Tata Tea plans Russia foray via joint venture
Business Standard — June 9, 2006

Buoyed by the success in Pakistan and Bangladesh, Tata Tea plans to enter Russia through a joint venture with a local company. Tetley, a part of Tata Tea, would be the vehicle for the Russian foray. According to Vijay Singh, director-developing markets, The Tetley Group, test marketing has started in Russia, which is one of the largest tea markets in the world consuming approximately 1,40,000 tonne per annum.

The Russian tea market comprises almost entirely branded teas, unlike India where the unbranded market still accounts for over 65 per cent of tea sales. Singh believes there is an opportunity for Tetley in Russia, as tea bags account for about 35 per cent of the market. In comparison, tea bags form just about one per cent of the market in India. Singh says the joint venture route had worked very well for the company in countries like Bangladesh and Pakistan.

"We entered Pakistan two years ago and currently it is the fifth biggest Tetley market globally, with sales of over 2 million kg," he pointed out. He said that the brand had taken the challenger approach in terms of its communication and marketing strategy which had worked well for them. Similarly the brand has been in Bangladesh for three years now achieving a market share of five per cent. In fact, riding on the popularity of the Tetley brand, the company has introduced the Tata Tea brand in Bangladesh a few months ago.

Singh said that the response to the brand has been encouraging so far. "We will have to wait before taking the Tata brand to other countries since the delineation between the premium and mainstream brands needs to be clear," he adds. According to Peter Unsworth, managing director-supply and support, The Tetley Group, the company would continue to invest in brands and companies as part of its growth strategy.

Talking of Jemca, which has a 27 per cent market share in its home market and will contribute around 10mn pounds to sales, Unsworth said, it would give Tetley a manufacturing base to operate from. Tetley acquired the Czech brand Jemca last month. Singh said that the Tetley brand would take the premium position when entering the developing markets to leverage its position as UK's number one tea brand. The brand has also done well in the past year in developed markets such as the Canada and UK where it had overtaken Apeejay's Typhoo in the decaf category.

Tetley's income from operations during the previous financial year was Rs 2,033.16 crore with a net profit of Rs 146.55 crore. Tata Tea has put in a bid to acquire the Moroccan brand Somathes, a company specialising in Chinese green tea, Last year, the company had acquired Good Earth Teas of the US and Jemca in the Czech Republic.