April 2015 | Philip Chacko
'The global market is vital to our health'
Tata Global Beverages plans to strengthen brands, innovate and build scale to drive its global business. Excerpts from an interview with chief executive officer Ajoy Kumar Misra.
Will TGB concentrate on its core businesses of tea, coffee and bottled water over the next five years?
Yes, TGB will continue to focus on natural beverages: tea, coffee and water. We believe there is strong potential for further growth and expansion in these categories. For example, some of the new opportunities we have pursued include entry into the pods (single serve) segment in markets such as the United States, Canada and Australia, functional water in India, green tea and specialty teas across geographies, and premium teas like Tetley Tea Masters in Australia. We are the world's second-largest tea company and we will continue to increase the share of coffee and water in our overall portfolio.
TGB appears to be especially keen to push up numbers in its coffee business. How is the company planning to do that, and will India be the principal market for this push?
TGB is present in the coffee business in the United States through Eight O'Clock Coffee, through Grand Coffee in Russia, the recently acquired Map Coffee in Australia, and through Tata Starbucks in India. We also have a stake in the coffee plantations business through our subsidiary company, Tata Coffee, in India.
In the United States, we entered the fast-growing pods market through Eight O'Clock Coffee's alliance with Green Mountain Coffee Roasters; this has helped TGB expand its presence further in the country. In Australia the acquisition of Map added coffee to TGB's portfolio. In Russia we are strengthening distribution for the Grand Coffee brand, and in India the Starbucks stores use coffee sourced from Tata Coffee's plantations and also stock the specially crafted 'India Estate Blend'. Tata Coffee is moving up the value chain in plantations as well as with its instant coffee business.
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Over 65 percent of TGB's revenues come from markets outside India, which means global markets are vital to the health of our business. In this context, the macroeconomic environment has been challenging in some parts of the world and economic volatility has to be managed.
It is important to strengthen our brands, keep them relevant to consumers and get our distribution right. In many developed markets we are seeing growth shifting to new segments such as pods and specialty teas, coupled with an increased focus on health and wellness. This is a challenge as well as an opportunity for TGB to think innovatively and explore new routes to market, based on changing consumer behaviour and consumption patterns. In the coffee and water categories, the challenge facing us is to build scale in the key geographies where we are present.