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Thursday, February 20, 2014

Successful Unrelated Diversification Strategy: story of a chai vala (tea vendor) in Agartala

While I was waiting for a friend at city centre, Agartala, capital of this small state Tripura, I felt little uncomfortable. My head was getting heavy and I felt like vomiting. Something was blocking my throat. I tried locating a medicine shop and as I found one, I spotted my friend waving. It was around 7 in the evening.  I told him 'I am not feeling well'. He showed his concern and inquired the reason and diagnosed that it is gastric problem. He said we should have spicy tea at this stall (indicating the exact location of a tea vendor on a side). I avoided as I thought maybe it might spoil my stomach further. We started walking towards the other end and I started feeling better. Took a small bottle of soda and after few sips it made me little light. I was getting better. We reached back to city centre and he again suggested that better we have this tea. He had told me about this tea stall and its delicacy before. So I agreed and as we sipped tea I started admiring the taste of this tea and the vendor for his innovative thinking for this entrepreneurial venture. As a student of entrepreneurship and business I got interested in knowing about the person, idea and product little deeply and got talking to the tea vendor. 

This person, Ranjan Mazumdar in his late forties or early fifties, is surrounded by customers, is busy taking their orders and in preparing different types of tea – as demanded by customers. He has a small platform where two big flasks, one with milk and other one with hot water are placed. This small platform has a chest and few drawers where different spices are kept in a very shabby style. I peep through a drawer and see coriander, green chilies, cumin powder, pepper, ginger, lemon, etc. That’s what it is. There is a small board on the pole, which is in Bengali. I request one of the customers (clean shaven, wearing a woolen suit, gelled hair, in his early twenties, whom I observe sipping tea), to translate it for me and as he tells me he makes a gesture of a tea lover, it seems he is a regular visitor of this small joint. He mentions, it reads as ‘spicy tea, try it out’.

The outer side of the stall reads in English ‘Spicy Tea Nescafe’. He tells me that the powder which he uses for milk tea is Nescafe powder so he writes like this. He shows me a Nescafe sachet lying on the platform. But I think there is something more than just this reason. His understanding of brand is clear. He knows pretty well that use of Nescafe brand shall add value to his product portfolio and customer base. Further it can also cover the risk that he is taking by introducing his own formula, his very own unique spicy tea. He intends to cater to all needs. He uses his own formula as well as provides the generic taste of Nescafe powder tea. It makes sense. He is just class ten pass, but his understanding of traditional 4Ps of marketing is remarkable. Though he has not been to any business school, his business diversification strategy (unrelated diversification) seems reaping good fruit.

In fact, some thirty years back in the year 1983, he started a watch repairing shop in Agartala. He says that in last ten years around that business is not doing well. There is lot of competition and in general the number of customers to his watch shop has been going down. May be if I can reason it out, it must have been due to the emergence and dominance of electronic watches. A small counter just beside his tea shop reads as Titan. I ask him why he uses this brand name. He tells me smilingly that he repairs titan watches. I mentioned earlier his understanding of brand value is praiseworthy. As an entrepreneur he knows how to capitalize on these brand names.

Though at present his whole concentration is on his tea business, whenever he gets some customers for repairing watches he does that. It is around 3 years that he thought of starting a tea shop beside his earlier watch repairing shop. And an idea to have unique spicy tea at such a location sounded a great proposition. He is ready for the day at his shop at 10:30 am and stays there till 3 pm, when he goes for lunch and then reopens at 5 pm and till 9:30 pm he is on toes, selling around 200 to 250 cups of tea every day. Each spicy tea cup costs Rs 10, which is in no case less. It shows that for the unique taste of tea, customers are willing to pay premium price.

Ranjan's principles about life are simple as he believes in dignity of labour when he says no work is small or big, we have to work to make our living. He considers education very important and that thinking has driven him to send his daughter outside Tripura to study Nursing in Bangalore where she is about to finish her course. His wife sells clothes door to door and contributes to the family. Human effort is the most important asset (wealth) for a nation as Adam Smith stated some 230 years back and this couple is a testimony to this fact.

India is known for its diversity. This feature adds lot of strength to its greatness. However in the times of globalisation uniform appeal of product and taste somehow has shifted the priority of younger generation to enjoy, Dominos, McDonalds, Pizza Huts, KFCs etc and with this influence local tastes are dying and that is really going to be a great loss for our diversity. There might be lot of Ranjans who are selling their own innovative versions of products and services which are much appreciated by their customers. Somehow these formulas are not patented by them and may be to that direction some steps should be taken by appropriate authorities so that the taste of Ranjan’s Spicy Tea reaches out to many other tea lovers.

White seeds of green chili float on tea and I see green chili piece in tea. I could never imagine green chili in tea. First I was little hesitant to taste, however once I sipped, I really liked the taste. As we both finish our first cup, my friend commands ‘lets have another one’. I nod in affirmation and there we are having fresh two cups of tea in our hands. I am busy looking at the bottom of the cup. I can make out an accumulation of small grated pieces of ginger and other spices which had made the tea aromatic. While I talked to him I noticed he was always doing one or the other thing apart from responding to my queries and questions. His dedication towards his work impresses me.

The feeling of vomiting has gone off and now I have started feeling fresh and light. And much of the credit goes to Ranjan, fully unaware about this he smiles and poses for a picture with his small board. I can understand really a small chai vala can make a big difference. I wish as a successful entrepreneur he grows big and bigger and next time while I am in Agartala I see a larger crowd at his tea stall.
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