 "The company says that its experience with Tata Nullore has given it the confidence to convert many more blocks within its estates into premium lots")
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One lot at a time. At Tata Coffee, that is how a premium brand is being created. The company has been scouring its estates and seeking help from coffee growers, tasters and brand consultants while encouraging estate managers to create single-origin premium coffee to be sold through the chain of Starbucks stores in the US. Its first success story is the Tata Nullore, which made the cut for the Starbucks Reserve programme (small batch rare coffees sourced from around the world and roasted in its flagship store at Seattle). Reserve coffees fetch anything between $10-65 for a pound, but no Indian coffee has ever been on the list.
Tata Coffee believes that going premium is its best bet. For one, it has an advantage over the rest in the market given its alliance with Starbucks. Secondly, this is perhaps the only way to insulate itself from the vagaries of weather and volatility of global markets. “Premium categorisations are catching up across sectors because customers are increasingly being more discerning,” says Sanjiv Sarin, managing director and CEO, Tata Coffee. Sarin is unwilling to discuss financial details or the revenue share with Starbucks. But he says the Tata Nullore brand will bring in more than any average Indian premium coffee brand does today. His confidence stems from the strong Starbucks retail format as well as the improving quality of the group’s estates. However, premium coffee drinkers are notoriously finicky and coffee from India, the sixth largest producer of the bean, is yet to find global appeal.
Brewing it right
The search for an estate-grown premium brand began nearly two years ago. The company identified several areas, based on recommendations of in-house coffee growers. The Nullore Estate in Pollibetta in Coorg was chosen for growing the Arabica bean.
Since then every single bean has been checked by a team responsible for taking the brand to Starbucks stores, the company says. “What clearly differentiates this micro lot are the different notes of caramel, citrus and cocoa that one can taste,” explains Sunalini Menon, coffee taster and quality control expert.
The company put a lot in store by the selection process and when news of acceptance into the Reserve programme filtered in, the estate workers celebrated like they would a wedding in the family. Unlike Darjeeling tea, Indian coffee has rarely been recognised as a premium commodity. It has lagged behind Latin American and African countries. It was a big deal getting past the quality check posts and the company was determined to drive the achievement home.
Tata Coffee is hoping that its entry into the premium category is a harbinger of better times. It will boost margins, for one. In the second quarter that ended September 30 the company had said its instant coffee business continued to show modest growth. The bulk of the almost 8,000 tonnes of coffee produced is exported. It also has an instant coffee business that is growing at an average three to five per cent per annum, most of which comes from countries such as Russia.
The manufacturing technology is similar across players in the instant coffee space. “The capabilities we bring are in blending, engaging with the customers, services and co-creating products. That’s how we are differentiating,” Sarin explains.
On the premium trail
For Tata Coffee, premiumisation is a way to insulate itself from the fluctuating prices of coffee in the world market. It will help rise up the value chain and improve the bottom line, it says. But it is a difficult trail to follow.
Production of premium coffee is as nuanced as wine-making, says Sunalini Menon. “Just like in wine-production, the soil, rain, temperature, the time of the day it is plucked or even the way you crush coffee beans during production can affect the taste,” she says. Menon was assigned the task of selecting the final micro lot for the Starbucks Reserve programme and she chose the one that made the list.
Having managed to meet the global benchmark on quality, the experience has buoyed the company’s hopes. It is nurturing over 150 blocks within its estates to create specialised coffee. Tata Coffee has about 19 estates with 840 blocks across the country. “This journey of premiumisation leads to the question ‘How do I unlock the value of my estates’,” Sarin adds. This is possible, he says, “By creating more Nullores. We are creating premium varieties of Indian coffee. (Indian coffee) has been traditionally a mass consumption product and could not compete with the world. We have gone and broken that myth.”
The company says it is also open to partnerships with more companies and roasteries. “The entire movement of going down the road of (creating) premium differentiated coffees was to put a gap between the commodity pricing (prevalent in the global markets) and what we can generate (through the Reserve coffee brand). If the consumer is going to put money down for a differentiated experience of coffee, other players (like roasteries) will definitely follow,” Sarin says.
