Tata Tea plots global expansion

16 July 2009

KOLKATA: The Tata Tea Group, part-owned by giant Indian conglomerate the Tata Group, is aiming to broaden its brand portfolio as it seeks to become a diversified beverage company able to compete on the global stage.

At present, Tata Tea, which owns assets including the UK's Tetley Tea, has a global market share of around 20% across the category as a whole.

India currently delivers around 25% of its revenues, while the UK and US are also responsible for a similar proportion of value sales on an annual basis.

Unilever, the owner of Lipton and PG Tips, is its major competitor in this sector, and Tata Tea is looking not only to take on the FMCG giant, but also to form partnerships and possibly make further acquisitions.

While tea accounts for some 70% of the company's annual turnover of $1.07bn (€759m; £652m), Peter Unsworth, ceo of the Tetley Group and head of Tata Tea Group's executive office, said it intends to enter new market segments.

"We're moving from being purely a tea business to a beverages business," he stated, adding that "for the right acquisition, we'd gear up again."

Tata Tea's stable of products currently includes coffee and energy drinks, as well as Himalayan, a bottled water brand available in India.

It has also been it talks with PepsiCo about developing joint projects, although the US firm works with Unilever on Lipton, meaning any tie-up would exclude this particular sector.

More specifically, the company is looking to expand its operations into smoothies, fruit juices and "functional drinks", and Unsworth argued "there are certain businesses out there that would fit well with us."

Among the companies he expressed an admiration for were distinctive beverage manufacturers such as the Arizona Beverage Company and Jones Soda in the US.

Tata Tea sold its 30% share in Glacéau, owner of Vitaminwater, to Coca-Cola for over $1bn in 2007, having paid slightly over $650m for it a year earlier, and thus has some funds set aside for growth.

It was originally assisted in making this purchase by the Tata Group, which has a 35% stake in the country, and the agriculture-to-telecoms group might also be willing to support further acquisitions.

Data sourced from Financial Times; additional content by WARC staff