Shantanu Chatterjee Is Here to Shantanu Chatterjee Answer Any Questions You May Have About Doing Business with [email protected] Us

Shantanu Chatterjee Is Here to Shantanu Chatterjee Answer Any Questions You May Have About Doing Business with Shantanu.Chatterjee@Ahlstrom-Munksjo.Com Us

THE

YOUR MARKETS INFORMATION NEWSLETTER URCE FOR TEA IN INDIA AND SRI LANKA

NEWS:

Welcome to our new Ahlstrom-Munksjö newsletter focusing on the tea market. We hope you will find it informative and interesting! In this first issue, we will CEYLON take a look at the events which took place for the 150th anniversary of Ceylon CELEBRATIONS tea and take a look at the packaged tea trends in India and Sri Lanka. Did you know a Scotsman was actually at the root of the commercial Please give us your tea industry arrival in Sri Lanka (previously Ceylon) in 1867? feedback and help to make James Taylor was the force behind the setting up and this newsletter better! expansion of this industry when the coffee plantations that were previously there were devastated. Your dedicated It took a lot of hard work and dedication and allowed the Ahlstrom-Munksjö team. economic expansion of Sri-Lanka; also building a railway network to service the tea industry in that process. The hard work continues today and the 150 year anniversary is the occasion to recognize the labor that goes into producing this fine delicacy. Throughout the year 2017, many events hosted by the government, trade groups and the tourism department have taken place to commemorate all of the women and men who made this industry, including a Ceylon Tea Expo, a tea convention, tea festivals, tea workshops and industry seminars. THE SOURCE YOUR MARKET INFORMATION NEWSLETTER FOR TEA IN INDIA AND SRI LANKA

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NEWS: CELEBRATING 150 YEARS OF CEYLON TEA — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — A very eventful year

19th JANUARY 13th JULY 8–11th AUGUST

A sculptured bust of James Taylor was A first day cover and a series Colombo International Tea Convention unveiled at the Tea Board premises of stamps was issued. 12th AUGUST MARCH-JUNE 20th JULY Ceylon Tea Festival Educational fairs in regions. The publication of a Commemorative A celebration of tea, food & music, to Book, an authentic historical record 6th JULY promote amongst tourists and Sri Lankans the of The 150 Years of Ceylon Tea’. uniqueness of Ceylon Tea and the tea culture, A unique ‘Global Ceylon Tea Party’, hosted by A ‘Grand Chanty Auction’ (BMICH) through a festive atmosphere, will be held, the country’s Diplomatic Missions worldwide, The entire proceeds of which to be invested with a focus on street events, featuring tea which will be held @ 5.00 p.m. in each time- in charitable projects, benefitting the stalls, food stalls and entertainment, including zone around the world, serving One Ceylon work force of the Plantation Sector. performances depicting tea related activities. Teas and a specially created biscuit for the occasion by Maliban Biscuit Manufactories, Release of a commerative Rs.10/- coin 13th AUGUST the oldest biscuit manufacturer in Sri Lanka Celebratory Musical Performance – “To Broadway with Love” THE SOURCE YOUR MARKET INFORMATION NEWSLETTER FOR TEA IN INDIA AND SRI LANKA

MARKET FRAMING:

Like any consumer market, the Tea market observes trends and new formats and flavors pop up all the time. We put together a brief summary of the trends observed in our market in the past few years and months. In this section you will find information about the type and flavors of tea sold in Sri-Lanka and India.

All data was extracted from Mintel. — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — SRI LANKA INDIA FORMAT T YPE FORMAT T YPE As we can see, the loose tea market is still the Tea bags are rapidly gaining market share over traditional loose biggest one although the market share of tea tea: from 30% in 2015 to nearly 50% in the first quarter of this year! bags is increasing year after year. Convenience is clearly a trend for the Indian market.

Market share for each format Market share for each format 100% 100%

80% 80%

60% 60%

l Pods 40% 40% l Other l Soluble/Instant l Soluble/Instant 20% 20% l Bags l Bags l Loose l Loose 2015 2016 Q1 2017 2015 2016 Q1 2017

TOP FLAVORS TOP FLAVORS Plain tea is still the best seller; but flavors seem to gain more After plain tea, the strongest flavors are lemon and and more share of mouth from consumers. A ‘ginger’ flavor mint in 2017. From the fragmentation we can see people wave appeared in 2016 but the trend seems to be slowing down like variety, proving that having a wide assortment is in 2017. Maybe Vanilla will take over as top flavored tea? key for retail visibility AND consumer preference.

Flavors (inc. blends) market share Flavors (inc. blends) market share 100% 100%

80% 80%

l Citrus l Apple 60% l Ginger/Vanilla 60% l Other Bourbon/ l Lemongrass Vanilla Madagascar l Ginger l Herbs/Herbal 40% l Strawberry 40% l Lemon l Jasmine l Coriander/ l Cardamon Ciltrano l Mint

20% l Cinnamon 20% l Masala l Ginger l Tulsi/Holy Basil l Herbs/Herbal l Lemon l Unflavored/ l Unflavored/ Plain Plain 2015 2016 Q1 2017 2015 2016 Q1 2017 THE SOURCE YOUR MARKET INFORMATION NEWSLETTER FOR TEA IN INDIA AND SRI LANKA

WHAT’S TRENDING:

In this section we will look at what new claims are popping up on product packaging and which new ingredients we can find in tea products.

SRI LANKA TOP GROWING CLAIMS NEW INGREDIENTS 1. No additives/ Tea ●● Trending Claims preservatives (+500%) • (Fastest growing and declining Lemongrass 2. Other (Functional) (+300%) • claims, Q1 2016 vs. Q1 2017) Full Fat Milk 3. All natural product (+200%) • ●● New Ingredients Vanilla Flavour (New ingredients appearing in this 4. Premium (+200%) • market for the first time tracked by Coriander Seed 5. Low/No/ • Mintel within the last 12 months) Reduced Sugar (+200%) • Flavouring Substances We can see the growing claims are about quality and the naturality of products; which is a concern for DECLINING CLAIMS consumers all over the world. 1. Low/No/ In terms of new ingredients, the full fat Reduced Calorie (-100%) milk indicates a premix for the tea, which 2. Social Media (-100%) again indicates a need for convenience. 3. Caffeine Free (-100%) 4. Convenient Packaging (-100%)

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — INDIA TOP GROWING CLAIMS NEW INGREDIENTS 1. Gluten Free (+100%) Amia Flavour ●● Trending Claims • 2. Halal (+50%) (Fastest growing and declining • Saffron Flavour claims, Q1 2016 vs. Q1 2017) 3. Convenient St. Thomas Lidpod Packaging (+50%) • ●● New Ingredients Indian Bdellium Tree (New ingredients appearing in this 4. No Additives/ • market for the first time tracked by Preservatives (+28.6%) • Chinese Cinnamon Mintel within the last 12 months) • Indian Bay Leaf We can see the growing claims are Steviol Glycoside about allergies and safety of products. DECLINING CLAIMS • Tomato Powder In terms of new ingredients, the variety 1. Seasonal (-100%) • of flavors suggests a very dynamic Khas-Khas Grass 2. Carbon Neutral (-100%) • market where you need something Onosma Echioides new and exciting to stay relevant. 3. Breath-Freshening (-100%) • 4. Bone Health (-94.7%) 5. Diabetic (-90.9%) THE SOURCE YOUR MARKET INFORMATION NEWSLETTER FOR TEA IN INDIA AND SRI LANKA

YOUR CONTACT:

Shantanu Chatterjee is here to Shantanu Chatterjee answer any questions you may have about doing business with [email protected] us. Don’t hesitate to contact him! +91 981 0184 624

SHANTANU About us: CHATTERJEE At Ahlstrom-Munksjö, everything we do is Sales Director geared towards making every tea bag the perfect — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — cup and the best tea ●●My mission is to sell more, share it possibly can be. more, learn more and earn more! Because at Ahlstrom-Munksjö we ●●This is my 13th year with believe our ideas shouldn’t just help Ahlstrom-Munksjö. I joined in 2005. our clients to make better tea. ●●I studied Literature and post- We want our ideas to graduated in Sales and Marketing. make tea better. ●●I’ve spend over 25 years in We offer a complete portfolio of Sales and Marketing, of paper, tea bag paper including our Classic board and nonwovens. Non Heatseal, InFuse Heatseal, Compostable BioWeb (heatseal or ultrasonic) and new Robust grades for improved machine processability. — How are SEE HOW OUR IDEAS MAKE TEA BETTER: we doing? Can you spare 5 minutes to give us some feedback?

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