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Tata Global Beverages to introduce ready-to-drink green tea

RTD tea market in India is pegged at Rs 140 cr, with a 9-10% annual growth rate

Tata Global Beverages


Tata Global Beverages

(TGBL) has entered the ready-to-drink (RTD) segment with a green tea-based drink, spearheaded by Tata Tea in India and Tetley in Canada.

To be made available in mango and orange variants, the company is piloting the new product segment it recently entered to diversify its Indian portfolio, to target youth. Although TGBL's competitors have entered the iced tea segment, the company has claimed that this is a first of its kind combination in the Indian iced tea market, with an offering that is innovative with herbal extract, low in sugar and relevant.

Globally, particularly in Europe and North America, traditional black tea consumption has been on a decline. The fruit and herbal infusion segment is on a growth trajectory.

In the company's annual report for 2016-17, the RTD tea market in India is pegged at Rs 140 crore, with a nine to 10 per cent annual growth rate.

"We haven't been really playing in the iced tea segment in the recent past but have been studying the scope," said Ajoy K Mishra, managing director and chief executive. He says black tea was about 85 per cent of Britain's beverage market only seven or eight years earlier but has shrunk to 68-69 per cent. In Canada, black tea consumption accounts for half the market.

"In USA, by tea, people understand iced tea and RTDs. The fruit and herbal beverage segment, however, is growing faster," he said.

In India, on the other hand, black tea accounts for 90 per cent of the market and is a growing category. The branded segment, where TGBL is market leader with a little over 20 per cent share, accounts for half the annual production of 1,200 million kg, pegged at Rs 14,000-15,000 crore. This leaves enough room to try new product categories. In the past, TGBL had tested the waters by introducing herbal-based tea, Tea Veda and others.

"However, even in India, the growth of green tea outpaces the growth rate of black tea," said Mishra.

In the past 15 months, the company has come up with six new launches in India, more than in the past five-six years.

It first introduced Tata Coffee Grand in three variants, then introduced a Maharashtra-specific blend from the Tata Tea stable, introduced Tea Veda, which is an Ayurvedic tea infusion, and a flavoured Super Green Tetley tea, fortified with vitamins, beside a cardamom-flavoured tea. The other introduction is Fruski, being experimented.

Global relook

TGBL, into a fifth consecutive quarter of operating profit, has decided to review its businesses globally, to maintain growth. Mishra said the company would take a call on unprofitable businesses.

Asked about performance in Poland and the Czech Republic, he said, "We are taking a hard look there and trying a new strategy, including brand restructuring, and we have changed the go-to-market distribution system. If we feel we have come to a point when its not going to be, we will take a call. We can't allow prolonged drag."

Recently, TGBL quit from Russia and China, where the operations weren't profitable. In Russia, where the company had two to three per cent share, it sold off the assets and the business to Skodnya Grand but will retain the brand in the country for five years. Mishra says the sale will help TGBL make up for losses from Russian operations and royalty income will add to the company's performance.

TGBL has also done away with its China presence, where the company had a business-to-business model. However, it will sell the Tetley brand of products through the online platform.

The EMEA region, of which Poland, Czech Republic, UK and Russia are a part saw a 5.5 per cent dip in revenue at Rs 1,548 crore in 2016-17. This region contributes 26 per cent of the branded revenue, with the UK accounting for 90 per cent of earnings.

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First Published: Fri, August 18 2017. 01:28 IST