Tuesday, June 23, 2009

Tata Tea set to take on global beverage makers

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BEVERAGES major Tata Tea has begun integrating its various global businesses operationally in a move aimed at transforming the company into a global beverages group. The new operational structure is modelled on the lines of multinationals such as Unilever's global operating structure.

Although, the integration process has begun, it isn't yet clear whether the consolidated entity would be a local firm or an international company, said company officials. They also ruled out any immediate plans for financial integration of its entities, three of which are listed. Tata Tea share price closed at Rs 788 on BSE on Thursday, down 3.3%. ET had first reported the development in March 2009. R Krishna Kumar, currently, vice-chairman of Tata Tea will be responsible for stewarding Tata Tea in the Tata Group, a
company release said. The management said the group would focus on global joint ventures and acquisitions of global and regional brands wherever it makes strategic sense.

The move to consolidate various beverages
businesses such as tea, water and soft drinks under a single entity is expected to facilitate fund-raising, simplify operational issues, cut costs, ensure efficient global sourcing, bring economies of scale and help the group leverage distribution strength. Tata Tea officials said the move would help Tata Tea compete globally, with companies such as Coca Cola, Pepsi and Unilever in the beverages business. The group plans to expand into new geographies and diversify from tea and coffee and build positions in the high growth areas of the 'good for you' $160-billion beverage market through strong product innovation, said Peter Unsworth, CEO of Tetley group.

"Tetley, Tata Tea, Good Earth and Himalayan
will be the brands with global focus while the regional brands are Vitax, Jemca, Eight O'Clock Coffee, Tata Coffee, Chakra Gold and Kanan Devan. We have diversified from black tea to water, ready to drink tea, tea infusions, red tea and organic tea," Mr Unsworth said. The global beverage business has been organised into six key regions led by a regional president: GB & Africa led by Nigel Holland, US by Barbara Roth, South Asia by Sangeeta Talwar, Canada & South America by Steve Rice, Europe & Middle East by Garry Nield and Asia-Pacific by Pradeep Poddar. A singlemanagement team based in London has been set up for the entire group comprising Mr Unsworth, Percy Siganporia, MD, Tata Tea and chairman, MEMW, Hamid Ashraff, MD, Tata Coffee, L Krishnakumar, CFO, Nalin Miglani, chief HR officer and John Nicholas, CMO.

The group's core markets are India, the UK, the US, Canada, Australia, Poland, France and the Czech Republic, and it is trying to grow its market with new product launches and innovative ad campaigns. It also plans to replicate its Jago Re campaign in other countries, after its success in India, the management said in an analyst discussion on Thursday. "We are looking to expand the reach of Himalayan mineral water in South Asia. Our acquisition of a company in Russia will give us an entry into the European market for all our products. We are also in the process of restructuring our US operations and consolidating them to one single office," he said.

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