The global tea market is highly competitive with key industry players adopting various strategies such as expansions, acquisitions, and product launches to strengthen their market positions. Most companies in the market are focused on expanding operations across regions, augmenting their capabilities, and building strong partner relations.
The growth of market players is dependent on market conditions, government support, and industry development. Thus, vendors should focus on expanding geographically and improving product quality. Tata Global Beverages Limited, Unilever PLC, Associated British Foods PLC, Barry's Tea, Apeejay Surrendra Group, Bettys & Taylors Group Ltd., McLeod Russel India Ltd., Ito En, Ltd., Davids Tea Inc., and Tea Forté Inc. are the major companies in the market that compete based on market presence, quality, and price.
The key players are taking steps toward business expansions and entering into untapped markets, thereby increasing their consumer bases. The international players may strengthen their presence worldwide through acquisitions during the review period. The surging demand for flavored and herbal tea is fueling market growth, thereby making it an ideal time for players to launch various types of teas and increase their global market shares.
Threat of New Entrants
There are several established players in the global tea market. For instance, Tata Global Beverages Limited has grabbed a large market share and has a wide customer base based on its product quality. Therefore, it becomes difficult for new entrants to compete with established brands in the market. Additionally, new players need to invest heavily in creating a brand name through promotion and marketing. However, the barriers to enter the market are not very high and the initial investments required to start a tea brand are not high either. The easy availability of raw materials and the wide consumption of tea incentivize players in the food & beverage industry to extend their product portfolios by adding tea.
Hence, the threat of new entrants in the global tea market is expected to be moderate.
Bargaining Power of Suppliers
The suppliers in the global tea market are tea estates, farmers, and independent suppliers. The suppliers of premium-quality tea leaves are concentrated in certain countries such as China, India, Kenya, and Sri Lanka. There are several tea manufacturers whereas the suppliers of premium-quality tea leaves are concentrated in certain regions, which results in their dominance in the market. However, several market players own tea estates to ensure a continuous, uninterrupted supply of tea leaves. This strategic move and/or backward integration by producers gives them an upper hand while reducing the bargaining power of suppliers.
Hence, the bargaining power of suppliers in the global tea market is expected to be moderate.
Threat of Substitutes
The close substitute for tea is coffee and the wide range of coffee variants available in the market pose a threat to players in the global tea market. The switching costs are almost negligible. However, certain factors such as a large customer base that consumes tea on a daily basis as well as the health benefits of tea lower the threat of substitutes to an extent.
Hence, the threat of substitutes in the global tea market is expected to be moderate.
Bargaining Power of Buyers
The bargaining power includes the pressure consumers exert on manufacturers to offer high-quality products at low prices. The buyers in the global tea market have several substitute products from which to choose and consumers usually tend to experiment with new products in the market and often change their preferences which increases their bargaining power. Moreover, owing to the presence of established industry players in the market, the buyers have several choices, which also reduces switching costs, thus, increasing the bargaining power of buyers.
Hence, the bargaining power of buyers in the global tea market is expected to be high.
Intensity of Rivalry
The global tea market is highly competitive, marked with fierce rivalry among the players in terms of product quality, variety, and pricing. The growing demand for tea among consumers is creating opportunities for the players to emphasize innovation and product quality to expand their customer base. Thus, manufacturers are focusing on reducing production costs to compete in the cut-throat market. They are also engaged in strategic expansions to strengthen their businesses worldwide and survive in the market.
Hence, the intensity of rivalry in the global tea market is expected to be high.
