Canadian Tea Consumption Trends

Executive Summary

According to Roberge (2018), the Canadians consume a double amount of tea as compared to the past decades. She found that every person drank at least 85 litres each year since 2015 where previously in 2008, each person used about 79.5 litres. While in 1991, and at least 39 litres was consumed by each person. Tea overtook both bottled water and soft drinks and is slightly below the coffee amount Canadians use. Data show that Canadians reduced the level of coffee drinking significantly since the previous years while tea usage increased significantly due to the increased awareness on a large variety of tea in Canada. For instance, in 2015, the tea market in Canada was about 426 million dollars where hot tea had 225,832,562 dollars. Black tea was at 80,447,086 dollars while specialty tea was at 145,385,476 dollars. Their ice tea was at 32,239,390 dollars while ready to use tea (bottles and cans) was at 167,838,506 dollars.

Appreciation of the Current Situation

The Statistics Portal (2018) claim that the revenue within the tea sector specifically in Canada was is at 42 million US dollars in 2018. The tea market is also expected to expand by 1% annually. Furthermore, The Statistics Portal (2018) points out that the total tea consumption per individual produces revenue of 14.70 US dollars in 2018. These figures bring the overall consumption per capita to be at 0.4 kg in 2018. The following figure shows the trend since 2011 and a projection to 2021 concerning revenue generation.

The above figure indicates that there is a tea market for Yorkshire in Canada after the North American Market of 23.2% (Research Nester, 2016)

Introduction

This essay intends to formulate a marketing plan for Yorkshire Tea Company for the Canadian Market. Yorkshire Tea was started in 1886 by Taylors of Harrogate. The first Yorkshire Tea was brewed in the 70s after Charles Taylor and his sons started the coffee and Tea Company. Harrogate currently houses its sister company known as Bettys as it keeps the original Taylors traditions. The company has several hundred employees. Their most famous brand of tea is the Yorkshire Tea although they also celebrate other brands like the green tea, the black tea, and herbal and fruit infusions. In this regard, external influences such as political, economic, social factors, technology, markets and competition within the Canadian market make it ideal regarding examining its marketing plan as well as how it sustains its market presence in a highly competitive Canadian market.

For this reason, this essay will examine the company’s internal influences, its strengths, and weakness, its performance trends, its resources, and capabilities. Then, an analysis of the key internal and external influences will be assessed. Lastly, a conclusion of the key findings of the essay will be provided.

External Influences

Political

Canada is a country that is both rich and beautiful, and that is full of agricultural land, with the majority of its population residing in the southern provinces. It is a democratic country that has a parliament that contains the House of Commons. The political parties that form the government are Liberals, Conservatives, New Democratic Party, the Green Party and the Bloc Quebecois (Meyer, Ding, and Zhang, 2018).

The leadership of the country mostly switches between conservatives and liberals. Canada has been extremely peaceful in political terms and this with no doubt provides a thriving environment for any business (Thorlakson, 2018).

Economic

Canada is both one of the wealthiest countries across the globe and also falls within the top ten trending nations. It is, however, worth noting that a majority of Canada's trading resides within the United States. The US and Canada partnership grew following the signing on the NAFTA deal in the 90s (North America Free Trade Agreement). Primarily, the US is a net importer while Canada mainly exports its products to the US (Frue, 2009). Canada has of late, however, been trying to expand outwards because its reliance on the US hasn`t been necessarily stable for their economy (Dunning and Dunning, 2014).

Social Factors

Studies conducted between 2005 and 2015 estimated the Canadian families' median total income to be between $ 63,457 and $79,336. Up to one-third of the population in Canada falls in the working class category with up to 50 per cent of this population being made up of middle-class citizens. The upper class is made up of only 4 percent of the total population of the Canadians (statista, 2018). Millennial drinkers observed to have a liking for both black and green tea in equal measures too. In terms of tea, consumers in Canada have been observed to purchase a variety of types, flavours, and brands. As for tea paraphernalia, travel mugs, infusers, and loose leaf tea are the most purchased. The population there finds tea as having a strong direct association with good health (Wadsworth et al., 2018).

Technology

Canada as a state is among the most developed countries across the globe with regards to science and technology (Pamda and Shetty, 2018). There is a heavy reliance by Canadians on the internet for leisure, education and career purposes. Ontario, Alberta and British Columbia are the most online-savvy provinces (Panda and Shetty, 2018).

Environmental, Legal, and Ethical Considerations

Canada has environmental policies amongst other legal requirements to start a business in the country. There are environmental inspections and regulation policies which require enterprises to acquire approval certificates from the environmental ministry. The policy inhibits release of contaminants into water, air or land. It requires firms or firms to have portable supplies of water. It also provides guidelines on waste transport and disposal. In general, the Canadian government requires that depending on the services or products offered. A business needs to meet the standards of regulation outlined by the federal, provincial and municipal governments. It must also meet the standards of rules described by the Canadian industry associations among other regulatory bodies such as colleges and state-approved firms (Ecological Stratification Working Group (Canada), Center for Land, Biological Resources Research (Canada) and Canada. State of the Environment Directorate, 1996).

Regarding ethics, it is noted that social issues have often threated sustainability in tea supply concerning labour. The work done on tea is often exhausting and difficult particularly in tea plantations with the people working in these fields experiencing oppressive conditions. It is thus the responsibility of tea firms such as Yorkshire tea to come up with plans to create sustainable working conditions for all tea farmers and workers (Castleden, Morgan and Lamb, 2012).

Markets

The Canadian market is divided in two distinct segements, one being the traditional or conventional market whereby tea bags and sachets are mostly used for the distribution of products through discounters, hypermarkets, and supermarkets (Donnet, Jeitschko, and Weatherspoon, 2011).

The other segment is a slew of players including David`s Tea who distribute specialist tea through non-store retailers and tea retailers mostly focusing on organic teas and loose leaf. The population in Canada is observed to prefer stronger flavours mostly and as such manufacturers should with no doubt put blends that are spicier on the market. Across Canada, chai is the tea that has been trending and whose consumption has continued to increase (Dave, 2016).

A majority of Yorkshire’s customers in Canada include the millennials. These are young people who were born between 1981 and 1996. Millennials are the cohort that has substantial benefits in specialty teas, and this has led to the markets preference shifts. While people 65 years and older tend to prefer black tea, the interest of millennials is mostly on specialty teas. In 2015, there were roughly 10 million millennials in Canada, a number that could have grown to 15 million today (Dave, 2016). This is representative of a quarter of the population of Canada. These customers led to an increased introduction of new teas and flavours by different tea companies and the continued expansion of the tea market in Canada.

Studies across Canada have indicate that the tea consumers in this state worry more about the type of tea (Weerahewa, 2011). Yorkshire tea further launched products that were more aligned with the trend towards fruit/herbal teas and organic teas between 2016 and 2017. As Yorkshire tea also plans to venture into Canada’s segments of younger people. To do so, it intends to adjust their products, come up with more different tea flavours and innovate value-added products (Basu, Bera, and Rajan, 2010). Yorkshire has also decided to boost the products it already offers in the Canadian markets by adding flavours that are free of caffeine and even refreshment teas like different ice teas.

Competition

Tea drinkers in Canada are currently opting for other formats such as few number of tea bags as well as loose leaf rather than pods. These new formats has led mainstream tea manufactures to diversify in the Canadian market. For instance in 2013, Unilever, that owns Red Rose, Salada ad Lipton brands started the K-cups. This group also added other new flavours like Chai Delight and Enlighten Green tea. Another competitor is David’s Tea that has since its inception in 2008 continued to consolidate its position as the market leader in the production of tea. The focus of the company has mostly been on bringing aboard a whole new tea experience not obtainable by consumers from the conventional market. DAVIDsTEA has about 150 unique tea brands in the global market. All these brands lack calories or sugar.

Other competitors include Algonquin Tea, Aliments Leika, Banff Tea, Capital Tea, F & L Innovations, Falcon Ridge Farms, Davidstea and Cuppa`t Specialty Tea (Kolk, 2012). The constant competition witnessed in Canada`s tea industry has continued to intensify especially with the increment in the number of players drawn to the existing growth opportunities in the category. The focus on the premium segments has been increased by premiumisation, with consumers observed to prefer products that are more unique, healthier and of a higher quality.

The rising popularity of tea and the health halo that is supported by the rise of specialist retailers of tea has quickly trickled down in such a way that it has boosted the demand for next product types and packaged tea incorporating food. Most importantly, leading tea brands and manufacturers have leveraged on the know-how and experience gained from such adjacent product types (Raynolds, and Ngcwangu, 2010). The largest competitors of Yorkshire Tea are PG Tips and Tetley with the shares shown in below.

Yorkshire Tea company listed its suppliers including the Amarawati Tea Company Ltd in ASSAM, Huna Tea Company Ltd in China, Goodricke Group Ltd in Darjeeling, Ethio Agri-CEFT PLC in Ethiopia, DL Koisagat Tea Estate Ltd in Kenya, Eastern Produce in Malawi, Gisovu Tea Company Ltd in Rwanda, United Nilgiri Tea Estate Ltd in South India and Hatton Plantations PLC in Sri Lanka among other suppliers (Yorkshire Tea, 2018).

Internal influences: Strengths & Weaknesses

Strengths

In Canada, the Yorkshire Tea brand has been expanded to include a range of fruit loaves, biscuits, and cakes which are sold as complementary to drinking tea by the parent company. One of the things that Yorkshire Tea is most notable for in Canada is its packaging which features in it the romanticised landscapes of Yorkshire Dales, even though from time to time different themes are explored (campaign, 2012).

To help caterers minimise waste, the company has done away with the foil envelope. The tea bags are today available in boxes of a hundred tea bags each. The Yorkshire Tea’s new format is more convenient and quicker for high volume caterers and will with time lessens waste while at the same time maintaining the reassurance of the brand as one of the most popular teas across Canada (Roderick, 2016).

Capabilities/Opportunities

It is apparent that the Canadian market is suitable to venture as it is a democratic country which is politically stable creating an enabling environment to start a business. Canada is both one of the wealthiest countries across the globe and also falls within the top ten trending nations. Canadian families' median total income to be between $ 63,457 and $79,336 and thus can purchase quality tea products. It is one of the most developed countries across the globe with regards to science and technology. Furthermore, there exist two distinct markets in Canada, one being the traditional or conventional market. These advanced technology as well as potential customers who are able to spend on tea purchases offer tremendous opportunity to expand Yorkshire Tea in the Canadian market.

The readily available advanced technology in Canada can be applied in producing the best tea brands offered by Yorkshire Tea. One of the things that Yorkshire Tea is most notable for is its packaging which features in it the romanticised landscapes of Yorkshire Dales. Another strength of Yorkshire Tea is the design of its products which is normally simple and clean. While tea plantations have changed the face of many countries, they are today threatened by climate change, increased demands for fair wages from workers, shortage of water and the effects of deforestation

Key External & Internal Issues

Threats or Limitations

The tea industry across the globe has been facing challenges with the potential of changing the economy and geography of the landscape. While tea plantations have changed the face of many countries, they are today threatened by climate change, increased demands for fair wages from workers, shortage of water and the effects of deforestation (Hicks, 2009).

The increased average temperatures across the globe have the potential of affecting the Tea Industries production. Other players in the tea industry in Canada include Algonquin Tea, Aliments Leika, Banff Tea, Capital Tea, F & L Innovations, Falcon Ridge Farms, Davidstea, and Cuppa`t Specialty Tea. These companies result in stiff competition for the tea market.

Performance Trends

According to Molineaux (2017), Yorkshire Tea commands at least 23% of the tea market in the United Kingdom. This makes it second to PG owned by Unilever. The tea company has expanded since its early days now having few hundred workers including trainees, the talented staff and a sustainability staff (Yorkshire Tea, 2018). They claim on their official website that they go an extra mile in ensuring they create the best tea products for its esteemed customers by tasting at least a thousand teas each day (Yorkshire Tea, 2018).

Roderick (2016) claims that the tea market has declined significantly regarding the number of sales. It is noted that to a large scale, the volume has declined by at least 6% since 2010 through 2015 in the UK (Roderick, 2016). Roderick (2016) claim that this decline is partly because of stiff competition from different companies within its markets. The reduced sales is seen in all tea firms including the Yorkshire Tea outlet in Canada particularly due to the stiff competition caused by other big tea firms like Tetley and PG Tips (Unilever).

Conclusions

It is feasible for Yorkshire Tea to venture into the Canadian market. The market is politically stable due to the nation being democratic. Additionally, the country is one of the richest in the world with sufficient resources and thus it is easy to establish the Yorkshire Tea business since resources to start the business like good infrastructure, latest tea production technologies and internet connectivity are easily accessible. The infrastructure not only makes it easy to establish the business but also allows for easy marketing.

Concerning market analysis, It is apparent that Canada has a ready tea market as shown by the two groups, the traditional and conventional markets. Despite, the presence of other key tea producing companies like DAVIDsTea, Algonquin Tea, Aliments Leika, Banff Tea, Capital Tea, F & L Innovations and Falcon Ridge Farms, orkshire’s excellent brands, high quality, romanticised branding, and good marketing strategies, it stands a chance of doing well in the Canadian market.

Objectives

The objective of Yorkshire marketing strategy is to capture the Canadian market through its high quality brands. Molineaux (2017) claim that their marketing approach whose aim is to be positive, funny and exciting already led in the acquisition of 500,000 new customers for their brands, an increased sale of 7%. Their objective is to capture an even higher number of customers than the 500,000 in the next five years as well as increase their sales to more than 7% in the same period. They intend to spread their outlets especially to tea loving Canadian millennial as well as other age groups like the elderly and those who love calorie or sugar free tea products. Their objective is to provide different classes of customers with the best quality tea which they prefer. They not only wish to provide the best quality tea but also want to ensure that their processes do not harm the environment as they expand (Yorkshire Tea, 2018).

Strategy

The marketing strategy that Yorkshire Tea Company can use to efficiently penetrate the Canadian market is the 4ps of Marketing. This strategy is localised and can enable them to drive local success while at the same time remaining fully integrated with their overall objectives and corporate strategy. Yorkshire will need to establish a suitable location in the Canadian market to set their tea outlets (Griffiths and McLean, 2015).

They will need to conduct a market survey to identify the trends in this market regarding customer preferences as well as market competition in the tea sector. They can overtake their competitors by assessing what they do and offer and work smart to develop better products such as through branding. Based on the findings of the product gap analysis the company should then take the steps necessary to make its brands ready for the market so as to achieve high impact product differentiation. Industry-specific and government regulations should be keenly reviewed to ensure maximum compliance and also ensure the required certifications are obtained.

Additionally, a determination should also be made on whether any form of localisation would be necessary, paying close attention to the translation of the products name in the language used locally (Eagle and Dahl, 2018). Additionally, procedures, policies, and handbooks should be developed that are compliant with the local requirements while still maintaining balance with the policies set in a company in general. The penetration pricing strategy will be the most appropriate for Yorkshire Tea as it tries to penetrate the Canadian market. Through this strategy, the premise will offer low-upfront prices which will act as incentives for customers and will attract them from competitors (Kokemuller, 2018).

The main objective of pricing here will be to build a customer base and profits won`t be given much consideration. A typical result of the penetration strategy is usually high volume sales. Over time and gradually, the prices will be increased once a following has been established. As of June 2018, the average retail price for tea in Canada was 4.34 Canadian dollars for every 72 teabags (statista, 2018). As such, Yorkshire Tea should price its tea a little bit lower than this. The company will also need to promote its products to improve its sales, the premise will also be required to establish itself through the different social media sites like Facebook and Twitter.

These two factors have demonstrated over time to be great tools for marketing as a majority of people widely uses them, and as such, any message relayed through them would with no doubt reach many people (statista, 2018).

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