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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 Tea’s 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.
Uploaded on January 5, 2005
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