I am pleased to write to you on the performance of Tata Global Beverages during the year 2018-19. Apart from being one of the world’s largest branded tea companies, with iconic brands such as Tetley and Tata Tea, the Company also has presence in the branded coffee and water markets, with well-regarded brands such as Eight O’Clock Coffee and Himalayan water. Coffee, tea and water are natural beverages and we believe that the global consumer trend towards health and wellness will therefore benefit the Company’s portfolio immensely, in the years ahead.
In the year under review, the Company has delivered a mixed performance, but has also undertaken many focussed initiatives that will help build a healthy future. While consolidated revenues have grown at 6% during the year, net profits have declined compared to the previous year.
The Indian branded tea market, which is at the core of the Company’s business, not only witnessed healthy growth, but also increased competition. The Company has worked intensively at strengthening its position during the year, by focusing on its flagship brands such as Tata Tea Premium, through enhanced brand investments, and also through multiple new blends of tea customised for the tastes of each region. Simultaneously, the Company has also recognised the urgent need to modernise its sales and distribution network through appropriate technology and make it future ready. Work on this front has commenced in right earnest.
Tetley Tea, the Company’s global brand, performed well in some key geographies such as Canada, where it is the market leader.
However, in the UK, where Tetley is a strong and much-loved brand, the business has been affected by the continued degrowth in the black tea market. Tetley is taking several steps to address this challenge. Tetley Cold Infusions, an innovative new product launched in the UK during the year, has received encouraging response.
The Company has to craft the right strategy for its branded coffee business in USA, which recorded lower levels of performance compared to the previous year.
The branded coffee market in USA has witnessed consolidation over the past few years and recrafting the Eight O’Clock coffee business in this new environment is critical to its growth and success.
Tata Coffee, the Company’s subsidiary, has invested in growth of its Instant Coffee business, by establishing a state-of-the-art, new freeze-dried instant coffee plant in Vietnam.
Overall, a core challenge ahead of the Company lies in leveraging its strong assets, including its brands, its deep category expertise and sales networks, to move up to a far higher trajectory of growth.
This will require innovation in the core portfolio and scaling up the business in chosen geographies.
The opportunities ahead of the Company are exciting and energising for all of us. The large India opportunity, over the years ahead, will see tens of millions of Indian consumers across this vast country, aspire to use reputed brands that offer them very good quality and value. This will undoubtedly lead to accelerated growth in India, for several categories of consumer-packaged goods, including tea, coffee and water. Across the world, the trend towards health and wellness will also ensure that these natural beverages continue to grow as preferred drinks.
Tata Global Beverages will focus on taking the right strategic actions and building a strong set of future-focused capabilities and platforms, to seize these opportunities.
We have a strong brand portfolio, backed by the power of the Tata brand, which will help us achieve our aspirations for the future.
May I take this opportunity to thank our employees as well as our business associates, for their hard work and commitment over the past year. On behalf of the Board,
I would like to extend my gratitude to all of you, our shareholders, for your consistent support.