Mohani Tea shows how to crack distribution network in remote areas
When Ramesh Chand Agarwal went for a holiday to Darjeeling after his graduation little did he know that it would decide the course of his future. As he visited the tea plantations in North Bengal and saw tea auctions in the open market, he felt that this was going to be his calling. Ramesh instantly bought a small consignment of tea to test out his potential and there has been no looking back since.
Initially Ramesh was just testing the waters by being involved in trading operations for bulk tea. But then one incident changed his perspective. Ramesh shares, “It so happened that once while I was sitting with a retailer of loose tea a customer came complaining about the quality of tea and wanted to return what she had bought from the retailer a few days back. That was the flash point for me and I made up my mind to launch my own packet tea with affordable pricing and good, consistent quality that will reach small villages where large packers like Brooke Bond or Lipton did not reach.” With the help of his three brothers, Ramesh got into the production of tea under his own brand, Mohani Tea, to solve the problem of people in remote areas.
How it works
Though tea is a seasonal product, people consume it throughout the year. From procuring the samples from different states, including Assam, North Bengal, Tamil Nadu and Kerala to getting out the final product is nothing less than a Herculean task. Once they procure samples from different agents, it goes through a standard and blind calibration check, after which they place their order. The entire product from different agents is then brought to their facility at Kanpur where it is again tested and processed. At present, they have a team of experts which oversees the entire supply chain and delivers the product within three months.
Like any consumer facing product they had to face huge challenges when it came to distribution. Rural population was a big market but reaching them was a challenge. Ramesh says, “As we started our backyard operation to produce packet tea in Kanpur, we realized that distribution and reaching to far flung areas in UP was a huge challenge that we had not anticipated. Being a new brand, it was difficult to find distributors. Everyone wanted credit. Off-take was low so shopkeepers did not have much confidence in the product. However, persistence and perseverance finally paid off and Mohani Tea started gaining acceptance with consumers in smaller towns.”
What had been their biggest challenge slowly became their strength. They have overcome most competition from other local players as well. Ramesh adds, “There are a number of regional players in the market who either dominate a small area, or number of districts and often compete on pricing and schemes. Since our key focus is villages, small towns and suburban area, we are not directly competing with large national players like Unilever or Tata. But the regional and local competition is very intense. There are no technology entry barriers as such and it is primarily the strength of distribution, branding, trust of the consumers and supply chain that give us the competitive edge over other players.”
At present, Ramesh claims to have achieved around five percent market share in North India, primarily in UP, MP, Punjab, J&K, Bihar and Jharkhand. Looking at the future, Ramesh says he is looking forward to reach at least Rs 1000 crore in turnover from their current turnover of around Rs 300 crore in the next five years.