June 26, 2001 | Business Standard

Tatas on road to merge tea, coffee lines

Tata Tea and Tata Coffee are working on integrating their marketing networks, a move which is widely perceived as a precursor to an eventual merger of the two companies.

Confirming that the marketing network of Tata Coffee, a subsidiary of Tata Tea and Asia's largest integrated coffee company, has been integrated with that of Tata Tea, P Siganporia, deputy managing director, Tata Tea, told Business Standard: "We now have a national marketing organisation. In fact, the sales, distribution and branding of Tata Coffee is now vested with Tata Tea."

But on the issue of a merger of the two companies, Siganporia said that this could be an option for the company in future.

"We are operating as one beverage company, the balance-sheets remain to be merged and we may explore that in future," he said, but immediately cautioned that "the decision will have to be taken by Tata Sons, the promoter company".

The integration of the marketing networks of the two companies is part of Tata Tea's strategy to increase its market share and make further penetration with the existing own brands and those of Tata Coffee.

To master a bigger share in the depleting market, the tea major is all set to start a massive brand building exercise this year. The company is also planning to launch new brands.

Apart from the Tetley brands, the company is contemplating a premium brand in the leaf category. The brand, when launched, will be pitted against Taj Mahal from the Hindustan Lever Ltd (HLL) stable.

The move has already payed dividend on the costs front, as the company has achieved Rs 2 crore savings on account of the integration.

Tata Coffee was formerly known as Consolidated Coffee Ltd. Subsequent to the merger of Coffee Lands Ltd. and Asian Coffee Ltd. with CCL, the company has become Asia's largest integrated coffee company.

On brand launches, Siganporia clarified that the brand launches are at a conceptualisation stage.

Tata Tea, which managed to maintain its market share last year, has 54 estates spread across 57,000 hectares in the four states of Assam, West Bengal, Tamil Nadu and Kerala and produces over 57 million kg of tea every year.

The company suffered a loss of Rs 15 crore in the first six months of 2000 from its south Indian gardens,but is endeavouring to come close to the break-even position this year.

Siganporia said the company managed to contain losses from these gardens by re-shuffling its product-mix.

Tata Tea reported a decline of 19.59 per cent in net profit to Rs 100.21 crore for 2000-01 compared with Rs 124.63 crore last year.

The Tata Tea scrip closed at Rs 187 on the Bombay Stock Exchange (BSE) and at Rs 186.95 on the National Stock Exchange (NSE), today.