Faced with stagnancy in the overseas markets, Tata Global Beverages Ltd (TGBL) has decided to put its focus back on Indian operations, which registered a 5 per cent growth in the last financial year.
The second-largest tea company quit China and Sri Lanka and restructured operations in Russia last year. Moreover, many of its product lines and joint venture brands like Tata Starbucks and Nourishco have failed to scale up.
The progression in India, the company said, would be via a mix of organic and inorganic growth. “The focus of the company will be to try and scale specific platforms of operations and also capture the growth in the Indian market. Though, in volume terms, we continue to be No.1 in the Indian market, we can’t say the same thing in value terms. So, there will be focus to bring growth in the Indian market by a combination of focusing on market share as well as a number of new product launches,” Chairman N Chandrasekaran told its shareholders at its 55th annual general meeting at Kolkata.
Last year, the company launched two brands of teas — Chakra Gold Active Plus and Kanan Devan Duet — targeted at the south Indian market. On a pan-India basis, Tata Tea Masala and additional flavours of its ready-to-drink ice-tea, Fruski, was launched. It also launched flavoured water under its Himalayan brand and came up with three tea cafés under the Cha by Tata Tea brand.
TGBL Managing Director and Chief Executive Officer Ajoy Misra said depending on the success of these tea cafés, the project can be scaled up.
Over the years, TGBL has come up with own brands particularly for India and had been acquiring brands like Tetley, 8’o Clock Coffee and others while setting up joint ventures like Tata Starbucks and Nourishco. While Tata Starbucks has broken even this year, registering a 28 per cent growth with a presence across 118 stores in seven cities in the country, and the Nourishco brand turning Ebidta positive, other brands continue to remain small in scale. “All of these are small in scale – even the water (product segment) has done well, but again, the scale is small and we need to make sure that many of these product lines scale up and this is going to be very important as we move into the future,” Chandrasekaran said.
Typically, a Tata Starbucks store takes around three years to break even. “Growth continues to suffer because of marginal presence in many international markets, and in the Indian market the growth is good at 5 per cent. But international markets have not grown; in fact, in some markets we have degrown,” Chandrasekaran added.
In a response to a shareholder’s enquiry over having numerous subsidiaries, the official said that the company’s plan was to have “optimal subsidiaries”.
Also, amidst speculation of a possible restructuring of the group’s FMCG business, involving a merger of the coffee (Tata Coffee) and branded salt business held under the Tata Chemicals with Tata Global Beverages, Chandrasekaran said, “The Tata group has a presence in multiple different consumers segment. Always proposals and ideas get discussed. These proposals sometimes come from investment bankers, sometimes internally. There is no concrete proposal. Whenever there is a concrete proposal in front of the board, it will deliberate on it."