WARREN TEA Ltd. INDIA

New Market Entry In Russia

ByANKUR PATELMBA (IB)AMITY INTERNATIONAL BUSINESS SCHOOL

Company Background

• The Company was incorporated on 31st May 1977 in the state of Assam

• Warren Tea Limited is the flagship of the Warrens group

• Cultivation of tea plantations, manufacture of machinery for processing tea

• 14 tea estates with total planted area under tea measuring about 6,078 ht.

• Carry on the business as warehousemen, shippers and exporters

• Warren Tea Limited produces 16 million kg of tea annually

• The produce of the Company is savoured across 50 countries

• One of the largest bulk tea producers in India and in the world

3

Current International Business

RUSSIATarget

The company exports its products to the United Kingdom, Germany, Ireland, North America, Pakistan, Iran, and the Middle East.

Why Go GLOBAL?

To increase sales, revenues, and

profits

Competitive advantages in new

markets

Excess capacity

Limited or declining home

market

Domestic competition

entering international

markets. “Competitive

response.” Eg: Tata Tea’s entry in to the U.S., China, and other global

markets; J.V. Gokal’s entry in to

the Russian market.

Global consumers' tastes are

converging. Easier to offer a globally standardized product.

Lower costs and higher prices -

opportunities for profit

70% of Russians' income is

disposable vs. around 40% in the

West

Russia: top location for global

retail

Why RUSSIA?

Surging Econom

y

Real GDP

Growth ↑ 8.1% to $1.3 trillion

The fastest

growing economy in the

G8 group

of industrialized

nations

Investors

pouring money

into improv

ed storage facilitie

s, infrastructure,

and logistics

Improving

financial

services, rule of

law, and

banking infrastructure

FDI into Russia reach $58

billion in 2008,

an increas

e of about 16%

compared to the

value in 2007

“Even as the

financial crisis shows

no signs of abating

and deleveraging

continues,

Russian econom

y will remain strong becaus

e of very low

levels of

public debt.”

Political Factors

Government seeking to streamline customs and taxation regimes to

Government focus on expanding manufacturing base and improving

New reforms targeting bureaucracy and corruption

E- commerce, including B2B ecommerce

Supporting the E-Russia program, designed to stimulate growth of

Attract more FDI

Infrastructure development

Opportunities for Indian Tea Companies in the Russian Tea Market

CATEGORIES GLOBAL INDIA RUSSIA

Market size in terms of retail value 23,323 876.4 3,266

Market size in terms of retail volume 1,765 226.04 161.44

Growth rate in terms of retail value (08-09)

4.50% 3.50% 12%

Growth rate in terms of retail volume (08-09)

3.50% 2.60% 2.30%

Per capita consumption (per kg) 0.3 0.7 1.3

Average retail price (in US$ per kg) $13.20 $3.90 $20.20

Growth rate in retail price (2008-09) 0.90% 0.90% 9.50%

Forecast of Tea Volumes by Sub-sectors: 2010-2012

2010 2011 2012230000

232000

234000

236000

238000

240000

242000

244000

246000

248000

239745

243099

245822

235900

239101

241683

Tea Black Tea

Opportunities for Indian Tea Companies inthe Russian Tea Market

Opportunities

Total value of Russian tea imports in 2009

was $308.97 million, which is nearly 14% of the global market

Largest importer of tea in the

world

Retail volume growth rates of 15% and 12% in black standard tea

bags and black specialty tea bags

respectively, in 2009.

Entry mode - Joint Venture

Provides access to government contacts and existing distribution network

Provides local help minimizing problems associated with bureaucracy and corruption

Pooling of resources

Sharing of profits and risks Time-to-Time market advantages

TO Have Joint Venture Between

Warren tea Ltd can enter into joint venture with local Russian tea industry like..

1.Orimi Trade2.MOSCOW TEA FACTORY LIMITED COMPANY

Conclusion

• Business relation between Russia and India are better.

• India tea industry have a great opportunities to enter in russian market.

• Benefited of world largest importer country.

THANK YOU