Tata Global Beverages to take on Hind Unilever in green tea segment

Tata Global Beverages (TGBL) plans to take on FMCG major Hindustan Unilever Ltd (HUL) in the fast-growing green tea segment. The company recently launched green tea under its Tata Tea brand with smaller packs to compete with HUL’s Lipton brand, which also came out with smaller packs and better pricing for consumers seeking value-for-money products.

While Tata Tea has priced a pack of 5 tea bags at ₹20, Lipton’s pack of 10 tea bags is priced at ₹55. TGBL also has green tea in the premium segment under the Tetley brand and plans to tap the e-commerce route to promote its products.

Ajoy Misra, Managing Director, TGBL, said the idea was to offer green tea at a better price point to consumers in smaller towns. Till now green tea was perceived as a premium product with a few players such as Twinnings, Typhoo and Tetley in fray.

Expanding portfolio “There is a humungous opportunity in this segment and it is growing at a very fast pace. We are planning to expand this portfolio and launch more flavours in the coming months. We expect about 10 per cent of the total sales in the tea segment to come from green tea in the next few years and establish a leadership position in the market not only in India but also globally.” At present, green tea contributes to 3-4 per cent of the overall sales for the company, while tea contributes to about 70 per cent and coffee about 20 per cent. About 10 per cent sales come from water.

The green tea market in India is growing at about 50 per cent annually and is likely to be at ₹400 crore by the end of 2014-15. At present, it is about 1.5 per cent of the 1,000 million kg of tea consumed in the country, Misra said talking about the company’s third quarter performance in this fiscal.

Profit declines During the June-September quarter, the company’s profit declined 65.31 per cent to ₹62.4 crore from ₹180 crore in the year-ago period. The drop in profits was due to extraordinary items to the tune of ₹25 crore (including diminution in the value of investments to the tune of ₹17 crore and reorganisation costs of ₹8 crore during this quarter). Further, in the same quarter of the previous year, the company had made a net gain of ₹92 crore because of extraordinary items. Net sales for the quarter under review also rose 4.56 per cent to ₹2,021 crore, compared with ₹1,933 crore in the same quarter the previous year.

On Wednesday, shares of the company plunged ₹2.05, or 1.25 per cent, to close at ₹161.65 on the BSE.