Tapal Report
Tapal Report
CONTENTS
COMPANY HISTORY ................................................................................................................................ 3 WHY SHOULD TAPAL ENTER THE EGYPTIAN MARKET? ............................................................... 4 DIFFERENT LEVELS AND PATTERNS WHICH REFLECT BEVERAGES DRINKING HABITS 6 ANALYZING EGYPTIAN BUSINESS & MARKET WITH HOFSTEDES MODEL POINT OF VIEW FOR TAPAL ................................................................................................................................................. 7 BUSINESS CULTURE AND ETHICS IN EGYPT ..................................................................................... 9 Etiquette & Customs in Egypt .................................................................................................................. 9 Business Etiquette and Protocol in Egypt ............................................................................................... 10 PLEST ANALYSIS FOR EGYPTIAN MARKET..................................................................................... 13 POLITICAL ENVIRONMENT.................................................................................................................. 13 LEGAL ENVIRONMENT: ........................................................................................................................ 13 ECONOMICAL ENVIRONMENT:........................................................................................................... 13 SOCIAL ENVIRONMENT: ....................................................................................................................... 14 TEA DRINKING CULTURE IN EGYPT.................................................................................................. 16 TEA TRADE IN EGYPT AND COMPETITOR ANALYSIS................................................................... 17 FORECAST OF TEA SALES IN EGYPT AND INSTITUTIONAL IMPLICATIONS ........................... 20 ENTRANCE STRATEGIES ...................................................................................................................... 21 PROMOTION OF TAPAL IN EGYPT ...................................................................................................... 22 CHALLENGES .......................................................................................................................................... 24
COMPANY HISTORY
Tapal Tea (Pvt) Ltd. is the largest privately owned Tea packing and Marketing Company in Pakistan. With humble beginnings in 1947 from a shop at Marriott Road, Karachi, Tapal Tea is now the market leader in terms of volume along with Unilever in the branded tea segment in Pakistan. Tapal has managed to gain a market share of 50% in the branded tea market. And are currently marketing Brands such as Tapal Danedar, Tapal Family Mixture, Tapal Tezdum, Tapal Mezban, and the range of Tapal Green Tea. However due to the pressures of inflation and a hike in the price of the Dollar, the profits of Tapal Tea are saturating. This made the management of the company think of alternative markets where the success of the Pakistani market can be replicated to ensure a smooth revenue stream for the company. It exports to North America, Saudi Arabia, Oman, UAE, Spain, Italy and Greece.
b) Types of Imported Tea: - Mainly DUST specially D1, PD, RD, SFD, Fangs, PF, and BOBF of higher quality for Tea Bags. Also a small percentage of flavored teas/Earl grey/Assam Tea and jasmine green Tea for niche markets and Hotels. c) Socio-economic classification in Egypt: - Socio-Economic classification Egypt is primarily very closely linked to family Income. There are however no hard and no fast rules that can be applied. Approximation of such a classification is based on defining a 5 group Pyramid as follows:-
Class Name
Total %
URBAN%
Rural %
A,B
15
-----
C1
14
20
C2
18
20
17
28
20
35
33
25
40
ANALYZING EGYPTIAN BUSINESS & MARKET WITH HOFSTEDES MODEL POINT OF VIEW FOR TAPAL
The Geert Hofstedes analysis for Egypt is almost identical to other Arab countries their Muslim faith plays a large role in the peoples lives. Large power distance and uncertainty avoidance are the predominant characteristics for this region. This indicates that it is expected and accepted that leaders separate themselves from the group and issue complete and specific directives. The Geert Hofstedes analysis for the Arab World, that includes the countries of Egypt, Iraq, Kuwait, Lebanon, Libya, Saudi Arabia, and the United Arab Emirates, demonstrates the Muslim faith plays a significant role in the peoples lives. Large Power Distance (PDI) (80) and Uncertainty Avoidance (UAI) (68) are predominant Hofstedes Dimension characteristics for the countries in this region. These societies are more likely to follow a caste system that does not allow significant upward mobility of its citizens. They are also highly rule-oriented with laws, rules, regulations, and controls in order to reduce the amount of uncertainty, while inequalities of power and wealth have been allowed to grow within the society. When these two Dimensions are combined, it creates a situation where leaders have virtually ultimate power and authority, and the rules, laws and regulations developed by those in power reinforce their own leadership and control. It is not unusual for new leadership to arise from armed insurrection the ultimate power, rather than from diplomatic or democratic change. The high Power Distance (PDI) ranking is indicative of a high level of inequality of power and wealth within the society. These populations have an expectation and acceptance that leaders will separate themselves from the group and this condition is not necessarily subverted upon the population, but rather accepted by the society as their cultural heritage. The high Uncertainty Avoidance ranking of 68 indicates the societys low level of tolerance for uncertainty. In an effort to minimize or reduce this level of uncertainty, strict rules, laws, policies, and regulations are adopted and implemented. The ultimate goal of these populations is to control everything in order to eliminate or avoid the unexpected. As a result of this high Uncertainty Avoidance characteristic, the society does not readily accept change and is very risk adverse. The Masculinity index (MAS), the third highest Hofstedes Dimension is 52, only slightly higher than the 50.2 average for all the countries included in the Hofstedes MAS Dimension. This would indicate that while women in the Arab World are limited in their rights, it may be due more Muslim religion rather than a cultural paradigm. The lowest Hofstedes Dimension for the Arab World is the Individualism (IDV) ranking at 38, compared to a world average ranking of 64. This translates into a Collectivist society as compared to Individualist culture and is manifested in a close long-term commitment to the
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member 'group', that being a family, extended family, or extended relationships. Loyalty in a collectivist culture is paramount, and over-rides most other societal rules, Hofstedes scores Egypt in respect to the four dimensions as follows: uncertainty Avoidance; 80, individualism; 26, power distance; 72, and masculinity; 46. Accordingly, high uncertainty avoidance, large power distance, low individualism is present In Egypt, reflecting a high collectivistic society, and a masculine one where a separation Between traditional gender roles occurs. Brown and Humphreys (1995) and Humphreys (1996) examined Hofstedes cultural aspects for both Egyptian and Anglo-American Managers and reached the same findings also. Hofstedes societal dimensions derive a framework that proposes an interactive accounting process. He derives four distinguishable accounting Values/subcultures that argues are related to societal values.
Egyptian Honour is an important facet of interpersonal relationships that Tapal will have to consider while its interacting with Egyptian business executives. . Respect and esteem for people is both a right and an obligation. An individual's honour is intricately entwined with the reputation and honour of everyone in their family. Honour requires that Egyptians demonstrate hospitality to friends and guests. It also dictates that people dress as well as their financial circumstances allow, and show proper respect and deference to their elders and those in authority. A man's word is considered his bond and to go back on your word is to bring dishonour to your family. Social Class is very apparent in Egypt since it determines your access to power and position. Tapal will have to be adaptive to work with all the categories of social class. The social class an Egyptian is born into dictates their everyday life and the opportunities they will have. There are three social classes: upper, middle, and lower. Status is defined more by family background than by absolute wealth. There is little social mobility.
Etiquette & Customs in Egypt The following are very important guidelines for Tapal to follow during informal meetings with the Egyptian executives Meeting Etiquette Greetings are based on both class and the religion of the person. It is best to follow the lead of the Egyptian you are meeting. Handshakes are the customary greeting among individuals of the same sex.
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Handshakes are somewhat limp and prolonged, although they are always given with a hearty smile and direct eye contact. Once a relationship has developed, it is common to kiss on one cheek and then the other while shaking hands, men with men and women with women. In any greeting between men and women, the woman must extend her hand first. If she does not, a man should bow his head in greeting.
While doing business, it is common to exchange gifts, Tapal should keep the following guidelines in mind while engaging in gift giving and taking. Gift Giving Etiquettes If you are invited to an Egyptian's home for dinner, bring good quality chocolates, sweets or pastries to the hostess. Do not give flowers, which are usually reserved for weddings or the ill, unless you know that the hosts would appreciate them. A small gift for the children shows affection. Always give gifts with the right hand or both hands if the gift is heavy. Gifts are not opened when received
Business dealings also lead to invitations for dinners. The following dining and table etiquettes will help Tapal when dining with the Egyptians. Dining Etiquette If you are invited into an Egyptian's house: You would normally remove your shoes before entering. Dress well and conservatively. Appearances are important to Egyptians. Compliment the host on the house.
Table manners Wait for the host or hostess to tell you where to sit. Eat with the right hand only. It is considered a sincere compliment to take second helpings. Always show appreciation for the meal. Salting your food is considered an insult Leave a small amount of food on your plate when you have finished eating. Otherwise they will keep filling it up for you!
Business Etiquette and Protocol in Egypt The following are important points for Tapal to consider during important formal, professional dealings with the Egyptian executives:
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Relationships & Communication Egyptians prefer to do business with those they know and respect, therefore expect to spend time cultivating a personal relationship before business is conducted. Who you know is more important than what you know, so it is important to network and cultivate a number of contracts. Expect to be offered coffee or tea whenever you meet someone, as this demonstrates hospitality. Even if you do not take a sip, always accept the beverage. Declining the offer is viewed as rejecting the person. Since Egyptians judge people on appearances wear good quality conservative clothes and present yourself well at all times. Egyptians believe direct eye contact is a sign of honesty and sincerity, so be prepared for disconcertingly intense stares. Egyptians are emotive and use hand gestures when they are excited. In general, they speak softly, although they may also shout or pound the table. This is not indicative of anger; it is merely an attempt to demonstrate a point. You should demonstrate deference to the most senior person in the group, who will also be their spokesperson. This is a country where hierarchy and rank are very important.
Business Meeting Etiquette Appointments are necessary and should be made in advance. Confirm the meeting one week in advance, either in writing or by telephone. Reconfirm again a day or two before the meeting. Meetings are generally not private unless there is a need to discuss matters confidentially. In general, Egyptians have an open-door policy, even when they are in a meeting. This means you may experience frequent interruptions. Others may even wander into the room and start a different discussion. You may join in, but do not try to bring the topic back to the original discussion until the new person leaves. High- level government officials often adhere to more western business practices and hold private meetings without interruptions. Business meetings generally start after prolonged inquiries about health, family, etc. If you send an agenda and presentation materials in advance of the meeting, send both an English and Egyptian Arabic translation.
Business Negotiation The social side of business is very important. Egyptians must know and like you to conduct business. Personal relationships are necessary for long-term business. Business is hierarchical. The highest ranking person makes decisions, after obtaining group consensus. Decisions are reached after great deliberation. If the government is involved, discussions will take even longer since approval must often be given by the ministers of several departments.
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Business moves at a slow pace. The society is extremely bureaucratic. It may take several visits to accomplish a simple task. It is advisable to include older people with impressive titles in your team since Egyptians respect age and experience. Expect a fair amount of haggling. Egyptians seldom see an offer as final. Egyptians do not like confrontation and abhor saying 'no'. If they do not respond, it usually is a negative sign. Always include research and documentation to support your claims. Do not use high-pressure tactics. Egyptians are tough negotiators.
Dress Etiquette Business attire is formal and conservative. Dress well if you want to make a good impression. Men should wear dark coloured, lightweight, conservative business suits, at least to the first meeting. Men should avoid wearing visible jewellery, especially around the face and neck. Women must be careful to cover themselves appropriately. Skirts and dresses should cover the knee and sleeves should cover most of the arm.
Business Cards Business cards are given without formal ritual. Have one side of your card translated into Egyptian Arabic. Always hand the card so the recipient may read it. Make a point of studying any business card you receive before putting into your business card case.
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achieved in 2008. However, sales of hot drinks in Egypt continued to grow in volume and value terms in 2009. Strong and positive growth rates were seen in both other hot drinks and coffee. Sales within more established categories such as tea grew slightly due to their maturity, particularly black standard tea, whilst other less-established categories coming from a smaller base such as green tea showed strong growth in 2009. Over the past three years, Egypt has significantly reduced overall tariff rates. In February 2007, a presidential decree reduced import tariffs on 1,114 items, including foodstuffs, cloth, raw materials, and intermediate and final goods. Liberalized imports in Egypt are a positive sign of any country exporting there. In general, Egyptian customs allows for commercial samples and temporary imports for display purposes at officially recognized exhibitions or for sales promotion activities to enter the country duty free, which will be an added advantage for Tapal. SOCIAL ENVIRONMENT: Egypt is the most populous country in the Arab world and the second-most populous on the African continent. Nearly all of the country's 80 million people live in Cairo and Alexandria. Small communities spread throughout the desert regions of Egypt are clustered around oases and historic trade and transportation routes. The literacy rate is about 58% of the adult population. Education is free through university and compulsory from ages six through 15. Rates for primary and secondary education have strengthened in recent years. Mubarak, their president, has overseen a domestic economic reform program to reduce the size of the public sector and expand the role of the private sector. All this makes the market for Tapal substantial and extremely attractive. The unemployment rate, which has averaged more than 10% over a decade, increased to over 12% in 200506. With the population growing at 1.8% per annum, the economic growth of 4.4% is not enough to curb the unemployment rate. The high rates of unemployment and population growth coupled with meager wages in most of the public sector companies contribute to the poverty levels, with close to 20% of Egypts population below the poverty line. TECHNOLOGICAL ENVIRONMENT: Egypt's IT spending is expected to increase from US$1.3bn in 2010 to US$2.1bn by 2014 and the Egyptian IT market growth is forecasted to remain below pre-economic crisis levels in 2010, but economic recovery, tenders delayed from 2009 and higher incomes boosted by pay raises for civil servants and other groups should help to keep sales on an upwards trajectory. A number of policies have been implemented to attract foreign investment in IT outsourcing, including local employment subsidies, lower corporate taxes and deductions for training costs. The Egyptian minister of state for administrative development has said that 200 government services will soon be available online through a new e-government portal. The portal will offer 70 services in both English and Arabic. According to the Ministry for Administrative Development, more than 20 government agencies currently offer services and licenses online. Egypt's computer hardware sales are projected at US$821mn in 2010 and are forecast to reach around US$1.3bn in 2014. Egypt's IT market will stay hardware
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dominated, with spending on PCs sustained by initiatives like the 'Computer for Every Student' and 'PC for Every Home' programs. Hardware accounted for an estimated 62% of Egypt's IT spending last year. Households account for 20-25% of unit sales, with almost 1-1.5mn households said to possess a computer at present. Overall spending on software remains rather low, which reflects the relative immaturity of Egypt's IT market. One market driver has been a significant fall in software piracy, with the illegal software usage rate, as measured by the Business Software Association, falling a further 1% to 59% in 2008. While large corporations have long understood the business case for deploying technology, small and medium-sized enterprises is increasingly beginning to see such investments as important if they are to avoid being overtaken by more tech-competent competitors. . In 2008, Egypt continued liberalization of the telecoms market, with the award of a second national fixed license. This development, which followed the award of 3G licenses to three mobile telecoms service providers in 2007, is likely to drive new opportunities for IT vendors. As well as generating additional spending on IT products and services from the telecoms sector, the spread of internet should provide a boost to the PC market over the next few years. The IT sector should not have many implications for Tapal other than having sophisticated systems for reporting sales data and constant feedback on the companys performance.
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Another table providing historical statistics of Egyptian tea market is presented below: Table 2 Tea imports, exports and consumption in Egypt: 1994-2003 Year Imports (000 tonnes) 57.2 80.0 65.0 77.9 65.5 73.3 71.7 56.4 79.0 79.0 Exports (000 tonnes) 0.2 0.1 0.3 0.2 0.3 0.3 0.9 0.7 1.4 1.6 Consumption (000 tonnes) 57.0 79.9 64.7 77.7 65.2 73.0 70.8 55.7 77.6 77.4 Per capita Consumption (Kg) 0.98 1.30 1.04 1.10 1.00 1.10 1.04 0.81 1.10 1.06
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: FAO.
As we can see the average consumption per capita of tea is 1kg and majority of the consumption is catered through imports. Kenya is the largest supplier of tea to Egypt. Market share volume of local brands in 2007 is given as follows:
I m p o r t e d , K L o e r d d a , 2 , 3 1 8 2
W a r d a O t h e r s , , 2
C a i r o , E l S a l a m , 2 3 1
E n a n y , C r o w n ,
El
Arousa,
45
Al Jawhara, 10
L i p t o n ,
2 0
In terms of companies Badawy & Sons Co leads in Egypt due to its strong presence in the retail market in both urban and rural areas as well as its focus on reasonable pricing. El Arosa, which means the bride in Arabic, led hot drinks in 2009 with a 53% value share. Multinational companies also maintained a strong presence, specifically Unilever Group with its famous Lipton brand. Unilever Group appeared the most dynamic player in terms of advertising and was responsible for many new innovations across the tea category, especially towards the end of the review period. For example, the company introduced the concept of tea bags into the green tea category and different sizes of packaging for its products in black standard tea bags as well as marketing its loose black standard tea products in smaller-sized packaging in a bid to appeal to lower income consumers. If Lipton can do well in the Egyptian market there is a great possibility for Tapal to do the same. It will need to carry out a strong marketing campaign to establish its brand presence. However, Tapal needs to consider the fact that India is striving to win back its share of the lucrative market through aggressive promotional activities. They have revived the tea centre at the Indian embassy in Cairo to promote the Indian Orthodox and CTC (crush, tear, curl) teas by encouraging local buyers and consumers to taste and sip them. The ITPC-Cairo, Indian Tea Promotion Centre, was set up in January 2010 as a joint venture by the state-run Tea Board and the United Planters' Association of Southern India (Upasi), an apex body of commodity planters in Tamil Nadu, Kerala and Karnataka. This further increases Tapals needs to create a strong brand presence in the country in order to stand forth Indian competition. Besides that Kenyan tea which supplies almost 90% tea to the market already has a strong presence in the market and making consumers switch from it will require extreme creative effort.
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the reinstatement of food subsidies on some products in September 2003; the removal of monopolistic control on imports from state-owned companies in 1994/95, encouraging the rapid growth of private sector trade; a reduction in import tariffs under the Common Market for Eastern and Southern Africa (COMESA)2, which gives a comparative advantage to Kenya in particular, over the previous main supplier, Sri Lanka. Import duties range from 30 percent to 60 percent, ad valorem. In addition to the customs duties, Egypt applies a sales tax and a service charge on tea imports.
Under the Economic Reform process the Government has been reducing the degree of control over commercial activities held by Government-controlled organizations. New privatization measures were proposed in late 2003/early 2004, but have yet to be followed through. The Egyptian pound was floated in January 2003, which affected prices and inflation, resulting in September 2003 in the Government re-introducing some subsidies on basic foodstuffs.
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Tea is amongst the cheapest beverages on the market, a factor that influences its consumption, especially in rural areas where incomes are lowest. Egyptian consumers have moved from consuming orthodox teas imported from Sri Lanka, to buying CTC grades, with Kenya CTC dust grade having about 75 percent of the Egyptian tea market. Consumers in Upper Egypt and rural areas purchase mainly medium and low quality tea. A survey carried out for FAO in 1995/96 reported that tea consumption in Egypt was highest in rural areas, where some 60 percent of the population was found. Per capita consumption levels were also indicated to typically be highest in rural areas. There was, however, some variation in this as per capita expenditure was indicated to be highest in the Port Said urban area. The survey also showed that consumption was higher in the older age groups; rural consumers preferred tea because it was the cheapest beverage; and tea quality was an important factor in competition between individual brands. Drinking preferences also varied, with consumers in Upper Egypt south of the Nile preferring dark strong tea, while those in North Nile (which includes Cairo, Alexandria and Port Said) preferred lighter teas.
ENTRANCE STRATEGIES
We suggest that the company limits operations to Egypt with the current blending and packaging set-up it has in Pakistan. Economies of scales and its benefits can be reaped here. Moreover there are a lot of tax breaks offered to industry here which makes the business environment friendly. The tea blending and packaging facility of Tapal in Pakistan is 2nd biggest in the world so it is adequate for exporting substantial quantity globally. Operations should be started on a small scale incurring minimum costs so that this initial move replicates test-marketing. If operations seem unfeasible and not cost effective then the company can easily pull out without much damage done. Therefore ample time, approximately 8 months, to test market the product should be incorporated in the export development plan before launching a full-scale marketing campaign so that a product that meets all local requirements can be delivered. Tapal should begin its entry with its Mezban brand all over which is a dust blend and is the most preferred variety in Egypt. It is a comparatively cheaper option and will do well in the rural areas along with Chenak where tea consumption is high. Danedar, which is the premier brand having a rich taste and colour should be introduced in the urban areas where a higher quality is preferred. Tezdum and Danedar will do well in the Southern Egypt where people prefer to drink strong tea and where the Saiidi variety is preferred.
Once the initial phase is successful followed by multiple orders from distributors and a good response from the channel and customers the business will expand accordingly. By this time, the initial test market phase would have given the export team enough data to develop sales forecasts to help develop production and supply plans for the first 8 months based on their research. A crucial point when planning the export launch is to make sure that enough time is given to employ and train the necessary people and to install the systems you will be needed to meet the expected demand.
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Radio will be a good medium of communicate to penetrate in Egyptian markets because it transmits 60 hours daily overseas in 33 languages and three hundred hours daily within Egypt. In 2000, Radio Cairo introduced new specialized (thematic) channels on its FM station. These stations, known as Radio El Nile, include news and music. Hypermarkets are becoming attractive outlets for a wider consumer base because of the growing culture in Egypt of 'one-stop-shopping'. The presence of hypermarkets allows for larger display for Tapal. Hypermarkets are not only adopting price reduction techniques but have also started to sell large volume packaging formats at special price discounts such as buy six packs for the price of five. Tapal can use this strategy in the beginning to get potential consumers to purchase their tea. Tapal needs to make sure that production and expiration dates are clearly shown on the package and that information on the label cannot be easily erased, scratched or altered. Tapal will ensure that information is written in Arabic as well, and weights and measures are shown using the metric system. Dates in Egypt are accepted in English, but the words "production" and "expiry" must be written in Arabic.
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The label of Tapal tea must include: Name and address of manufacturer; Brand or trade mark (if applicable); Country of origin Type of product; Name and address of importer; Production and expiration dates; Product use instructions (optional); Ingredients; Storage instructions or storage temperature; Net weight; Gross weight and total number of packages per case or carton; If preservatives are being used- percentages of each preservative must be indicated;
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CHALLENGES
COMPETITION: Tapal will face strong competition from the Kenyan and Indian markets since they are poised to grab the largest share of tea market in Egypt. India was the single largest player in the Egyptian tea market till the mid-eighties. The trade agreement, Common Market for East and South Africa (COMESA), made the duty regime highly unfavourable and drove Indian teas virtually out of the booming market. Now with the establishment of the India Tea Promotion Centre in Cairo, consumption and promotion of Indian teas have been revived and the volume and value of Indian exports have been looking up. CERTIFICATION: Complying with the legalities of a country is quintessential to a businesss success. Tapal as a beverage should make sure that it has a 50% shelf life remaining at the time of import into Egypt according to a decree the government issued in 1994. For tea, various certifications are required by different countries. SITO health certificate is issued for all organic products by chamber of commerce of Pakistan. This certification is required as tea is an organic product. Tea imported to Egypt are subjected to ISO /3720 Specifications for Tests ,Health Authorities clearance at ports , and are governed by Egyptian Standardization Organization under article No.2613 and article No.1546 regarding Expiry date (3years for date of Production/packing) that must be printed or embossed in indelible way . Packet sizes also are subject to another Ministerial Decree Nos.107/94 and 283/98 which obliges all Tea Traders to have even weight nominations :15,25,40,50,100,125,250,500 and 1000grams for Tea packets and 2grams for each Tea bag and to be packed inside 10 ,25 ,50 ,75 or 100 Tea bags. That is to avoid mal-practicing for down sizing weights and raising prices. Currently sales tax has become 2% for all Tea imports except COMESA countries for which it is zero %. Sales Tax are fixed at 1166 L.E./Ton for all Teas and all origins ; which is paid only once at Port and never claimed again from Retailers /Consumers .Only records have to be maintained and monthly reported to Sales Tax Offices for scrutiny .Other clearing charges are applicable like other commodities. Furthermore, it is required by international law that when exporting, all items should be declared. Commercial value invoice of every product that is exported should be sent to the importing country as per trading procedures. Everything has to be documented and there are strict binding international rules that guard these procedures so these should be strictly adhered to.
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RETAIL MARGINS: Tapal would be unable to offer high margins to retailers because of the cost factor. As a result, retailers may not push Tapal products, refuse to stock them or give them priority over other tea brands. Tapal faces problems in setting margins as their cost of production is high. The cost of production for Tapal Tea includes cost of importing tea from Kenya, blending and packaging and then exporting it abroad. On the other hand, Indian tea companies which produce tea locally, unlike Pakistan, are able to keep their costs and consequently prices low. The dynamics are such that the business is directly affected by any fluctuation in rupee or dollar value, political or economic instability in Kenya or any natural calamity there. Even though, in order to reduce price a substitute tea producer has to be found, the company would not compromise on quality and therefore will compete low priced and low quality Indian and Kenyan tea brands in Egypt. SUPPLY SHORTAGES:
Tapals business is vulnerable to supply-side shortages such as droughts and floods in Kenya which may create a shortage here driving costs sky-high. The company in such situation could withstand the blow to an extent after which it will have to pass on the cost rise to the customers.
DAMAGE TO PACKAGING: Damaged packaging creates a problem for the distributor as the goods once exported cannot be sent back and it adds to the financial burden for the company which is entitled to compensate the distributor. It takes about 15 days to export to Egypt. Hence, the containers and jars of tea sent there should be durable enough to withstand any damage in the long journey.
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