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By: Hope Lee

 

Generally, Ahmad Tea exports its processed tea to its target markets and relies on local companies to pack, market and distribute them with its guidance. In Iran, Ahmad Tea has established itself for many years and ranks second in tea, and its local partner is Maham Qeshm Trading Co. In 2013, Ahmad Tea experienced a tough time in the face of high inflation and devaluation of local currency, resulting in inflated retail prices in local currency terms. Some shop keepers declined to stock Ahmad Tea, and this reduced availability caused a short-term losses of share. On the top of this, smuggling and counterfeit products are an ongoing issue and threat.

Emerging markets tend to present a relatively high risk in terms of political change and unpredictability, compared to developed markets. Ukraine is also an important market for Ahmad Tea, and the current unstable political situation in this country inevitably poses problems. It is understandable that Ahmad Tea has started to explore opportunities in its British home market, as a more stable alternative.

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Source: Euromonitor International

Britain and London form the basis of marketing and brand equity

In Russia, Ahmad Tea ranks third in tea and its local partner is SDS-Foods, a partnership that has lasted for over 10 years. Ahmad Tea holds a 10% share, similar to Unilever. Its marketing is largely associated with celebrities and cultural events to support its associations of Britishness and London.

In 2013, Ahmad Tea had an eventful year. It worked together with the British Council and the Russian State Library and organised a series of literary meetings over a cup of tea, attended by prominent British and contemporary Russian writers and also literary critics. The company supports campaigns emphasising its British origin, with the Ahmad Tea Music Festival organised four years in a row in Moscow, with British music representatives in attendance.

Ahmad Tea also offers a range of tea for children, namely decaffeinated Ahmad and Ahmad Earl Grey tea bags. It is noted that tea for children is not actively marketed by mainstream players, although healthy beverages for children are receiving growing interest from beverage industry players in general. In terms of new product development, Ahmad Tea launched the Four Seasons Collection in 2013, featuring a box incorporating various flavours of teas for four seasons of the year. Russia is a mature tea market, tea marketers will find it hard to increase volume sales going forward, so adding value to the products and encouraging consumers to trade up to a prestige brand and concept is a logical strategy. Ahmad Tea seems on the right track so far.

Limited global scope

In brief, although Ahmad Tea has shown interest in exploring the UK, the company remains cautious and remains focused on countries where it is already established. As large scale geographical diversification takes financial strength and management resources, Ahmad Tea as a private company may not want to act aggressively beyond its financial means if it can still comfortably cope with the current marketplace. However, the fact that it is largely not present in Asia Pacific, North America and Latin America, its global profile can only be stretched to a limited extent. It is unlikely that Ahmad Tea will present a significant threat to Unilever in the short to medium term. Ahmad Tea essentially relies on organic growth with little appetite for acquisition and this strategy may well carry on in the next few years.

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