The Tata Tea kitchen is fragrant with new aromas. The latest to waft in, all the way from America, is Good Earth Corporation, with an offering of herbal and fruity flavours.

This feast of flavours has a lot to recommend it, says Tata Tea managing director Percy Siganporia: "If we are able to present tea for more occasions and in more formats to consumers, we can get an increasingly larger share of throats and grow the business."

A hot, new cuppa
Back in 2000, the company was a small player in danger of being swamped by global food giant Unilever. Not willing to fade quietly into the night, Tata Tea stoked its fires and upped its position in the global tea stakes by the dramatic acquisition of Tetley, the world's second-largest tea brand, in a leveraged buyout.

The deal infused new energy into Tata Tea. It gained from Tetley's expertise in blending, branding and packaging — key areas for securing market share and increasing bottom lines. The company's portfolio of brands was enriched with new products and its footprint was extended to new geographies. Next on the menu was tackling the competition from the beverages industry. Consumers were moving to flavoured and herbal teas. It was time for another acquisition.

Flavours of freshness
The company zeroed in on Good Earth Corporation which owned the US speciality tea brand Good Earth, offering a range of herbal, fruit-flavoured, medicinal and speciality green and black teas. The brand was licensed to FMALI Herb Inc. It had a 3.7 per cent share of the US speciality tea market. In August 2005, Tata Tea through its subsidiary Tetley US Holdings, signed the agreement to acquire the company and the brand.

"This acquisition is an important contribution to our plans for growing the Tata Group's tea business around the world. We believe that there is a real tea sector for the US market and elsewhere in the world. Good Earth's strong product portfolio means it is well placed to leverage this potential. The experience and skills of Good Earth and Tetley complement each other well and will combine to create a significant new force in the global tea industry," say Ken Pringle, executive vice chairman and CEO, Tetley Group.

Quest for growth continues
Tata Tea is not yet ready to curl up with a cuppa and relax, however. "We are still very small in terms of the total global opportunity for tea. We are currently present in only 30-35 per cent of the total markets where tea is consumed, we are only 4.5 per cent at best of total global tea business," says Mr Siganporia.

Tata Tea is aggressively looking at strategic alliances, mergers and acquisitions to gain a bigger share in the global herbal, fruit and other speciality tea markets. Aiming to position itself as a leading beverage player in the US and Europe to start with, Tata Tea has already started scouting around for suitable new acquisitions. "Funds have never been a constraint," says Mr Siganporia, "if there is a good project with reasonable returns."

Uploaded on May 17, 2006