Tata Global Beverages (TGB), the world?s second-largest packaged tea maker, will focus on increasing the revenue per serving in the domestic as well as overseas markets. TGB, which said Tuesday that the company?s market share has increased in value terms ahead of its peers , will continue to concentrate on ?value-added? products in its portfolio.
One such product is the green tea, Tetley Infusions, which the company has launched in West Asia. In India, TGB launched ?Tion? in Tamil Nadu last year, and is now increasing its distribution in other states like Kerala and Karnataka. The 400 ml bottle has been competitively priced at Rs 22.Industry analysts, who have been tracking the company, say that these value-added products, despite being more expensive than black tea, have better margins and higher realisations.
Therefore, the company would be able to increase its sales per serving, given that it advertises aggressively to spread awareness of such products. According to a Kotak Institutional Equities report, in the fourth quarter of FY2010, the company’s ad spends stood at 16.3% of sales.
Currently, 70% of the business of TGB comes from tea and tea products. The management reckons that investments are going to be made in new beverage categories in India. ?We are targetting more than 50% from non-tea products in five years,? said Percy Siganporia, MD, TGB.
A Mumbai-based FMCG analyst said, ?TGB would want its consumers to shift from tea to tea bags as that has a lower cost, relatively. Hence, it fetches higher margins. Moreover, any shift for the company from a tea product into the beverage category would insulate the firm from the fluctuation in auction tea prices.?
TGB has expanded in the ?good for you? category with the launch of ‘Sukk’, a green tea based jelly drink in the United Kingdom. Siganporia said, ?Sukk brand is ready for a city test launch in the UK. We are going to roll out the brand with two initial flavours mainly targeted for a young audience .?