A story of Tata Tea - How a local tea brand became a global player
- Sandhya
- Nov 28, 2021
- 3 min read
Updated: Dec 2, 2021
Tata tea went on an acquiring spree from time to time in-order to establish their presence globally. They did not want to be local commodity company which owned a plantation and sold tea. They wanted to go big or go home just like their parent company and at present they are the world’s second largest tea company. Not only did they acquire, they also spotted potential smaller tea companies and funded them via their subsidiary Tetley or via their parent company Tata Consumer Products.
Tetley:
In a landmark deal in 2000, Tata Tea acquired the UK heavyweight brand Tetley for a staggering 271 million pounds. This deal which happened to be the largest cross-border acquisition by any Indian company and was Tata Tea's strategy of pushing for aggressive growth and internationalisation. This made them the 2nd biggest company in the world and is known to be one of the major acquisitions done in India. What is astonishing is that Tetley was twice as much bigger than the brand and it bet its competitors such as Sara Lee.
In 2007, Tetley accounted for around two thirds of Tata Tea's total turnover, and provided strong presence in the UK, where Tetley is the number one tea brand (with a volume share of 20.6% in 2006), as well as significant market shares in the United States, Australia, Poland and France.
Tetley banked on the health aspects of tea to promote itself after the acquisition. These include organic, herbal and decaffeinated blends of tea, as well as green tea varieties, such as Tetley Plus Wellbeing, Tetley T of Life, and Tetley Green Tea. They had taken their focus away from Black Tea’s and focused more on fruit-based teas for which there was rise demand by CAGR (Compound Annual Growth Rate) of 16.5%.
Though the acquisition and the incubation was not a rosy process due to cultural differences and large amounts of debt, it did turn out to be worthwhile risk in the long term.
Good Earth:
Good Earth one the 1st herbal tea companies in the US sells herbal, fruit-flavoured, medicinal and traditional teas. Founded in 1972, Tata acquired the London-based Tetley Group for $432 million in 2000. This acquisition was done via Tetley – US a subsidiary. Their website claims that they sell 100% natural tea. They also sell Kombucha -a fermented, lightly effervescent sweetened black tea drink commonly consumed for its purported health benefits. Although in 2011 they had to close down their manufacturing unit in Westside post acquisition and start in New Jersey, Tetley kept the brand and its values alive and is popular in the US.
Joekels:
In 2006, Tetley brought 33% of this company’s shares to expand in South Africa. They were tea packers and Tetley wanted to sell their products with Joekel’s local packaging. Joekels Tea Packers is owned and run by Jonathan Kelsey and Joe Swart, who founded it in 1994. They had speciality products such as TEA4KIDZ, the 1st ever tea made for kids.
Jemca:
In 2006, They acquired Jemca the largest tea company in the Czech Republic from food processing company, Alima Znackova Potravina, for an undisclosed amount. This Czech company has a 26.6% volume share in its home tea market with a turnover of 300 million Czech Koruna, or US$12.5 million.
They have quirky flavours like Hot raspberry with cinnamon and Hot plum with cinnamon and cloves which are much needed for winters.
They also have other flavours like Apples and rose berries, Blackberry and wild strawberries, cherry etc to cater the taste buds during summer and spring time!
Tea Pigs:
Nick and Lou, former employees had only one mission, to bring good quality tea to UK’s tea lovers when they founded tea pigs in 2006. What started out in Ikea shelves in a tiny office in Ealing became a big brand after getting funding from a mammoth – Tata Consumer Products. Sustainability is one of the themes this brand seems to bank on.
Instead of tea bags, they used what was called the tea temple - a roomy, biodegradable mesh bag, which offers all the space whole leaves need to release their big, bold, beautiful flavour as their website describes. Their plastic looking outer packaging is made out of wood pulp. Their current net worth is 8.8 million pounds.
Vitax and Flosana:
In 2007, They acquired Vitax and Flosana from premium foods SA, a local company headquartered in Krakow. This was done through Tetley, which catapulted Tetley to the second position in the Polish tea market with a 10.5% value share and a turnover of $36 million. This acquisition was made to move away from the stagnation of black tea markets and get into the fruity and herbal teas. The company exported to several Scandinavian and European countries and also supplies to global chains such as Tesco Plc., Spar, Kaufland and UAB VP Market.
- By Sandhya Suresh
References:
https://www.globenewswire.com/news-release/2021/10/26/2320788/0/en/Global-Green-Tea-Market-Estimated-to-Garner-a-Revenue-of-34-044-3-Million-Growing-at-a-Noteworthy-CAGR-of-11-9-during-the-Forecast-Period-from-2021-to-2028-Exclusive-165-pages-Repo.html
https://youtu.be/DNkHTxOPKlE
Data Monitor – Tata Tea Case study - Reference Code: CSCM0127 Publication Date: June 2007
https://www.dnaindia.com/business/report-tata-tea-finds-czech-mate-1027399
Number of words : 762
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