Twinings in talks with Marico for cross promotions

Premium tea brand Twinings is in talks with consumer goods major Marico India for cross promotions.

A company executive at Twinings, who is close to the development, said it was mainly looking at a promotional tie-up with Marico’s products that were pitched on health platform, such as fortified aata (wheat flour) or Saffola oil range. Twinings wants to promote its green tea variant on this health platform.

Twinings’ green tea variant contributes around 10 per cent to its India turnover and about 15 per cent to global turnover. It grows at a compounded annual growth rate (CAGR) of about 80– 90 per cent, according to estimates.

Both companies said it was too premature to comment as the talks were still underway.

“The company’s main aim is to increase household penetration to at least 12 per cent this year and double it by next year, so this tie-up with a bigger Indian player will be profitable,” the executive said. It has a household penetration of 5 per cent. This cross promotion would include tag-on advertising with Marico in television and print media, along with a long-term tie-up with Marico’s fortified aata.

Analysts feel that this tie-up could give other tea players a run for their money, as Marico is a brand with a reasonable recall with consumers. “The tie-up fits very well for two reasons. Firstly, both companies are pitching their respective products on the health platform, which gives Twinings good visibility in the market.Also, both companies are not competitors in any product category, so there is no fear of one brand overtaking the other. So, Twinings can leverage from the brand recall that Marico’s products have,” said Purnendu Kumar, senior analyst, Technopak India.

Twinings set foot on India in 1997 and since then, has been working on its market and household penetration activities. It plans to double its Kolkata manufacturing unit’s capacity to 2,000 tonnes to cope with increased demand that went up by 10 per cent in the last one year.

Twinings also plans to add more contractors to expand in South and West, namely in Coimbatore, Pune and Cochin. For this, it has already invested around Rs 30 crore.

It was also looking at marketing some of its tea variants at a lower price point like Rs 40 for a pack of 10 bags and for this, it was in talks with global cereal foods giant Kellogg’s, the executive added. Kellogg’s recently became the first organised player to launch a breakfast cereals.

Source: Business Standard