A new shop of TATA Cha at Indiranagar in Bengaluru on Tuesday. Photo by Janardhan B K
With a variety of brands, including Tata Tea, Tetley, Good Earth, Vitax, Joekels, Jemca and Teapigs in its cup, TGBL is now a Rs 6,780-crore company (Consolidated revenue as on March 2017) with prominent presence in the UK, the US, the Middle East, South Africa and Poland, as part of its strategic alliances.
In India, Tata Tea enjoys a 21.4% share in the Rs 23,000-crore market. However, it must be noted that the branded tea market is estimated at Rs 15,000-crore. Over 30 years in the business have made TGBL an expert in tea, and the company is now ready to bring its expertise to the consumer's table, quite literally, with the launch of Tata Cha. The promising venture, which has been piloted in Bengaluru, marks the entry of TGBL in the quick service restaurant (QSR) space.
Discussing the initiative in question alongside several others with DH, Tata Global Beverages India Regional President Sushant Dash said, "Indians are today waking up to a nascent yet formidable 'eating outdoors' culture, making food services one of the most promising business sectors in India. Tata Cha wants to be a part of this trend and through this pilot launch, test consumer proposition; the business model and its feasibility. At the core of this venture for TGBL, is the motivation to enhance the appeal for tea to make it more vibrant, amassing popularity among millennials."
Cup of joe for TGBL
As much as India loves its tea with all sorts of spices and condiments, the country does not take its coffee lightly. TGBL's approach with coffee was simply inverse. Having entered into a 50:50 joint venture with famed coffeehouse chain Starbucks, the company announced its participation in the Indian coffee market in 2012.
Starbucks entered India as as 'Starbucks Coffee A Tata Alliance'. As of today, the brand has nearly 90 stores across India. In another step to get closer to the Indian consumer's coffee experience, TGBL announced its entry into the branded instant coffee business with Tata Coffee Grand in November 2015. Globally, the company has brands like Grand, Eight O'Clock and map under its umbrella.
While traditional beverages remain at the core of TGBL's business, the company is actively participating in the rapidly evolving beverage culture. Offering his take on the company's diversification plans, Dash states, "We will continue to pursue aggressive growth through base business rejuvenation, innovation and category expansion. Health and wellness continues to be a key focus area, and our recent innovations are built around this trend. We are also premiumising our brands by creating enhanced beverage experiences for consumers through vitamin enhanced teas, tea blends specially crafted to meet regional preferences, and branded coffee."
Some of the company's latest launches include Tetley Super Green - tea fortified with vitamins, Tata Teaveda - tea with the goodness of ayurvedic ingredients, Tata Tea Elaichi and Tata Coffee Grand. The most distinct brand for TGBL, in terms of innovation, would be Fruski. "We have started with the Fruski pilot in the NCR. It is a ready-to-drink green tea-based iced tea, which is available in mango and orange flavours. The response has been great," he says.
"We believe that the health trend is here to stay, and we want to participate in it with more innovation. But we understand that taste is primary. So we will work accordingly," adding, "In the past few years, we have seen the green tea portfolio grow from ground-zero to contribute to a significant share of the revenues. Green tea and functional beverages are now areas of growth opportunity. The health and wellness segment continue to be a priority. With fortified teas, green teas, teas with ayurvedic ingredients, like Tetley Super Green and Tata Tea Teaveda, we are bullish on growth opportunities here."
Moreover, the company is keen on 'premiumising'. In the current market scenario, wherein consumers have access to innumerable brands and varieties of products, differentiation has become a necessity to pique consumer interest.
Where premiumising means moving towards expensive products, it also entails products that come with value additions.
"Premiumising our products is an area of opportunity. We are tapping into this by introducing new products under our portfolio. For instance, Tata Coffee Grand is the first coffee to offer 'decoction crystals' that help retain aroma. Further, significant research went into creating a product that integrates Ayurvedic wellness in a manner suited to the various palates. Teaveda is an endeavour in that direction." Interestingly, Tetley was the first to introduce the drawstring teabag.
Beyond the average Indian's daily beverage requirements, TGBL is catering to another basic need -- water -- with premiumisation being the key diffrentiator in this category. With an objective to disrupt the hydration market, TGBL entered into a yet another joint venture with PepsiCo India, to set up NourishCo, in 2010.
NourishCo has Himalayan (mineral water), Tata Water Plus (nutrient water) and Tata Gluco Plus (re-hydration solution) in its portfolio to compete in the under-penetrated Rs 4,200 crore market for water in India. To strengthen its game, the company had recently announced plans to set up about 70 plants across the country.
In fact, in the quarter ended September 2017, the company's branded business increased to Rs 1,507.4 crore from Rs 1,434.7 crore a year-earlier, while non-branded business saw a marginal decrease from Rs 204.1 crore to Rs 197.4 crore.
Putting future plans on the boil
On the manufacturing front, having made a conscious decision to exit production, and concentrate on marketing tea several years ago, TGBL Chairman N Chandrasekaran had said that the company is looking at ways to tackle the problems arising from its interests in its plantation associates.
TGBL owns 41% stake (Rs 61 crore) in Amalgamated Plantations, which has 24 tea estates in Assam and North Bengal. It owns 28.5% (Rs 12.33 crore) in Kanan Devan Hills Plantations, which has seven estates. It also has some plantation interests in Sri Lanka through Estate Management Services, a joint venture with Pyramid Wilmar Plantations. Stating that the company has no intention of returning to the business of plantations, Chandrasekaran had said that a call will soon be taken by the company in this regard.
Even as it continues to innovate and introduce new products across markets, Tata Global Beverages is committed to maintaining value and volume market leadership in India. As a market leader, the company has witnessed continued growth, both in topline as well as market share over the last five years.
In India, Tata Tea is the market leader, and Tetley pioneered green tea. The company has expressed that it has ambitious plans for both these brands.
Bullish on its debut in the QSR space, Dash says, "Tata Cha will serve freshly boiled tea, one perfect cup at a time, with an aim to optimise the 'out of home' tea drinking experience coupled with snacks that will bring back nostalgic moments. We are here to build a strong presence and the investments that we make will be towards that purpose."