Tata Tea scouts global buys

Written by Corporate Bureau | Mumbai | Updated: Jun 12 2009, 06:06am hrs
Tata Tea, the worlds second-largest tea company after FMCG giant Unilever with FY09 revenues of Rs 4,874 crore, on Thursday said it wants to acquire global brands in Russia, South America, Asia Pacific and Africa. These proposed acquisitions are part of Tata Teas new thrust on attaining global leadership in beverages.

Tata Tea is planning to operationally integrate five areas of its businessproducts & categories, brands, distribution, people, and processesunder an overarching management team of six people: Tetley CEO Peter Unsworth, Tata Tea MD Percy Siganporia, Tata Tea CFO L Krishnakumar, Tata Coffee MD Hamid Ashraff, Tata Tea HR head Nalin Miglani, and Tetley head of brands and marketing John Nicholas.

Branded tea contributes around 86% to Tata Teas consolidated worldwide turnover, with the remaining coming from bulk tea, coffee, and investment income. Two-thirds of Tata Teas revenues accrue from international markets. The turnover of Tetley alone, which Tata Tea acquired in 2000 for $430 million, stood at Rs 2,406.26 crore for FY09--around half the parents consolidated revenues.

We may acquire global brands or brands that can become global. We would acquire categories that offer us functional benefits and those that offer us value, Unsworth said. Partnerships would also be quite important for us going forward, he added, without specifying the acquisitions on the companys radar.

In its latest acquisition in March this year, Tata Tea joined forces with European Bank for Reconstruction & Development to acquire 51% in Grand, a Russian tea branding, packaging and distribution company.

On Thursday, Tata Tea shares fell 3.26% on the BSE to close at Rs 788.45, a day after the company said its FY09 net profit fell 56% to Rs 831.90 crore, although profits in the previous year were boosted by one-time gains from the sale of investments in Energy Brands Inc and North India Plantations.

Besides Tetley and Tata Tea, the companys brands include Good Earth and Himalayan. For these four, the company not only wants to expand geographically, but it also hopes to improve processes, build economies of scale, create sharper consumer focus and introduce innovations such as ready-to-drink teas. Regional brands that the company wants to focus on include Vitax, Jemca, Eight OClock Coffee and Tata Coffee.