I am delighted to report that your Company posted strong results last year recording a24% growth in operating profit and significant increase in net profits. We continued ourfocus on bringing out innovative new products investing in our brands throughdifferentiated marketing and striving for higher operational efficiencies. Despite themacroeconomic challenges posed by Brexit increasing competition and slow Eurozonerecovery our key international markets performed well. The India business has shown goodperformance buoyed by multiple new launches in the year. We weathered the demonetisationstorm well and are well prepared for the GST transition.
We see significant growth opportunities in the tea coffee water categories and willbe leveraging this through innovation strengthening our core brands premiumisation andtapping white space geographies.
The beverage landscape is evolving rapidly and it is critical to innovate consistentlyto keep pace with changing consumer preferences and needs. We are building on our richheritage of innovation be it path-breaking tea bags to stand out brandcommunication to leverage opportunities. Over the past year we have increased ourfocus on innovation and strengthening it as a core characteristic. Our annual report themeDifferent by Innovation' reflects this. We have tried to bring to life selectexamples of innovation across our operations and also some of our efforts to embed it inour culture through multiple initiatives.
I summarise a few of these initiatives here.
Continued focus on health and wellness
Health and wellness continues to be a key consumer theme across markets. We haveexpanded our portfolio of green teas and fruit & herbal teas in line with this trend.After a successful launch in the UK Tetley Super Green Tea (fortified with vitamins) waslaunched in
India. Tata Tea Teaveda and Tetley Balance two product ranges inspired byAyurveda and containing herbal ingredients - were launched in India and Canadarespectively. Eight O'Clock coffee in the USA launched a new line called Infusions with amulti-experiential marketing campaign to deliver an enhanced coffee experience.
Premiumising our products
Premiumisation has been a part of several of our innovations across markets andcategories. Globally consumers are seeking more indulgent beverage experiences.Celebrating 180 years of tea blending Tetley Indulgence launched in the UK is a range ofblack teas in indulgent flavour twists such as cookies & cream chocolate mintgingerbread and spiced apple. In India TGB collaborated with Starbucks to create asignature innovation India Spice Majesty Blend especially for the Starbucks Teavanaportfolio in India. This blend is inspired by India's rich tea legacy and is aninvigorating blend of full leaf Assam black tea with a rich spice infusion.
Our premium offering in the water segment - Himalayan natural mineral water - launcheda sparkling variant in select channels and also piloted Orchard Pure' flavouredwater in Delhi-NCR.
Some of the other new launches have already been mentioned as part of the Health andWellness focus above such as Tetley Super Teas and Eight O'Clock Infusions.
Establishing thought leadership through campaigns with a social purpose
The Tata Tea brand launched a powerful new version of its Jaago Re campaign in India -Alarm Bajne se Pehle Jaago Re' urging people to stop being reactive and insteadstart Pre-acting' and prevent tragedies and unfortunate incidents from happening.The campaign aimed at igniting the spirit of prevention in society has been extremelywell received.
The Tetley brand partnered with Smile Train the international children's cleftcorrection charity to raise awareness and extend support to affected children. Thispartnership symbolises the brand's philosophy of spreading moments of warmth.' Tofurther amplify this Tetley is running a digital campaign called Tetley SmileChallenge' across the UK Australia US and Canada to raise awareness among consumersabout Smile Train and to invite their participation.
Growth with sustainability
Sustainability has always been and will continue to be integral to our business. It isimportant for us that the tea industry is part of a sustainable growth story which enablesbetter opportunities for all stakeholders across the supply chain. TGB is a leader forthe 5th consecutive year in CDP's Climate Disclosure Leadership Index in India. We havereduced our carbon footprint by 40 percent over the last 3 years. We have also achieved100% Rainforest Alliance certification of all Tetley blends in the EMEA and CAA* regionsand are committed to achieving 100% sustainable sourcing of our other tea brands by 2020.TGB is a founding member of the Ethical Tea
Partnership a non-commercial partnership of tea companies committed to improving thelives of tea workers and their environment to create a thriving tea industry that issocially just and environmentally sustainable. We started Project S-PPF (Sustainable PlantProtection Formulation) a few years back in collaboration with other Tata companies. Itis an innovative initiative to develop biopesticides for tea crops based on theprinciples of Vriksha Ayurveda and is making good progress.
We have built our organisation on sound fundamentals and continue to focus onopportunities to grow and strengthen our offerings. We are deploying innovative thinkingand smart execution to create value for all stakeholders. I would like to take thisopportunity to thank our employees and partners for being an integral part of thisjourney. Our shareholders too have been a constant source of support as have been thegovernments and other institutions that we engage and interact with.
We remain committed to our strategy and vision and are confident of the continuedsupport of all our stakeholders and well-wishers.
With warm wishes
Managing Director & CEO