Tata Global Beverages rejigs global management to streamline business

Adil Ahmad to head unit that will combine UK, Europe, West Asia and Africa arms with US, Canada, Australia's

Tata Global Beverages (TGBL) has combined its UK, Europe, Middle East and Africa (EMEA) and CAA (Canada, Australia, and Americas) businesses into a single unit to streamline cost and operations.

The new unit will be called the International Business Division (IBD). Country heads from these key global markets will now report to the new unit’s head. The company’s chief marketing officer, Adil Ahmad, has been selected to lead the IBD team. 

The IBD headquarters will be located in the UK. The company clarified these businesses had not been merged but it was only the management structure that had been reorganised. 

"We are looking at simplifying our structure and driving decision-making ability, with an enhanced empowerment system to drive agility and accountability. Consequent to this, there will be a fair amount of cost efficiency as well," said Ajoy Misra, managing director and chief executive officer of TGBL. "This restructure will help us better focus on core markets and better leverage growth opportunities." 

This was the first time in recent years such an extent of restructuring has been done at TGBL, Misra said.

According to the firm’s annual report, the CAA region reported a 9 per cent growth, while the EMEA region had seen a 13 per cent dip in FY18. While the EMEA region generates 20 per cent of the company's revenue, the CAA region contributes 25 per cent to it. In the year ended March 2018, TGBL's consolidated revenue remained almost flat at Rs 68.15 billion.

Europe is one of the core markets of TGBL. In the UK, the company recently celebrated the 180th anniversary of Tetley, one of its flagship brands that became a part of the TGBL family in 2000. It also launched a healthy variant, Tetley super tea, in Finland and Sweden.

In the CAA region, the company has entered two different categories — ready-to-drink range of iced teas in Canada under the Tetley brand and pilot launch of Kombucha, its tea-based ready-to-drink product in Australia. The tea, coffee and bottled water company, which has its global businesses spread across 40 countries, has also exited non-core and sub-scale markets to focus on core markets. The company has divested its stake in plantations in Sri Lanka, and exited its joint venture business in China, which was namely a tea extractions factory to produce instant tea.

In Russia, the company has restructured its operating model by transferring ownership and operational responsibility of its Russian business unit to Skodnya Grand LLC. TGB continues to retain ownership of its brands in Russia and will receive royalties from the sale of these brands, said Misra.

  

TGBL had last year sold two of its subsidiaries — Sunty and Teatrade — in Russia for Rs 410 million to cut losses. Earlier, Tata Sons Chairman N Chandrasekaran had said international growth of TGBL was suffering because of marginal presence in many overseas countries. These restructurings are likely to be completed by the end of the year or early next year. 

The firm has also outsourced the management of back office processes in areas like human resources, finance and operations to sister concern Tata Consultancy Services (TCS). 

These processes are now being handled from TCS' Development Centre located in Kolkata.

CORE MARKETS

• India: Tea portfolio grows 8% in volume and 6% in value terms in Q1FY19; branded coffee also shows volume growth of 8%
   
• UK: Witnesses sales growth of 6% in sequential term in Q1FY19, driven by 4% volume growth
   
• US: Crosses the 10% market share in black tea category
   
• Canada: Sees sales growth of 3%