Executive Summary

We are launching Tata’s product Tetley tea in Russia. Tata not only in one sector but in seven

sectors: consumer products, engineering, communications and information technology, materials,

services, energy, and chemicals. Russia has many preferable condition which favors tea. Around

95 per cent of population drink tea and Russia’s annual tea consumption is 1 kg. The climatic

conditions are also in our favor as most of the time Russia’s climate is cold and people drinks tea

to keep them hot. History also favors the growth in consumptions of tea. History shows that

Russian drink tea post lunch and even at afternoon breaks. Families in Russia are usually lives as

joint family. On an average there are six members in a family. This again favors our product as

people usually prefer to drink in groups. Education in Russia is of high standard and they have

always maintained it. According to census 2002 literacy rate in Russia is 99.4 per cent. The

education level among people will make it easier for us to communicate our products through

marketing. Tax system in Russia has been amended in 2001 and it made it more libral for

business to start. All companies has to give 24 per cent tax to the government which is equal to

all business. Legal system is also fair in Russia and there is a separate court that is courts of

arbitration which looks only the disputes between of business entities. Language can create

problem for us. Russian is an official language in Russia and 81 per cent of population speks

Russia. This will make it more difficult to communicate. But this can also be taken as positive if

we master the language as we can cover 90 per cent of populations at one go. Though there are

some problem but overall the consumption of tea is high.

Company profile

We are exporting “Tata Tetley tea” the product of Tata. Tata Companies not only operate in tea

but also in seven business sectors: consumer products, engineering, communications and

information technology, materials, services, energy, and chemicals. Tata tea is second largest

branded tea company in the world, second in India, and works along with UK-based subsidiary

Tetley. Tetley began its operation in 1837 by two brothers Joseph and Edward Tetley.

We are going to export in Russia, the reasons for are:

1. Russia’s annual per capita tea consumption is 1 kg and around 95 per cent of the

population drinks tea.

2. The tea is usually preferred in winter months as it keeps the body hot.

3. According the survey the average Russian drinks 3 cups of hot beverages daily and half

of them drink two cups.

4. Consumers usually prefer three brands (86 per cent) and around 70 per cent buyers go for

persistent loyalty to the brand. ()

5. The reasons for switching to another brand are change or worsen flavor or ability to buy a

more expensive product. These factors will help us to launching our product
History of Russian tea market:

Tea is admired in many countries and every country has its own set of customs and traditions

associated with it. If we look upon the history of tea market in Russia, it started back 1600’s

when Mongolians first introduce tea in Russia in the form of gift given by” Altyun khan” a

Mongolian ruler to” Tsar Michael Fedorovich “a Russian king in 1638. Before that no one knew

about tea but soon after that it is being followed as a tea ceremony and become official drink of

the nation. Initially tea was used to come from china and took 16 months to reach at Russia.

Before the death of “Catherine the great” in 1796 tea was consider as premium and expensive

product and general masses can’t afford to have it but after the death trend was changed and

prices of tea dropped out and become affordable. But the real cause which makes tea so

affordable that it can reach to all masses was their railway transportation system which they

invent in the name of Trans Siberian railway in 1913. Usually tea in Russia is being served as

post lunch and even at afternoon breaks which is very similar of other nation’s five o’clock tea

but the difference is that Russian tea can be consumed anywhere and any place and any time of

the day.

So all this mentioned facts justify that how closely tea is associated with their history and an

important part of their day to day life.

Geert Hofstede model:

It shows
Power distance index (PDI) tells about Low and High Power Distance

Individualism (IDV) tells about Individualism and collectivism

Masculinity (MAS) tells about Masculinity and femininity

Uncertainty avoid index (UAI) tells about risk taking ability

Long term orientation (LTO) tells about Long and short term orientation

(Geert Hofstede™ Cultural Dimensions, n.d)

Geographical overview of Russia

Location:
Russia is located in northern Asia and northeastern Europe. It is the largest country in the world

which his slightly less than 1.8 times the size of the United States, with a total area of

17,075,200 sq km (6,592,771 sq mi). Russia is one of the largest independent countries among

twenty one republicans in the world. It shares boundaries with the Arctic Ocean on the N,

northern Pacific Ocean on the W, China, Mongolia, Kazakhstan, the Caspian Sea, Azerbaijan,

Georgia on the S , and the Black Sea, Ukraine, Belarus, Latvia, Estonia, Finland on the W with

a total land boundary of 19,990 km (12,421 mi) and a coastline of 37,653 km (23,396 mi).

Russia's capital city, Moscow, is located in the eastern part of the country. Its southern portion is

attached with black sea and northern portion is attached with Arctic Ocean. ()

Climate :

Russia’s most part have continental climate, with long, cold winters and brief summers. There is

a wide range of summer and winter temperature and relatively low perception. Annual

precipitation decreases from about 64 – 76 cm (25 – 30 in) in the European region to less than 5

cm (2 in) a year in parts of central Asia. The far northern forest has long severe winters, short

summers, and extremely short springs and autumns.

CITY TEMPERATURE in OC (April 01, 2009)

1. Moscow 0.6

2. st. peterburg 3
 3. Ekaterinburg 2

4. Omsk 11

5. Tomsk 0

6. Yakutsk -1

()
7.Vladivostok 9

Topography

There are different kinds of trees in Russia like cedar, spruce etc. Taiga is world’s largest forest

area and is in Russia. It spreads over north east region of the country. Around 33 per cent of

total population settles in Taiga. It is also known as tourist hub. (Topography and Drainage, n.d.) 

Around 24.5 million tourist vist Russia in the year 2004 (According to Travel daily news). This

create another opportunity to launch our product in these regions. There are lots of people

visiting from China, Finland and other neighbouring countries for a trip or small scale business.

(Topography and Drainage, n.d.)

Social Institutions: -

Family
There was a change in average Russian family (1994 survey). According to experts, Russians

rely more heavily than ever on the family. This was because of the social and economic crises.

On an average there are 6 members living in each apartment. Russians spend more time with

their family. Hence the mutual understanding between children and parents is more. This will

certainly help in our product as tea is usually preferred with family members or friends.

(Russian Culture background)

Education

Russia has maintained its high quality standards for long period and producing a literacy rate of

98 per cent exceeding most western countries. Education is in two parts

Compulsory Basic Education

Compulsory basic education last for nine years. After this graduated may continue their

education at senior high school to receive secondary general education.

Higher Education

There are two types of higher education

• Basic higher education which is for four years leading to Bakalavr's degree. It is

equivalent to B.Sc degree in US or Western Europe.

• Postgraduate higher education which is for 5-6 years leading to Magistr's degree. This is

equivalent to master degree in US.

 • Higher education is provided by public or non-public (non-state) accredited higher

education institutions.

Literacy rate:

Russians has always maintained its standards high in education. Literacy rate of total population

is 99.4 per cent. Literacy rate among male is 99.7 per cent and 99.2 per cent among women

(according to census 2002). All the above figures are for age 15 and above who can read and

write.

Expectancy of school life is 14 years and expenditure on education is 3.8 per cent of GDP.

Russia Percentage Figures

Population - 140041247
Literacy Rate 99.4% 139201000
Unemployment Rate 6.2% 8682557
Illiteracy Rate 0.6% 840247
Literate unemployed rate 5.6% 7842310

().

Political System
After “soviet union” collapsed in 1991, Russia became independent. Russian federation consists

of 21 autonomous republics with Moscow being capital. There are three branch system of

government. The executive branch, the legislative branch which is a bicameral federal

assembly, it consists of the State Duma and the Federal Council. The State Duma has 450

members and the Federal Council has 176 members. Judicial Branch: Constitutional

CourtSupreme Court(highest court for criminal, and administrative cases), Superior Court of

Arbitration (highest court that resolves economic matters)

Political parties: -

There are four types of political parties in Russia : -

i. United Russia: - The leader name is “Vladimir Putin”

ii.Communist Party of Russian Federation: - The leader name is “Gennady”

iii.Liberal Democratic Party of Russia: - The leader of this political party is

“Valdimar Zhirinovsky”.

iv. Fair Russia: - The party is leading by “Sergey Mironov”.

()

Special Taxes

Russia’s tax system was amended in the year 2001to make sure that companies and common

people can survive and do business with minimum burden from the government. Currently

Russian has to give 13 per cent tax where as foreigners has to pay 15 per cent. But in case of

corporate tax, all companies have to pay 24 per cent tax. This 24 per cent tax is divided into
Federal tax that is 6.5 per cent and regionaltax that is 17.5 per cent. In addition to that 2 per

cent tax is charged as VAT. (Russia Income Taxes and Tax Laws, 2009)

Legal System

The judiciary system of Russia is split into three branches: the regular court system with

Supreme Court on top, the arbitration court system with the High Court of Arbitration on top,

and the Constitutional Court as a single body with no courts under it. The dispute between

business entities is taken by courts of arbitration. There are eighty-two courts of arbitration.

Apart from the arbitration court system, no court handle domestic relations or probate disputes.

()

Religion

Russian Orthodox Christianity is a chief religion which is 75 per cent of total population and

they describe themselves as religious beliver .The country has over 5000 Russian orthodox

churches. The second largest religious community in Russia is Muslims. There are over 800

parishes and mosques. Buddhism and Jews are also wide spread in Russia.

Languages

Russian is a official language spoken in Russia and 81 per cent of population speaks it. There

are over 100 minority languages spoken in Russia today, the most popular is Tartar, spoken by

more than 3% of the country's population, Ukrainian, Chuvash, Bashir, Mordvin and Chechen.

These populations make up even 1% of the Russian population, these languages are prominent

in key regional areas.

REFERENCES: -
A History of Tea Timeline. (n.d.). Retrieved april 3, 2009, from www.2basnob.com:
http://www.2basnob.com/tea-history-timeline.html
http://www.orimitrade.ru/e/russian-tea-market-trends/

http://www.nationsencyclopedia.com/Europe/Russia-LOCATION-SIZE-AND-EXTENT.html

http://www.nationsencyclopedia.com/Europe/Russia-CLIMATE.html

http://countrystudies.us/russia/50.htm

http://www.worldservicesgroup.com/countries.asp?c=rs&country=Russia

http://www.russianembassy.org/RUSSIA/religion.htm

http://www.kwintessential.co.uk/resources/global-etiquette/russia-country-profile.html