Two major structural changes that Tata Tea made in its organisational structure in the last quarter of 2002-03 began to pay off in 2003-04. First, the separation of the company's branded and plantation operations into independent economic value added centres has driven greater value into operations in both activities. Second, the integration by Tata Tea of its sales and marketing operations has produced much-needed marketplace synergy.
The most rewarding consequences of these efforts are all-time-high productivity and efficiency in plantation operations. Meanwhile, on the people front, the company's energies were focused in 2003 on driving a greater performance orientation across the organisation, and developing through the process of integrating operations with Tetley a cadre of managers with global competencies.
In terms of products Tata Tea entered new geographies and categories. It expanded its thinking to take in more than just the local market; the growth canvas became global, as did the priorities. The outcome was, among other things, an entry into vending, a widening of the company's operational portfolio through the launch of new tea variants, and a planned international debut in the fast-growing fruit and herb tea segments.
Tetley continued the pursuit of business growth by strengthening its performance in existing markets while expanding into new geographies and categories. Record market shares were achieved in Australia, Canada, France and Britain. The brand was successfully launched in Russia, Bangladesh and Pakistan, with teas developed specifically for these markets, and it was re-launched in Poland. A ready-to-drink tea was test marketed in Britain.
In terms of business processes, the integration of Tata Tea and Tetley gives both companies the opportunity to put together a totally new global company that combines the best of both organisations, and draws on best practices and best processes from around the world in doing so. In India, the top priorities are implementing the Tata Business Excellence Model becoming positive on the economic-value-added (EVA) scale. Migration to a SAP-based enterprise resource planning system common to both companies is the next step.
Tata Teas vision is strongly focused on tea, which means that new business ventures will be in this domain. It is commitment of this nature that has seen the company outperforming its Indian peers in one of the most difficult business environments the industry has ever seen. The Tetley acquisition gives Tata Tea's worldwide business the insulation it needs from low commodity prices in India, and a significant presence in the higher-priced and more evolved global tea market.
The key challenge for the worldwide tea industry is to drive consumption of tea upwards. With production growth outstripping the growth in consumption, and a depressed commodity scenario that shows few signs of disappearing, tea businesses will have to climb to the higher end of the value chain.
The combined Tata Tea-Tetley business, with a combined market share of 4 per cent, ranks second in the global stakes, well behind Unilever, which has lorded it over the No 1 position for many years. Understanding that challengers have to work that much harder, Tata Tea is now girding its muscles to narrow the gap with Unilever.
In India, the goal is to grow the top and bottom line significantly, improve market share by at least 1 per cent over 2004-05, make the company EVA positive and transform its plantation operations so that the haemorrhaging of the past three years stops. The other, overarching, goal is to now move as quickly as possible to being a fully integrated global business.
For Tata Tea, the year ahead promises to be as rewarding as it will be challenging.
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