What’s in a Drink that you calla Chai? Quality Attributes and Hedonic Price Analysis of Tea

India is one of the leading producers and exporters of tea. However, in the last two decades its share in the world exports has gone down considerably. On the other hand, although the domestic market is large, the per capita consumption in India is one of the lowest in the world. Therefore, Indian growers, processors, and traders could focus their attention to cultivate and expand the domestic market as a buffer against the vicissitudes of export performance. As a first step in their competitive strategy, Indian tea industry may want to understand the valuation consumers place on various quality attributes of tea. This can be done by applying hedonic price analysis to the data on prices and the quality attributes of tea. In this paper, we applied the hedonic price analysis to the data on 43 Indian tea brands. Based on performance of regression equations, exponential functional form was selected for the Box-Cox transformation, where price of tea brands was taken as the dependent variable and quality attributes of tea were considered as independent variables. Indian consumers seemed to attach importance to two quality attributes, aroma and colour. No significant value is attached to flavour and strength of tea. Premium is attached to the tea types CTC Leaf, Teabags, and CTC Fanning in that order over the type CTC Dust. Based on these results, stakeholders in the tea industry may want to enhance or reduce some of the quality attributes during the tea blending process. The newly blended teas may be marketed through aggressive generic promotions to increase overall consumption and/or through firm specific advertisements to improve market share.

Quality Attributes and Hedonic Price Analysis of Ghee

In the post-WTO scenario processed food industry is witnessing intra-industry trade, i.e., trade in similar products. It also means that there will be intense competition between foreign and Indian companies in the domestic market. This competition will compel companies to focus their attention on product differentiation and branding. This is possible if companies prepare themselves to be quality competitive. In order to be quality competitive, firms have to understand consumers perception and valuation of various quality attributes. Hedonic price analysis, a methodology used for this purpose, is extensively used for processed food products in developed countries. However, it has not been applied to Indian food markets. We conduct a hedonic price analysis of a typical Indian processed food product - ghee. Results indicate that consumers are willing to pay a premium for branded over non-branded ghee, and, for corporate brands over cooperative brands. Flavour is an important quality attribute valued by consumers. While texture is not that important, an agreement needs to be developed on whether or not there is an ideal colour attribute for ghee. The results imply that branding generates reputation, and, cooperatives may want to enhance their brand equity. Firms may do well in improving flavour to enhance ghee quality. Another implication is that large firms and other organizations need to generate data on measurements of food quality attributes so that hedonic price analysis can be effectively used for strategic food quality management.

evaluation of various brands of Indian tea. What’s in a Beverage You Call a Chai?: Quality Attributes and Hedonic Price Analysis of Tea

India is one of the leading producers and exporters of tea. However, in the last two decades its share in the world exports has gone down considerably. On the other hand, although the domestic market is large, the per capita consumption in India is one of the lowest in the world. Therefore, Indian growers, processors, and traders could focus their attention to cultivate and expand the domestic market as a buffer against the vicissitudes of export performance. As a first step in their competitive strategy, Indian tea industry may want to understand the valuation consumers place on various quality attributes of tea. This can be done by applying hedonic price analysis to the data on prices and the quality attributes of tea. In this paper, we applied the hedonic price analysis to the data on 43 Indian tea brands. Based on Box-Cox transformation, exponential functional form was selected for the regression analysis, where price of tea brands was taken as the dependent variable and quality attributes of tea were considered as independent variables. Indian consumers seemed to attach importance to two quality attributes, aroma and colour. No significant value is attached to flavour and strength of tea. Premium is attached to the tea types CTC Leaf, Teabags, and CTC Fanning in that order over the type CTC Dust. Based on these results, stakeholders in the tea industry may want to enhance or reduce some of the quality attributes through selective plantation, processing and blending of teas. The newly blended teas may be marketed through aggressive generic promotions to increase overall consumption and/or through firm specific advertisements to improve market share. 2 1