How did Tata Tea begin its operations in the United States?
Business began when the Tata joint venture, Tata Finlay, formed in 1962, successfully developed a process to manufacture instant tea powder with fresh green leaves as the raw material at its instant tea manufacturing plant at Munnar in Kerala, India. This 100-per cent tea product, with its unique fresh tea character and distinct astringent taste, gained for itself a market in the US. With the volumes growing, the need to have a base for the reprocessing and distribution of the tea powder that was near its customers was imperative.
So the Tatas approached a leading American tea company that owned the facility at Plant City. This facility, set up in the early 1960s, was being used to extract and manufacture tea powder when the Tatas first started using it in 1974. A joint venture company, TriTea Inc, was then formed with theTatas as a partner and by 1980 the Tatas took over full management control. In 1987, Tata Tea Inc, a Florida corporation, was incorporated as a 100-per cent subsidiary of Tata Tea Limited, India.
What are the products that Tata Tea produces?
The instant tea powder market in the US has three major consumer segments, namely, 100-per cent tea powder in jars, iced tea mixes, and ready-to-drink (RTD) teas. We have products for all three segments and are the leading supplier of 100-per cent tea in jars for the private label brands in the US. In the iced tea and RTD segments, we supply to some of the leading brands for whom specific products have been developed and improved over years. We source about 3.5 million pounds of tea powder from the Munnar plant of which 35 per cent is for the RTD segment, 35 per cent for the co-dried and iced tea mix segments, and the rest for the 100-per cent tea in jars and green tea variants.
The processing facilities at our factory include spray driers and associated equipment, powder milling machines, and a glass jar bottling line. Our tea powder product sales are around 5 million pounds per annum.
Today, we are not a brand in the US market. Most of our products are customer specific, developed with our customers over the years. We are, what I call, a silent ingredient supplier.
Does the company plan to expand its facilities or its areas of business?
The growth in the US tea market is in the speciality segment. This is the fast growing segment and a high value segment and we have to be there.
Does the company intend to create its own brand as part of its growth plans? Will there not be a conflict of interests if the company does plan to do so?
Conflict of interest with existing customers is a possibility. However it can be worked around, like in the automobile industry, car manufacturers today get critical components from the same source.
American quality standards are known to be a lot more stringent than those of the Indian market. How has the company fared?
Quality standards extend well beyond just the product alone. The entire supply chain is scrutinised. Government agencies like the FDA, Department of Agriculture and Customs, apart from various watchdog agencies and consumer protection groups, are constantly monitoring the supply chain through inspections, testing and auditing.
Independent food safety audits are almost a mandatory annual requirement by most major customers. We are proud to have received the highest rating for the past two years from an independent food safety audit organisation. The laws with regard to food quality and safety are also constantly reviewed at governmental and industry forums.
How do you compare with your competitors?
How many customers do you have?
What are the political issues that one has to guard against and legal issues to be kept in mind to run a manufacturing plant in the US? Also, what are the cultural or social issues you find yourself addressing as an Indian-run plant in the US?
Social issues are not a major factor in the running of the plant. However to be a part of the community, especially like the small rural one in which we work, a degree of sensitivity and tact is required.
Could you tell us a little bit about your employees, human resource initiatives at Tata Tea Inc?
Most of our employees have been working with us for over 15 years with over six having spent 25 years or more with us. Ivey Campbell started at the plant over 34 years ago and is today our production manager. James King, Joyce LaBarbera and Kerry Merrick who have also been with us for a very long time are heading various departments of our company's operations.
As for HR initiatives, we conduct a number of training programmes, every year, in food safety and equipment handling for all our employees. A number of specific programmes for employees for their specialised work areas are also conducted by external agencies.