in production in the
next few years.

Reports say tea cultivation had begun around 1990 in Pakistan, while Lever Brothers
Pakistan Ltd began a formal cultivation project last year with some growers being roped in.

More importantly, the quality of tea produced in Pakistan had been found to be comparable
with that from Kenya or Sri Lanka. A Food and Agricultural Organisation (FAO) official has
reportedly termed the quality as ``the best produced anywhere in the world''.

NTRI has begun taking more concrete steps to make Pakistan a leading tea-growing nation
and as a first step, it is setting up a black tea plant of 1000 kg per day processing capacity.
The plant is expected to become operational by April next.
Meanwhile, the first tea consignment was exported from Pakistan earlier this month to
United Arab Emirates. The 5,000 kg consignment valued at $25,000 was re-exported of tea
imported at an average $2 a kg. Tapal Danedar, the exporter, has said it would try to make
non-resident Pakistanis to prefer its tea instead of Chinese or other tea''.

TEA IMPORT

Legal black tea import surged by 10 per cent to 116,941 tons in 2003-2004 from 105,244
tons in 2002-2003 Besides, consumers sipped around of 35,000-40,000 tons smuggled
black tea in 2003-2004.

The above figures clearly show that country's total tea consumption has improved by seven
to 10 per cent to over 150,000 tons in 2003-2004 as compared to 135,000-140,000 in
2002-2003.

PTA now portrays a new picture of legal tea trade in the wake of government's decision of
slashing import duty on tea to 10 from 20 per cent in the 2004-2005 budget.

The legal black tea import will reach to around 150,000 tons in 2004-2005 owing to duty
cut. Smuggled tea will arrive but the quantity will be very negligible in 2004-2005.

Meanwhile, a tea importer said that country's total tea consumption is expected to reach to
over 170,000 tons in new fiscal as a result of rising population. Besides, import duty cut will
encourage many new players to get engaged in tea business.

Tea sales of packers/ blenders and loose tea dealers would also rise in 2004-2005 as a
result of price cut, he said. The importer said that the measure to cut import duty by 50 per
cent would, however, not completely eliminate the menace of smuggling and smugglers
would still have a little chance to dump around 10,000-15,000 tons in the Pakistani markets
through Afghan Transit Trade (ATT).

Import statistics, compiled by the PTA, revealed that out of total $187m total Pakistan's tea
import from around 20 countries, arrival from Kenya remained at the top with $119m in
2003-2004 as against $108m in 2002-2003.

As a result of signing free trade agreement with Bangladesh, tea imports surged to 9,830
tons in 2003-2004 from 5,627 tons in 2002-2003 while 927 tons of tea also landed in
Pakistan from Nepal under FTA.

Import of Indian tea stood at 6,872 tons as compared to 3,783 tons in 2002-2003, up by 81
per cent as majority of tea consignments had arrived from South India owing to cheaper
rates.

Increased arrival of black tea from India, Nepal and Bangladesh remained a main reason
for boost in legal tea imports. Consumers have started receiving the benefit of import duty
cut in shape of price cuts ranging between Rs10-15 per kg.
ROLE OF TAPAL TEA IN TEA INDUSTRY

Tapal Tea Private has already cut the prices last week while Unilever is likely to follow the
suit as the tea giant is waiting for the clearance of old stocks.
Pakistan imports 10 mn kg of Indian tea.

There are mainly two kinds of buyers in Pakistan — organized and unorganized. Unilever,
Pakistan and Tapal Tea Company are the largest organized buyers in Pakistan. Most of the
unorganized buyers are located in the Jodia Bazaar — the largest wholesale market in
Pakistan.

The unorganised buyers are extremely price sensitive and they generally avoid Indian tea
as it is priced higher than the Kenyan tea. Pakistan buys good quality CTC teas. The tea
industry is aiming to send mostly first flush tea to Pakistan.
“Even though Indian tea is yet to make a substantial dent in imports from Kenya,
Bangladesh, Brazil, Uganda and other African countries, a beginning has been made. It is a
good signal that a palate for Indian tea is being created among the Pakistanis,” said the ITA
joint secretary.

The ice between India and Pakistan over tea trade has started melting. After a hiatus of
almost 10 years, Pakistan has imported close to 9.5m kg of Indian tea in ’05, which
accounts for 7% of the country’s tea imports of 130m kg. Indian tea has also garnered
better prices in Pakistan.

The price realisation, on an average, has crossed £1 per kg. In the earlier years, the same
quality tea had fetched much lower value. In ’04, Pakistan had imported only 3.5m kg and
in ’03 the Indian tea exports to Pakistan was 5.8m kg.
Figures compiled by the Pakistan Tea Association (PTA) shows that the country has
imported 9.3m kg of Indian tea in ’05.

INDO-PAKISTAN TRADE OF TEA

Earlier, most trade was through the bi-weekly Samjhauta Express, the lone rail link
between India and Pakistan, or through Mumbai port, both resulting in long delays over
customs' clearances. The delays also ruled out trade in perishable goods like fruit and
vegetables or livestock.

Pakistan is estimated to be the second largest tea consumer in the world, with a market
size of around 140 million kilograms per year. India, at present, is exporting just 6.4 million
kilos of tea to Pakistan due to high duty of 49 percent and Pakistan buys most its tea from
Kenya and Rwanda. In engineering goods, consumers in Pakistan may benefit from lower
prices of cars, motorcycles and bicycles, the study elaborates.

Trouble stirs in Pakistani tea trade

Pakistan’s tea traders are demanding a complete elimination of custom duties on imported
tea as they prepare in the new financial year that began this month to confront the influence
of cheaper smuggled tea.
Pakistan charges only 10 per cent custom duty on tea imports. But even this apparently
modest level of duty gives such a large advantage to smugglers. For a country that has a
population of more than 150m – and a passion for drinking tea left behind across southern
Asia by the British Raj – there is no shortage of tea drinkers.

Tea traders such as warn that up to a quarter of the 165m kg of tea estimated to be
consumed annually in Pakistan is brought in by smugglers. That puts the legal tea traders
at a disadvantage as smuggled tea supplies are sold at cheaper rates than legally imported
stock. Part of the controversy over tea duties is embedded in the nature of Pakistan’s
relations with Afghanistan.

Pakistan allows Afghanistan the right to import commodities through its ports such as
Karachi. Imports for Afghanistan are offloaded at Karachi and supplied onwards by trucks.

Tea traders, however, insist that a large part of the consignment of tea imported for
Afghanistan is brought back to Pakistan through mountainous passes along the 1,500-mile
porous border between the two countries. One disturbing feature of this case is that there
are large numbers of tea containers destined for Afghanistan that carry tea imported from
Kenya. Anyone who knows the tea-drinking habits of Afghans would tell you, Afghans
generally don’t like drinking this type of tea, referring to the African tea that is consumed
with milk in most Pakistani homes.

Pakistani officials at the government’s central board of revenue, the main tax collection
agency, agree there is enough cause to get tougher on imports to Afghanistan.

On the streets of Pakistan, the price for a cup of tea remains a controversial matter as it is
the most widely consumed drink across the country. Any sign of a sharp rise in the price of
a cup of tea is lamented in a country where opposition leaders have demanded tougher
measures to curb recent inflation.

The Pakistani government has responded to rising prices of some commodities by allowing
imports from neighboring India, after a year-long peace process between the two long-
warring neighbors. But there are no measures just yet to allow the import of tea from India,
which Pakistani traders say would cost less than tea imports from Kenya.
THE TAPAL GROUP

Is headed by Aftab Tapal. The group’s success in tea business has astounded many. The
journey of Tapal’s remarkable success is the combined harvest of three generations of this
family. In 1947, Tapal started out as a family concern under the supervision of Adam Ali
Tapal. Faced with tough competition from very well known tea brands in the market, the
Tapals dispelled the common impression that their capital base would soon be eroded. The
company grew under Faizullah Tapal, whose son Aftab today brings a lot of innovation and
marketing vision to make Tapal a household name. After having lived abroad, Aftab rushed
hack home with flourishing ideas and introduced new concepts in the commodity that was
first sold at Thomas Garway’s Coffee House in London in 1657. Equipped with latest state-
of-the art blending and tea-mixing paraphernalia. Tapal is today Pakistan largest tea
company as its consumption runs into millions of cups every month, according to an
estimate by this company’s marketing division. In December 1997, Tapal Tea became the
first Pakistani of its kind to have attained the ISO-9001 certification. Tapals are also known
to have stakes in power generation business. But their tea makes the Tapals known to all.
The group claims nearly 1.4 million cups of tea in Pakistan are made of Tapal every hour.

VISION

"TAPAL's vision is to have its products available within an arm's reach of every
individual's desire be a benchmark for quality, creativity and ethical values ."

MISSION STATEMENT

“We at Tapal are committed to create powerful brands for our diverse consumer
base Our purpose is to meet the everyday needs of people everywhere to anticipate
the aspirations of our consumers and customers to respond creatively and
competitively with branded products and services which raise the quality of life.
Three generations of innovation and growth
The journey of Tapal's remarkable success is the combined efforts of three dynamic
generations of the Tapal Family. In 1947, Tapal started out as a family concern under the
personal supervision of its founder, Adam Ali Tapal.

Against tough competition Adam Ali's unique blend, later named Family Mixture, became a
hot favorite and eventually the largest selling brand in the unorganized tea market. From
this auspicious beginning, Tapal moved from success to success introducing tea brands to
suit every taste and pocket, sold from its retail outlet in Jodia Bazaar, Karachi. The quality
of Tapal teas soon became legendary and people from all parts of Karachi started lining up
at the outlet to purchase tea. For their convenience, tea distribution was initiated to retail
outlets around the city. The company continued to grow under the management of the
founder's son, Faizullah A. Tapal.

Today Tapal Tea is managed by the founder's grandson, Aftab F. Tapal. After studying
abroad, Aftab Tapal returned to Pakistan to introduce professional management and
unique production ideas to the business. A well trained tea taster and tea connoisseur
himself, Aftab Tapal introduced new tea concepts and developed a wide range of tea
blends catering specifically to the tastes of people throughout Pakistan. His progressive
outlook resulted in giving further strength to the foundation of quality laid by his family.

Making a modest beginning over half a century back , today Tapal has become the largest,
100% Pakistani owned tea company in the country. It has modern tea blending and
packaging factories, warehouses equipped with state-of-the-art equipment and a team of
highly dynamic professionals headed by Aftab Tapal himself.

SECRET OF SUCCESS

Tapal's success has astounded many. However no magic formula lies behind its growth
other than hard work, dedication and of course unique tea blends. As a result, Tapal has
won the hearts of countless tea drinkers across the country.

Tapal's deep rooted culture and core values differentiates it from its competitors. It is built
on sound principles and practices; not dominated by a group of individuals. Its greatest
asset are its people; and the consistency of principle and policy give the direction.

A commitment to quality

"Never compromise on quality" has been the motto at Tapal since the very beginning. This
commitment to quality has resulted in a high level of customer satisfaction and unflinching
brand loyalty. In December 1997, Tapal Tea became the first Pakistani Tea Company to
earn the ISO-9001 certification: a symbol of the highest international quality standards.
Again in December 2000, Tapal acquired the ISO9001: 2000 certification, making it one of
the first few companies in the world to achieve this milestone. In addition to the standard
requirements, the ISO9001: 2000 certification system includes requirements for
environment improvement, concepts of TQM (continuous improvement) with major
emphasis on consumer requirements and satisfaction.
TAPAL’S QUALITY POLICY

The Management and the employees of Tapal Tea (Pvt.) Ltd. are committed:
• To produce products that meet the customer's requirements & expectations.
• To fulfil the requirements and effectiveness of the quality management system through
continual improvements.
• By constantly reviewing / updating the relevant quality objectives of products & processes.
• To participate as teams or individually towards the improvement of processes, personnel,
environment & ethical values.

Leaders in innovation

Always on the move, Tapal Tea is honored to have taken the lead in a number of areas in
the tea industry. Tapal has been:
• The first to introduce soft packs in the country.
• The first tea company to introduce metal-free tea bags.
• The first to develop an entirely new blend and category-Tapal Family Mixture (the mixture
of leaf & dust).
• The first to invent the highly successful brand Danedar Leaf Blend.
• The first to market Kenya teas in Pakistan.
• The first tea company to be awarded the ISO 9001/2000 Quality Certification

As a step towards backward integration Tapal has begun tea plantation at Shinkiari in the
northern region of Pakistan. This project aims at providing jobs, saving the country's
valuable foreign exchange and is a significant step towards self-sufficiency. Tapal is also
the 1st national tea company to export tea to the UAE, Canada and USA. This is again a
pioneering step towards increasing value-added exports and is also a fast developing
source of foreign exchange for the country.

PACKAGING- Pioneers of soft packaging

Technology is also harnessed at Tapal to benefit the consumer. From the very beginning,
Tapal realized the importance of importing innovative technologies such as the soft packing
process. A fully automatic facility was established where soft packs were produced for the
first time in Pakistan.
At this facility tea is blended and packed in hygienic conditions, untouched by human hands
whilst the soft packing technology keeps tea fresh and packaging costs economical. The
success of these soft packs has been such that other tea companies have also followed
Tapal's lead and launched some of their brands in soft packaging.

RESEARCH AND DEVELOPMENT

Tea blending and tasting is both an art and a science and Tapal prides itself on having
mastered both the aspects. Tapal has adroitly judged the olfactory senses and keenness of
the taste buds of their patrons, resulting in the creation of various well-known brands. Aftab
F. Tapal is a well-trained and

Highly experienced tea taster of the country and is recognized as a qualified tea specialist
worldwide. Tapal's tea managers have been trained at home and abroad in this very
rigorous and specialized discipline, and have frequently traveled to leading tea-producing
countries searching for better teas.

Tapal is a research-oriented company. It subscribes to and conducts various researches in

the area of retail audits, consumer behavior, media planning and product development.
This research is used for continuous improvement in product quality, brand positioning and
communication according to the changing requirements of the consumers. Consistency and
quality are the two keystones of Tapal's production policy, and the Quality Control
Department at Tapal ensures that flavor and freshness is never compromised. That's why
all the brands, whether Danedar, Tapal Special or Tapal Family Mixture, always taste
exactly as expected; retaining aroma and freshness till the last sip.

Power of brands

After Tapal's unique Family Mixture became Karachi's largest selling brand, the company
was encouraged to innovate further. As a result, in 1987, an entirely new category brand
called Danedar was created and launched. Tapal Danedar became the country's Largest
selling tea brand with a loyal following.

Tapal's experienced "high voltage" marketing team has contributed over the years to the
phenomenal growth of the brands and the company. In recent years, memorable
advertising campaigns on the electronic and print media using TV and film celebrities, have
made Tapal a household name. Tapal is considered to be among Pakistani women's most
preferred tea brand.

The highly successful mix of great teas, modern marketing, proper distribution and
promotional activities has resulted in overwhelming growth for Tapal over the last 50 years.

Tapal and the world of music

With the view that the younger generation will be Tapal's future customers, Tapal is
actively supporting the fast developing music industry in Pakistan. It has sponsored the
leading singers in Pakistan and actively participates in music concerts.

Tapal rural marketing

Tapal has endeavored to make its marketing activities as attractive and interactive as
possible, forging a direct link with the consumers. The recently introduced Tapal Road
Show has given rural marketing a whole new feel.

Tapal has a huge fleet of beautifully decorated trucks conducting the road shows. These
trucks are fabricated with a kitchen, a state of the art sound system and a side door which
converts into a stage. Vans are used for conducting merchandising activities and POS
splash. Mobile Video Units are used for projecting promotional and entertainment films.
Tapal's philosophy has always been "be as unique and innovative as possible in what ever
we do"...and this is just one of the many examples.
STRONG DISTRIBUTION NETWORK

Tapal has a distribution network spread across Pakistan, from Karachi to Khyber with over
400 distributors. Extensive training programs are provided for the devoted sales personnel.
The popularity of its fine brands is unabated, making it the No 1 national tea company in
Pakistan.

A vision for the future

A company that has grown with the country, Tapal Tea looks forward to even greater
progress and innovation in the years to come. It remains committed to providing the people
of Pakistan with only the highest quality products and improving their lives in whatever little
way possible.

BRANDS

A unique combination of high- grown Kenya tea leaves and dust, that gives a refreshing
aroma of leaf and strong taste of dust all together in one cup. Tapal Chai Family Mixture is
the pride of Tapal developed by the forefathers in 1947 and thus creating a new category of
Mixture in the tea market.

It is the blend that started the Tapal success story, and now the other tea companies are
following Tapal’s footsteps by entering the market with similar blends. Danedar Leaf Blend
Pioneer of the Danedar category in Pakistan, Tapal’s Danedar remains a firm favorite
around the country with its grape-nutty appearances, rich golden colour and a strong
refreshing taste. In fact its popularity is such that several multinationals have launched their
own versions, but Tapal’s remains the original and ultimate Danedar because of its unique
colour and taste.
 Danedar Leaf Blend Family Mixture

Mezban Super Dust Chenak Kenya Dust

Jasmine Green Tea Gulbahar Green Tea

Special Round Teabags

TAPAL AND COMMUNITY SERVICES

Over the years Tapal has not only provided quality products, but has also fulfilled its social
responsibility of being a good corporate citizen by actively participating in community
service activities. The company has continuously sponsored the arts, social welfare
projects and sports within Pakistan.
The Tapal Cricket Club, started in 1988 has become one of the most popular and reputable
sports clubs in Karachi and has many cricketers and professionals as its members. Tapal
has also sponsored fund-raising events for the Pakistan Medical Association such as
marathons, walks etc.

As part of its rural marketing program, Tapal conducts various welfare activities in towns on
an on-going basis such as providing fans and furniture for schools, installation of litterbins
for a cleaner environment and providing street lights to municipal committees of small
towns where such infrastructure is not available. Tapal has provided support to
communities at the time of crisis due to natural calamity such as the drought that hit Thar in
the year 2000 during which the company distributed free tea to the affected people.

Tapal has also recently completed the restoration of the 100 year old Jampur Gate in the
town of Jampur in Punjab. This project is a symbol of Tapal's active participation in the
country's development and preservation of its rich cultural heritage. This spirit is also
evident on national days such as 14th August and 6th September when Tapal celebrates
with the nation by taking out a cavalcade

TAPAL HOLDS STRONG MARKET POSITION

Tapal, is the first tea company to be awarded ISO 9002 quality certification. From its
modest beginning as a family-owned retail outlet in Jodia Bazaar Karachi, the biggest
commodities market in the country, Tapal Tea (Private) Limited today is the largest wholly-
owned Pakistani tea packaging and marketing company.

Phenomenal growth

The company has enjoyed a phenomenal growth particularly during the last decade to
expand its base in the branded market which for long were dominated by multinational
competitors. Tapal today enjoys over 17 per cent or 22 million kilogram share of the total
tea market annually up from 10 million kilogram in 1990. Tapal's envious growth has come
at the expense of its multinational competitors, Brooke Bond and Lipton brands, whose
combined market share has shrunk from 60 million kg to 45 million kg during the same
period.

Millions KG

45
40
35
30
25
20 East
15
10
5
0
Tapal Brooke Bond
/Lipton
 Brands

Market & Share

Putting the per capita tea consumption in Pakistan at about one kilogram, Mr. Thara said
that approximately 140 million kg of tea is marketed annually in the country of which 110 m
kg is met by the imports while the rest of the 30 million kg demand is fed by the smuggled
counterpart.

Of the 110 million kg regular imports, 70 million kg is branded while the loose market
makes up the rest of the 40 million kg. Tapal and its multinational rival Lever Brothers
combined enjoy the biggest share of the branded market — 60 million kg leaving the
remaining 10 million kg for a number of other smaller companies, he added.

TOTAL CONSUMPTION IN COUNTRY (IN MILLION KGS)

TOTAL CONSUMPTION
IMPORT
SMUGGLED

Tapal is not for sale

Denying any truth about the baseless rumors about Tapal's take over by its multinational
rival Lever Brothers, Mr. Thara termed them 'baseless as we were neither approached by
anyone nor we approached anybody for any deal." However, he said, that irrespective of
the reasons of spreading the rumors who were behind it, it made Tapal to do 'internal
brainstorming' as they seemed planned and intentional to achieve primarily two basic
objectives. Number one, they were meant to demoralize our employees and secondly to
weaken our distribution network which comprise a number of distributors whose sole
business is Tapal, he added.

It is discussed whether or not to react to the baseless rumors and finally decided to address
the issue internally including letters to the distributors by our managing director that his
family business which enjoys immense loyal following is not for sale. Talking to that the
spread of rumors may had its basis in the huge billboards of the competitor in front of all its
three factories- 2 in Karachi, one in Raiwind — as well as in front of its sales office in
Lahore. It may have been also prompted by the fact the Lever Brothers has already bought
Polka Ice Cream — the biggest branded ice cream manufacturer of the country soon after
establishing its own Walls Ice Cream few years ago. In addition, he said, the worldwide
merger of Best Foods with the Lever Brothers could have also provided an impetus for the
rumor in the local media and market.

Tapal is a corporate entity it belongs to a family which is proud of its name which has
become a benchmark of quality tea. The family can not sell its name irrespective of how big
may be the offer, Mr. Thara said. In fact, he added, Tapal is actively involved to expand its
market not only within and outside the country as well as has recently signed a
Memorandum of Understanding with the Pakistan Agricultural Research Council (PARC) to
cultivate tea in Pakistan.

COMPANY’s APPROACH
Three principles underpin TAPAL’s approach to the management of people:
A focus on managing talent to identify, reward and retain talented employees.
Building a strengths-based approach by providing the skills to develop individuals and
teams by focusing on people’s personal strengths. Driving employee engagement through
the development of exceptional managers with the skills to identify and build talent.

An eye on the future

Company’s culture is about empowering employees, both to contribute to business
objectives and to achieve their own personal and career goals. They also keep an eye on
the future, with 'leadership behaviours' initiative aiming to identify the next generation of
leaders.

HR's overall function is to devise and implement strategies and policies to ensure that
company have the right people with the right skills. Within that, there are numerous options
for workers. For example, it could be covering culture change, leadership development,
strategic talent management, coaching and skills development or alignment of reward with
performance.  

Human resources need

 Strong interpersonal and leadership skills.
 The ability to see the big picture while delivering on day-to-day goals.
 A real interest in how people drive business.
 The strength and integrity to take tough decisions.
 An interest in coaching and developing people.  
Leveraging high performance

This approach focuses on helping employees to understand their individual talents and
developing them to leverage productivity and performance.
Based on extensive research, benchmarking against best practice and proven good
practice, company developed and implemented a number of strategic people levers to
achieve their business goals:

A strengths-based recruitment process, focusing on selecting people capable of

exceptional performance, with increasing use of web-based technology to ensure global
consistency and maximise efficiency.
An employee engagement measurement tool to encourage the application of their
individual talents and discretionary effort.

A rigorous talent management process to ensure that high potential is recognized,

developed and supported, and that under-performance is addressed.
A cutting edge, on-line learning system, accessible to all employees and
providing high quality, consistent and cost effective learning programmes.

Development programmes targeted at managers and leaders to enable them to build their
strengths to maximise their contribution to business performance.
A common set of organisational values to enable employees to consistently demonstrate
the behaviours which underpin brand.
A total reward model which recognises an individual's contribution to business
performance.

MANAGEMENT DILEMMA

Research Question
The research question is that Tapal’s Tea is not capturing the local market

Investigative Question
The investigative question is that why Tapal Tea is not capturing the local market
and why Lipton tea and Brooke Bond have the combined Market Share of 45% more
popular in the local market.

Sir Thomas Lipton's vision to provide the best quality tea has made Lipton the number one
tea in the world today. Lipton offers an option to tea lovers to enjoy their favorite drink in an
exciting and refreshing way.

Making a big splash

Lipton is one of the world's great refreshment brands, making a big splash in the global
beverages market; it is the epitome of international quality. Lipton Yellow Label's assurance
of quality has helped it become the world's largest selling tea brand. Specially plucked from
the best tea gardens of Kenya and blended to perfection - it is truly the gold standard in tea.
The 100% International Blend - made with one of the best technologies available in the
world, has been brought to you to provide the finest tea drinking experience.

Be the best you can be

Drinking Lipton is a way for the consumers to feel great in mind and body - to feel good
about themselves and the world around them. Lipton allows its consumers to be the best
that they can be…to stay engaged and connected.

Key facts and figures

Tea is the world's favourite beverage and for many years people have believed tea to
possess unique health-giving properties. Today modern scientists are exploring the exciting
potential of tea, which has a unique combination of natural antioxidants, known as
flavanoids, catechins and aroma-components. Taken regularly, tea can help improve
vascular function, combat fatigue, reduce cholesterol levels and increase feelings of
vitality. 

Painting the world yellow

Lipton is the world's leading brand of tea by far. It's the global market leader in both leaf
and ready-to-drink tea, giving  a global share of all tea-based beverages that's nearly three
times larger than its nearest rival. In total non-alcoholic beverages, Lipton is the global
number three brand in terms of volume consumed.

Did you know that globally

 1649  cups of Lipton Tea are enjoyed every second
 8245 cups of Lipton Tea are enjoyed every time you blink
 1252 cups of Lipton Tea are drunk every time your heart beats
 52 billion cups of Lipton Tea  are drunk each year
 45.75 billionTea Bags are produced by Lipton Tea each year         

Drink to your health

If that's not enough to convince you that tea is worth trying, take a look at some of these
fast facts:

 Drinking four cups of tea is rehydrating, NOT dehydrating as is often said - unless
the amount of tea consumed at one sitting contains more than 250mg of caffeine –
that's the same as five cups of tea.
 Tea as it's packed with fluoride, helps to protect your teeth against decay. In fact,
studies have shown that it can provide up to 70% of the fluoride you need.
 It's also thought that the tannins in tea can inhibit the growth of the bacteria that
cause plaque, plus reduce the amount of sugary, enamel-damaging saliva in your
mouth. 
 Tea without milk and sugar has no calories.
 In hot weather, tea refreshes you by raising your body temperature and momentarily
causing perspiration, which cools the skin.         
From our range

Caramel flavoured

Cookies flavoured

Vanilla flavoured

Lipton Green Tea

Lipton Yellow Label tea bags

Lipton Yellow Label sachet

Lipton Yellow Label pack

Jar

TEA
In Pakistan Tea is more than just a beverage; it is part of traditional hospitality in most of
our homes. Over the years Brooke Bond & Lipton have built formidable grand equities,
Having delighted Pakistani consumers by offering blends that catered to their taste and
preference.

Local Tea Sales and profitability have been under pressure from continued smuggling of Tea since
1994. This has severely impacted the business of legitimate tea traders and blenders, and caused
substantial losses of much needed revenues to the Government. It is estimated by the Pakistan
Tea Association that approximately 60 million kilograms tea (over 40% of the total Pakistan
consumption) will enter Pakistan through the illegal channel. Over a 12 month period several
representations have been made to the Government to curb the smuggling of tea but no effective
measures have been taken to date.
The Company is focusing on fulfilling a variety of consumer needs and a string of innovative
products are in the development stage to safeguard Lever's market share and offer better value
to consumers.

Lever Brothers is also working towards improving its cost competitiveness by taking advantage
of the synergies from the recent amalgamation of the two companies, through improving
its operational and supply chain efficiencies and strengthening its distribution.

The Company is also committed to accelerate its tea research project in Mansehra, aimed at
growing tea in Pakistan.

Secondary Data Exploration

The research contents of this report are descriptive and less approach to accurate
variables.

Data collection method

The data collection method used in this report was

Surveys
Interviews

Interviews are conducted after personal visits from HR personnel of Tapal Tea limited and
remaining from web.

Sources of data

In this report the data was exclusively collected with supporting

Secondary data

This was collected through the company literature, books and from the web or internet.
CONCLUSION AND RECOMMENDATIONS

Conclusion
Recommendations