In an interview to CNBC-TV18's Kritika Saxena, Ajoy Mishra, MD & CEO of Tata Global Beverages spoke about the outlook of the company.
Below is an excerpt of the interview.
Q: I will start by asking you about one of your flagship products. Tetley is something that has caught investor attention, that has caught consumer attention and in terms of brand recall value it has stood out. I read an article somewhere that you had indicated that you are looking at touching USD 1 billion as far as revenues are concerned in Tetley. What is the revenue base right now and what is the strategy to be able to grow to that figure?
A: Tata Tea acquired Tetley in the year 2000 and at that time, it was not only India's but also Tata Group's largest overseas acquisition. Tetley has been a global brand, has been a brand of trusted tea for over 100 years and it is indeed a brand that is truly global because Tetley is available in around 40 countries in the world. The epicentre of the Tetley brand and the business has been in UK. Tetley is also a big brand in Canada where it is number one market share brand. Many countries of Europe, also Australia, post acquisition, we even brought the Tetley brand into India for our premium range of teas and now we have extended that into green tea under the Tetley brand.
So Tetley is indeed a brand that had a global footprint which we are keen for it to expand further, both within existing markets as well as some new geographies including markets such as India where the Tetley brand play, whether it be in the green tea part of tea or it be in tea bags has still not been as extensive a play as we think the market for that brand in India is.
So yes, being a global brand, we have an ambition to grow that brand, but not just in tea which is the traditional hot tea, we are now taking the Tetley brand into beyond black. So, with Tetley tea in the UK, we are already into everyday black tea, decaffeinated tea, green tea and now, we have entered the fruit and herbal tea segment, all with the Tetley brand. So, Tetley, as a brand will extend in the tea category into other sub categories of tea. And already in Canada, we have taken the Tetley brand and gone beyond fruit and herbals and Ayurveda which we have gone under the Tetley brand. We have recently launched a ready to drink Tetley.
Q: This had been piloted in North India already, right?
A: Yes. So, I will come to that. The ready to drink entry of Tata Global Beverages across 3-4 key geographies is a whole new thrust. But sticking to the Tetley brand, Tetley is also taking our ready to drink brand of ice tea into Canada and shortly into other markets. So yes, Tetley as a brand, with all its extensions is a brand that we are planning to grow and become much bigger than what it is today.
Q: So, what is the revenue base right now and the USD 1 billion target that you have set for yourself, what is the timeline that you are looking at?
A: We are hoping that we will be able to, with all these additional products that we are coming, we hope to be able to be there in, I cannot give you the exact number because we are not specific on our forward looking.
Q: 2-3 years is a decent timeline to look at?
A: A little bit more than that because some of these are new categories that we are entering and some of the new categories we are entering, we are entering with pilots so that we take some learnings and retool so that we go ahead. But suffice it to say that Tetley as a brand has not seen the kind of growth in the past which we are planning to make happen.
Q: You have several smaller brands. You have introduced brands across the water, coffee and tea markets. Are you looking at consolidating this? Are there any brands that you would perhaps look at moving out of? Any exits that may make sense? Would you look at consolidating the presence across these three segments?
A: You are right. We do have a portfolio of brands and that is why it took so many shelves for us to showcase all the brands that we have between tea, coffee and enhanced waters. Yes, to answer your question, a bit of both.
Q: So you will look at consolidating the smaller ones?
A: Yes, we have also grown since the year 2000 with a series of acquisitions. But, when it comes to global portfolio of brands, we are indeed at this point looking at a rationalisation of our portfolio of businesses as well as brands.
Q: So how would that work? Let us talk about brands first. How would that work? What are the brands that may make sense to pull out of and what are the brands that you look at either merging into larger or several smaller brands together?
A: We have stated in the past that we are wanting to rationalise our portfolio of businesses. We have said, in the past, and we continue to walk that journey that we would put some of our businesses that are underperforming businesses under a sharp lens and we are moving in that direction where underperforming businesses/brands, it is not easy to change brands and put another brand in that place because each local brand has a huge affinity with the local market. But if that business is not performing and giving us the kind of returns that we want, we are not afraid to restructure some parts of those businesses.
Q: Which are the businesses and which are the brands?
A: I wish could tell you. So many people in the market would love to know, but that, as and when it gets consummated, we will be announcing. We have announced one exit of one business, but that was not a branded business. That was in China. We had a business to business (B2B) business. We made an announcement some months back to SEBI as well as it came out in the media that we are pulling out of that business. So, it is an indication of the fact that Tata Global Beverages wants to move on aggressively for growth, but profitably. And if a business is not going to give that, we will put it under a severe lens.For the entire discussion, watch accompanying videos...