In an interview, Director Dhaval Shah says that tailored blends across price points and the rapid rise of quick commerce will power the next phase of scale
As Society Tea looks beyond its Maharashtra stronghold, the tea maker is pursuing a calibrated path to becoming a national brand, with double-digit growth in sight. New markets are being opened through research and distributor partnerships, with the understanding that real traction builds over three to four years, says Dhaval Shah, Director, Society Tea.
In an interview with BW Retail World, Shah notes that tailored blends across price points, convenience-led products for younger consumers and the rapid rise of quick commerce will power the next phase of scale. The company is also stepping up its presence in the Gulf Cooperation Council (GCC) while pushing deeper into the United States and exploring the United Kingdom and European markets. Edited Excerpts:
The brand focuses more on tailoring blends and approaches for different regions. How do consumer preferences differ across different tiers and how are you adapting your product portfolio for these regions?
Ideally, we were, we are market leaders in Maharashtra. Consumer behaviour in Bombay compared to the rest of Maharashtra is also different. Maharashtra usually has a lot of dust consumption, which is a type of tea, whereas the Bombay segment and the tier 1 cities are more mamri chai concept. The same applies to other states in India. A lot of price points come into play as well.
We realised that a lot of markets like UP, Bihar, some parts of Rajasthan, they basically want a little lower-end tea because we are competing with brands like Tata Agni and the lower segment, which is around Rs 60 for 250 gram. We decided to come up with a blend that was Chahat, which was sold in these sectors and it has given good results to us. We have flavoured in that also. We are the first ones to have flavoured tea in that lower segment.
Society Tea has been a dominant force in Maharashtra and south India through the ecommerce channels. How are you strategically approaching expansion into North, East India and what benchmarks are you using to gauge success in new regions?
We do not set any benchmarks. The way we start a market is we do some research. Then, obviously, the first step is to have distributors. Try to get distributors that do well in FMCG, retail, general trade and modern trade. Once we set up distributors, we hire the right person and we start sales in that market.
We do not expect a crazy amount of growth in the first one to two years because the promotions will go on, brand awareness will happen. Eventually, by the third or fourth year, we should get some traction and focus on getting more and more sales.
Beyond tea, you have also diversified into dairy and other categories as well. How are these categories performing and what role do they play in your medium-term growth strategy?
They do play a big role because we produce a lot of dairy whiteners, skim milk powder. And because we have our in-house research and technical team, we are trying to innovate more and more. We are trying to get on products that are more rich in protein, with more health angles, less sugar.
We are trying to improvise because more and more people are getting health conscious. People do not want to have sugar, people want to have clean stuff. They want protein, electrolytes. We are trying to develop products by making a combination of all that. But still, it is a long way to go.
How has your omnichannel strategy, from kiranas to ecommerce and quick commerce platforms, reshaped your distribution mix? What share of sales do you expect from online channels in the next few years?
Covid has changed everything for us, for all brands. Everyone wants things quickly. Things on their fingertips. Convenience is also there. Ecommerce is also dying out now. Quick commerce is taking over. The sales are multiplying very fast.
GT, MT is suffering a bit but it has not eaten up so much percentage-wise when it comes to this. Even if quick -commerce is growing, the volumes of GT, MT is too big for it to be damaged. Quick commerce contribution would be very less. It is in single digit right now.
Society Tea is available in some international markets via e-commerce. Do you have formal plans to expand exports or enter global retail in a structured way?
We do a lot of GCC right now, which is the Middle East. We have increasing sales there. We are also trying to get inroads into UK and Europe but we have a good enough hold in the US market and we are trying to do some marketing activities and trying to increase sales there.
What is the revenue milestone that you are aiming for in the short term as well as the long term?
Honestly, it is a private company, so we do not give out figures as such. We are always looking for double-digit growth. 10 to 15 per cent is a good, good growth for us.
Society Tea is basically my generation, which is the millennials we call. We are the fourth generation in the business. We still have the drive to take this company ahead and to put all our efforts in to make sure that this eventually is a national brand and is being recognised all over the world.
Since the company focuses on products tailored for ‘tomorrow’s customer’ (ready-to-drink teas, instant mixes, shakes). Which innovations are you prioritising for launch in the next 12 to 18 months?
Honestly, I cannot reveal that. If the competitors see this interview, they will jump on it. But we have a few products in the pipeline which are very exciting. They are more convenient based, like how there is premix, which is the one-minute tea. We are coming up on those lines, some products that are very convenient to the new generation so that they do not spend a lot of time making the tea the traditional way.
And to come up with some powders, some ready-to-drink teas with a twist or maybe a health angle, we are focusing more on that.
Given the challenge of keeping a legacy brand relevant for younger audiences today, what shifts in marketing are you focusing on to build affinity with Gen Z and millennials?
Market is changing very fast. Consumer is also changing very fast. To catch up with the consumer is tough. We do a lot of market research. When we design a product, we show it to a lot of consultants of the packaging, whether it will appeal to the audience. And also we do lots of social media.
Business is rising on the ecommerce platforms. We we are doing is we are trying to be available in all selling sectors. We are making sure that we throw ads, like even a brand awareness campaign. We try to focus also on younger generation so that, at least it is in their mind that there is a brand called Society Tea.
