Applied Business Research

The Study on the

Market Potential of
Tea Millac – Millac
Foods (Pvt) Ltd.
Submitted to: Dr. Huma Amir

Rimsha Imran; Javeria Rehan; Syeda Aaminah Asim;

Fatima Ali; Hussain Mustafa Khandwala. (Section 2;
2132)
1/28/2019
Contents
Interview with the Decision Makers ............................................................................................................. 3
Secondary Research ...................................................................................................................................... 3
Environmental Analysis ................................................................................................................................. 6
PESTEL Analysis ......................................................................................................................................... 6
Political .................................................................................................................................................. 6
Economical ............................................................................................................................................ 6
Sociological............................................................................................................................................ 7
Technological ........................................................................................................................................ 7
Environment.......................................................................................................................................... 7
Legal ...................................................................................................................................................... 7
Porter’s Five Forces Analysis ......................................................................................................................... 8
Past Information and Forecasts .................................................................................................................... 8
Statement of the Problem ............................................................................................................................ 9
Management Problem .............................................................................................................................. 9
Marketing Research Problem ................................................................................................................... 9
Exhibits ........................................................................................................................................................ 12

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Interview with the Decision Makers
We interviewed Mr. Peter Xavier D’Souza, GM Marketing, Millac Foods (Pvt) Limited,
regarding the better understanding of their brand portfolio and the problems company was
facing. Mr. Peter has joined Millac Foods 6 months back while the company was facing several
loses. Company has bought in new products like Comelle – Full Cream Pure Milk and Tea
Millac in their powdered category but has filed to activity work towards marketing the brand.
Further into discussion he mentioned two main problems the company is facing right now; they
want to understand if a specialized product is required to cater all needs in a house hold or an all
rounder milk pack. Powders to be our scope highly consists of children powdered milk and dairy
whiteners’ category. They have Tea Millac variant but nothing kids specific variant to
benchmark against, as of now he wants us to focus on the tea whitener category, TEA MILLAC,
only. Tea Millac being a tea whitener is specialized for use in tea and coffee directly competing
with Nestle Everyday in the market.

Tea Millac has been recently placed in the market and much haven’t been done for its marketing
purpose, little have they just started doing on digital platforms. Before he joined the company
was suffering loses; now everything is getting researched. There is no advertising for Tea Millac
since there wasn’t budget allocated, no structured work took place. Right now they are focusing
on having more shops on board, expanding the distribution to increase the penetration of the
product and then work on the advertisement. For now they have placed the product only at all
outlets of Imtiaz Super Market for test marketing and want some market research to understand
the way forward and understand the market potential for Tea Millac and figure out emerging
niche segment for this category.

Secondary Research
Pakistan falls in the category of top five milk producing countries in the world, with an annual
production of 37-38 billion litres1, much of which is consumed locally. 10 percent of the dairy
sales are categorized by the packaged milk industry, whereas the rest 90 percent is still loose
milk2. Commercial processing of milk started in 1980’s when Ali Group set up a plant in
Sheikhupura to produce Milkpak. In early 1990’s Nestle formally took over the management of

1
‘Milk in the time of Opportunity’, Marylow Andrew (Jan 2018), https://aurora.dawn.com/news/1141745
2
‘Dairy Sector comes under the Spotlight’, Business Recorder (Feb 2018),
https://fp.brecorder.com/2018/02/20180227347512/

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Milkpak. Similarly, Haleeb Milk was launched in 1986. The penetration of packaged milk gained
momentum in early 2000’s, when Tetra Pack launched television campaigns for packaged milk
products. Slowly, but gradually, UHT packaged milk gained acceptance in urban areas and was
considered a healthier and more hygienic option compared to loose milk.

Various variants and sub-products have swiftly become part of the Packaged Milk family. These
include liquid and powdered Tea Whiteners, Pasteurized milk, Flavored Milk and other dairy
drinks. Milk used for secondary purposes such as making tea, coffee or food can be substituted
by tea whiteners. It is preferred in offices and institutions for convenience, and in homes for
taste, convenience and lower cost. Nestle’s ‘Everyday’ (powdered tea whitener) has been around
for almost 20 years and Engro Foods successfully established its liquid tea whitener brand
‘Tarang’ in 2007, which ultimately became the market leader. Only recently, several different tea
whiteners have been launched and the competition is building up. Tarang has thus seen decline in
sales.

According to Tetra Pack estimates, 32% of total milk consumption in Pakistan comprises of
drinking milk with tea3. Thus, this is an important area of focus for milk producing companies.
Tea whiteners are not milk; they are purpose-built substitutes of milk that contain 30% milk or
milk fat, thereby providing an obvious cost and price advantage. This allows tea whiteners to
penetrate even those markets where UHT packaged milk has not made inroads; it can cater to
lower income markets by having a price that is competitive with loose milk, it can cater to
institutions that only require milk for the purpose of tea and coffee and it can also lure loose milk
consuming households to try a packaged milk product specifically for the purpose of tea.
According to Javed Iqbal, Ex-Director Marketing, Engro Foods4

“When people make the conversion from loose to packaged products, they want to consume it in
smaller quantities so that they don’t have to spend a lot of money. For tea, all you need is 35ml
of milk. Taking these factors into account, most tea whiteners are available in smaller SKUs and
this is one reason why this product is so attractive to DiPs (Deeper in Pyramid).”

3
‘Milk in the Time of Opportunity’, Marylow Andrew (Sep 2012), https://aurora.dawn.com/news/1141928
4
Ibid

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 Liquid tea whiteners are generally available in lower price SKUs and are more popular in lower
income segments. Nestle Everyday is considered more premium due to its pricing,
communication and legacy value, thus more preferred by urban and higher income users.

Pack Unit Unit

Brand Company Pack Pack
Category Outlet Type Price Price Price Per
Name Name Type Size
(Local) (Local) (USD)

Nestlé
Coffee Coffee Plastic
Pakistan Supermarket 400 g 320.00 800.00 7.59 kilogram
Whiteners Mate Jars
Ltd

Nestlé
Coffee Flexible
Everyday Pakistan Supermarket 400 g 330.00 825.00 7.82 kilogram
Whiteners Packaging
Ltd

Coffee Engro Independent

Tarang Others 250 ml 20.00 80.00 0.76 litre
Whiteners Foods Ltd small grocers

Research Sources:

Packaged Food: Euromonitor from trade

sources/national statistics

Date Exported (GMT): 1/24/2019

11:24:17 AM

© Euromonitor
International

Table 1: Passport by Euromonitor International 2018

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In terms of percentage of Volume, Tea whiteners have grown at a CAGR of 1.9% from 2013-
2018, reaching a volume of 503,400 tonnes in 2018 from 460,600 tonnes in 20135. However, the
sector currently faces a host of problems. Tea Whiteners are made from skimmed milk powder
that is imported. Currently, the government has imposed a 25% regulatory duty on the import of
skimmed milk powder, with 20% customs duty already in place6. Hence costs of production have
increased and margins have decreased. Companies are still optimistic that rising disposable
incomes, changing consumer preferences and increasing awareness will result in higher
conversion rates from loose milk to packaged milk products. It is forecasted that the sales
volume of tea whiteners will grow at a CAGR of 2% in the coming five years7.

Environmental Analysis
PESTEL Analysis

Political
The government of Pakistan has been biased towards the crop sector over the dairy sector in
terms of providing incentives and exemptions of duties and taxes. Despite the unfavorable
environment, the private sector established 23 milk pasteurization and sterilization plants in
1960-1970’s. Favorable policies were then introduced in terms of duty free import of machinery,
exemptions from income tax, and credit financing which created a favorable environment for
producers.

Economical
The tea whitener sector is an emerging part of the packaged milk industry, which in turn is part
of the dairy industry in Pakistan. Although milk is a necessary good for living, packaged milk is
generally a high-end product in Pakistan. Hence, affordability factor plays a very important role
in purchase decisions. Affordability is determined by the macroeconomic factors like inflation
and GDP growth per capita. Increasing inflation decreases the purchasing power of the
consumers which in turn reduces the demand for a niche product like tea whiteners. On the other
hand, increasing GDP per capita increases the spending capacity which will increase the demand
of the tea whitener.

5
‘Other Dairy in Pakistan’, Euromonitor International (August 2018)
6
Ibid
7
Ibid

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Sociological
The cultural factors shape the perceptions regarding milk purchase in Pakistan. Milk consumers
tend to be very rigid in their choice of preferring packaged milk or unprocessed milk. They have
been shifted towards packaged milk from unpackaged milk after considerable efforts of
producers of packaged milk, primarily through educating them about the unhygienic processing
of unpackaged milk. Despite this awareness, majority of the milk consumers still prefer
unpackaged milk due to taste preferences and the perception of packaged milk containing
artificial and health-damaging chemicals. Given this, tea whiteners are only preferred by only a
small portion of the Pakistani market with majority preferring liquid packaged milk or
unpackaged milk for tea and beverages.

Technological
Pakistan lacks behind in the technological arena to establish support systems for easily
establishing state-of-the-art facilities for other dairy products like tea whiteners. The machinery
for the main dairy products along with tetra packaging are imported from developed countries
like Germany and Japan.

Environment
There is a lean and flush period in the milk industry which results in supply to vary across the
year. This ultimately leads to shortages and excess supply which in turns results in price
fluctuations for the end-consumers.

Legal
The legal system is not developed enough to ensure health and hygiene standards for the
processing and handling milk. Only the packaged milk industry follow standards to provide
healthy and hygienic milk products but they are not even regulated/checked properly. On the
other hand, unpackaged milk producers have no standards for providing hygienic and healthy
milk to consumers.

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Porter’s Five Forces Analysis
Factor Threat Explanation
Supplier Power Low Suppliers have limited power to influence raw
material prices. Raw materials are primarily raw milk
provided by farmers which have limited power to
bargain. Raw materials can also be cows or buffaloes
for companies having their own farms. In this case,
seller of the livestock have limited to influence
prices.
Buying Power Low Buyers have limited power to influence prices since
prices are set up based on costs and margins
established by the producers.
Rivalry High Tea whiteners is a new market in the Pakistani dairy
industry with the concept introduced by Nestle
Everyday. With new brands entering this market,
they try to capture market share from the monopoly.
New Entrants Moderate to Costs of setting up tea whitening setups are high
High which limits the entry of new players in the market.
Also, converting tea or coffee consumers to use tea
whiteners over liquid packaged or unpackaged milk
is costly due to social as well as affordability factors.
Substitutes High Unpackaged milk and liquid packaged milk are an
easily available and preferred substitute of tea
whiteners.

Past Information and Forecasts

See Exhibit 1

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Statement of the Problem
Management Problem
Market Potential is a necessary estimate for the company to figure out the market share it is
required to reach the expected revenue benchmarks. It shows the customers interest and
willingness to buy your product hence important for managers to check the competition by the
research on the market size available and the potential growth of the product.

Similarly, after decreasing sales of Millac Foods, they want to check its market potential of their
new products, Tea Millac, in the powder category of tea whitener segment. Also aspiring to take
the market share from its direct competitor and leading player in the powder category, Nestle
EveryDay.

Accordingly, Millac Foods wants to figure out the best possible way forward by understanding
the market dynamics of the powered tea whitener category. This research will help the company
to structure its spending towards the marketing tools effectively which would stimulate the
results of the products market potential, Tea Millac being able to take over its competitor market
share. Hence the management problem which company is working towards is as follows;

1. What is the potential of Tea Millac in the dairy whitener industry?

2. How can Tea Millac increase its market share in the category of powdered tea
whiteners?

Marketing Research Problem

The management needs to work on the evaluation of the marketing tools needed to strengthen
their product position in the market and increase the current market share of Tea Millac. Hence,
finding answers to the marketing problems mentioned will help the company to gain the required
insights, concerning the problems faced by Millac Foods.

 To determine the preferences and purchase intentions of the consumers before they
buy powdered tea whitener.

To gain insights on consumer behaviors regarding preferences and purchase intention

before opting for powdered milk for their tea, focus groups can be conducted. Focus
groups will be a great way to probe the customers in order to deep dive into the customers’
perception regarding liquid whiteners or powdered tea whiteners. Who is the ultimate
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 decision maker when it comes to buying milk for the household? Where they gather
knowledge regarding the products in the market? What are the factors they take into
account before purchasing?

Moreover, choosing a predetermined sample size to conduct the survey, the results
can give a generalized idea of the powdered tea whitener attributes and characteristics that
are significant when people are making their tea whitener purchase decision.

 To determine the consumer perceptions regarding powdered tea whitener.

It is crucial to understand the perceptions of customers regarding powdered tea whitener.

Why do we experience low consumption of the tea whiteners in Pakistani household?
What will be the required rate of penetration to imbed in the market to create a spot?
What made them use the tea whiteners in the first place? This will help the management
in planning and strategizing their communications on ground and on media to deal with
reservations that people have regarding use of tea whitener or to the usage of its
competitor. Moreover, it will promote to use of Tea Millac over its competitors, liquid tea
whiteners, tetra milk packs and even loose milk.

 To determine the attributes required to convert the non-users of Tea Millac to

consumers.

There is a need to evaluate why there are non-users in the category. What made them
shift to the powdered category over the liquid one? What are the key attributes that drive
purchase amongst the identified target audience and how the product attributes can be
highlighted so that they resonate not only with current users but also with the non-users.
Non-users need to be targeted to convert to Tea Millac, to increase the market share.

 Determine the potency and weak point of Tea Millac vis-à-vis those of the
competitors.

The management wants to understand the reasons for target consumers switched from the
liquid tea whitener to the powdered category, especially to Nestle EveryDay. This
analysis would help the management in identifying the perceived benefits of other
competing brands over Tea Millac, so that the Company can make the required changes.

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 A change that could be needed in the packaging, repositioning of the brand or increase in
the number of SKUs available, the research will help the company to strategize in future.

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Exhibits
Exhibit 1

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