September 06, 2010 | Business Standard

Acquisitions to drive Tata Global's foods foray

Company plans to continue building its non-tea portfolio.
 
The proposed foods foray of the Rs 5,783-crore Tata Global Beverages (TGB), formerly Tata Tea Ltd, will happen via acquisitions, said Peter Unsworth, chief executive officer, in an exclusive conversation with Business Standard.
 
"We do not have any capabilities or assets in foods; whatever we have is in beverages. So, the route with foods will have to be via acquisitions," he said.
 
Unsworth, however, declined to indicate the targets the company had identified for its foray into foods.
 
It was at the firm's 47th annual general meeting recently in Kolkata that the chairman, Ratan Tata, had spoken of TGB's plans to get into foods as part an expansion into newer areas. Tata had said, "During the year (2009-10), the major issue has been the change of name of the company. This was done to better reflect the business, which in the years to come will be a more evolved beverage company, possibly even getting into foods rather than being a tea company as it has been."
 
EXPANDING HORIZONS
  • Tata Global Beverages (TGB), formerly known as Tata Tea, has an extensive list of power brands, which include Tetley, Good Earth, Himalayan, and a niche product called Tea Pix
  • Since the company does not have any capabilities or assets in foods, expansion in non-beverage section will happen via acquisitions
  • TGB would look at a nutritional food product targeted at children
  • The firm is also looking at innovative product executions that are global in nature
  • There may be a proposed joint venture between TGB and PepsiCo
Since then, reports had suggested TGB would look at a nutritional food product targeted at children, but Unsworth declined to give precise details about the plans. "If there are any opportunities outside beverages which is life-enhancing, and in the foods domain, we will consider it," he said. "At the moment, the attention of my team is on beverages. Our assets, our capabilities, are in this area."
 
Tea accounts for 67 per cent of turnover, according to TGB's 2009-10 annual report. This is down from over 90 per cent five years earlier. Unsworth says the plan is to continue building the firm's non-tea portfolio. "The focus for us will be on good-for-you beverages," he says.
 
Global apps
TGB has been stepping up its efforts in this area. In an earlier conversation with Business Standard, Percy Siganporia, TGB's deputy chief executive officer, had said the firm was looking at innovative product executions that were global in nature.
 
SUKK, a jelly-based tea drink, was an example of that, he had said. Currently being test marketed in Manchester, the product would be eventually rolled out across the UK, moving to allied markets after that. "Our eyes are on the global picture," Siganporia had said. "We are not interested in executions that are local in nature, though some of them we will do."
 
Siganporia had also indicated that SUKK could make it to TGB's list of power brands, which includes Tetley, Good Earth, Himalayan, and a niche product called Tea Pix. He had also indicated the proposed joint venture between TGB and PepsiCo, announced this April to develop beverages on the health and wellness platform, would not be restricted to India. "There is no doubt in my mind that these discussions are not geographical," he had said.
 
Unsworth, his colleague, adds, "Water is part of the discussion on between the two companies. The products that the JV will look at will be functional, good-for-you beverages, in our as well as PepsiCo's portfolio. It will also look at products being developed by the two companies in that space."

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