Charbrew

Market

Target market

The UK’s total hot drinks market continues to remain strong, with approximately 165 million cups of tea and 70 million cups of coffee consumed per day. The herbal/fruit tea market in the UK is increasing year on year; according to a recent Euro-monitor report it has increased between 2009/2010 and 2013/14 by more than an third (34.6%) From £46.5m to £62.6m.

In the fruit and herbal tea sector Twinings represent a domestic market share of 52.9% in 2013/2014 up from 50,6% in 2009/2010, clearly the most dominant brand in the sector. Other brands in the marketplace had a comparatively small share with Pukka accounting for 9.3% of the market in 2013/2014, followed by private label at 6.8%. Other popular brands included Tetley, Sainsbury’s, Clipper, Tesco and Tick Tock, all of which held a similar market share ranging between 4.6% and 3.8% in 2013/2014.

The total UK hot beverage market is forecast to rise in value by 9.2% between 2014/2015 and 2018/2019 (years ending 1st February), from £1.74bn to £1.9bn. The fruit and herbal tea market is forecast to witness significant growth with an estimated rise expected in value of 19.5%, from £68.2m to £81.5, in 2018/2019. This market is expected to benefit significantly from the perceived health benefits of such tea, alongside the increasing number of major tea brands expanding their ranges in this area.

Ice Tea

At the end of 2012, it was decided that Charbrew should move into the Ice Tea market. The Britvic soft drinks report, based on Neilson and CGA data, found that the ‘’cold hot drink’’ category as a whole grew 43%. It is clear to us that ice tea is significantly outperforming the market average.

Characteristics of target market

The market is broken up into the several segments. Convenience and Department Stores which take around 13.5% of the tea sales in the UK combined. Independent’s which take around 2.3% and Other which take around 3.9%. My main target however is multiple high end retailers, these account for around 80.3% of tea-related sales. Charbrew's target market is multiple high end retailers. Herbal tea has a feminine, affluent and urban appeal. With just 15% of men drinking herbal tea as opposed to 27% of women. The appeal to male drinkers could be increased by a more masculine image, for example, through packaging innovation or profiling to target specific men’s health issues.

Utilising sales data we have been able to clearly define who Charbrew customers are:

Age range - 25-45 year old
Gender - Female
ACORN classification - Highly Affluent, Wealth Achievers and Urban prosperity
Behavioural Profile - Confident cooks and Health conscious.

Marketing strategy

Charbrew's main focus is on reaching the market through multiple high end retailers which account for 80.3% of tea related sales in the UK. Charbrew has already had early stage success with listings with Tesco, Holland and Barrett and TJX.

The next stage of growth is focusing on increasing Charbrew’s sales and revenues with existing and new customers, developing the core customer base and leveraging Charbrew’s lean and cost effective structure delivering a ROI to shareholders. With plans to extend Charbrew products to more multiple supermarket chains where over 80% of consumers pick up fruit and herbal tea and ice teas the brand will develop traction and presence with the right on-shelf investment.

The short term view is to develop the main core of the business in the UK retail market, to build Charbrew as a recognized supermarket shelf brand. Through a combination of on-shelf promotions as well as ongoing sales efforts we aim to increase levels of distribution and will in turn build a strong loyal core customer base.

The mid-term view is to develop Charbrew on an international retail basis targeting high per capita established tea drinking countries the main target being North America. This development phase is in motion targeting key distributors and multiples in these countries.

The Long term view is to fully evolve the brand into complementary products to the brand, examples of this being our Ice tea which successfully launched into 250 Holland and Barrett Stores in June 2014. The Charbrew brand is at an early yet unique position with limited new entrants into the supermarket tea aisles we have broken the mould and built traction with reputable retailers.

The company requires funding to catalyse the already growing awareness and distribution of Charbrew products.

Competition strategy

The more direct competition in the market place comes from Tetley’s through their wholly own subsidiary ‘Teapigs’. Teapigs is a direct competitor in terms of quality and product offering but due to the differences in blends, it is not a complete direct comparable range to Charbrew. Teapigs has, over the past few years, ventured into the supermarket aisles.
Teapigs initially built up its network of sales through a network of independents and smaller chains, this is reflected in its hefty retail unit price between £3.99 and £5.49 in store.

Twinings is the market leader in herbal teas and fruit infusions whilst also having a black tea range. Twinings is owned by Associated British Foods (ABF). ABF operates as a diversified food, ingredients and retail group with a presence in 47 countries the company is organised into five business lines – sugar, agriculture, retail, grocery and ingredients. Twinings in the last two years has developed a mesh teabag range however their focus has been on core teas such as breakfast tea, earl grey etc.

Also proving the buoyancy of the mesh tea pyramid and its success in the food service market channel, The London Tea Company (“LTC”) was set up in 2003 by two brothers, Dinuk and Mahin Dissanayake. LTC have positioned their brand focusing on high end premium teas & infusions marketed under the LTC brand and as a supplier of private label products. LTC’s main route to market is through the food service channel including work places, restaurants, hotels, visitor attractions, travel, universities. Their company strategy is ’to provide, for the discerning Foodservice supplier and caterer, a range of fine quality, ethically sourced teas and infusions, for front and back of house use, which leaves a lasting impression of highest quality and superior taste with the consumer.