Tata Global Beverages Ltd (TGBL) may have grown in the tea business through global acquisitions beginning with Tetley, but it does not plan to repeat the same growth strategy in the domestic market.
One of its key challenges is competition from regional tea companies across the country. The company has thus decided to focus on its own brands rather than extend its domestic portfolio through acquisitions.
“We are looking at organic growth in India. There is no need to acquire local tea brands and companies. There is a plethora of nearly 250 regional tea brands, which are both a challenge and an opportunity for us today. We plan to get shares away from these brands and convince consumers to buy the brands created by us,” says Harish Bhat, Managing Director and CEO, Tata Global Beverages.
Focusing on the mid and premium end of the tea category, TGBL would also be open to bringing in more offerings from its international portfolio, as and when required, to fill the gaps in the category. “Nothing stops us from bringing in more products from the global portfolio. In the next five years, there could be more tea products from the US and UK markets. For the moment though, we would like to grow the flavours liked by Indians in the Tetley portfolio,” said Bhat.
However, the company has decided to stay away from the super premium or luxury segment of the tea category. In the past, it had launched the Tea Veda brand to enter the luxury segment. “Tea Veda was a niche brand and is no longer a strategic or focus area for us,” he added.
The company, at present, has brands such as Tetley and Tata Gold at the premium end, followed by mid-market brands such as Tata Tea, Gemini Dust and Kanan Devan, while Agni is at the lower end of the category. “While we have a balanced tea portfolio, it is the premium end of the category which is growing faster,” said Bhat.
Going forward, TGBL may also explore premium variants in the organic tea segment. One of its group plantation companies in the north-east is already making the blend. “Organic tea is a good segment to get into,” he said. Even in water, it has segmented the category with Himalayan natural mineral water at the premium end and Tata Water Plus to cater to the mass segment. “Today, Himalayan is a profitable brand and its volumes have grown by 30 per cent over last year,” added Bhat. Selling the brand through the Starbucks network is also expected to give a boost to the brand. A pilot test is also being conducted across certain overseas markets. Starbucks is also selling the Tata Tazo brand of tea, a brand created by the Tata brand and the Tazo brand of Starbucks.
However, Tata Water Plus is still restricted to two markets down south (Tamil Nadu and Andhra Pradesh) with the company initiating a national roll-out soon.