Tata Global Beverages brewing hot: Nirmal Bang
Tata Global Beverages is an integrated beverage business that has set out to become a global leader in branded, good-for-you beverages through innovation, strategic acquisition and organic growth.
August 11, 2012 / 13:41 IST
Tata Global Beverages Ltd (formerly Tata Tea Ltd) is an Indian multinational non-alcoholic beverages company headquartered in Kolkata, West Bengal, and a part of the Tata Group.
It is the world’s second-largest manufacturer and distributor of tea and a major producer of coffee. Set up in 1964 as a joint venture with UK-based James Finlay and Company to develop value-added tea, Tata Global Beverages Ltd (TGBL) has now product and brand presence in 50 countries.It is one of India’s first multinational companies. The operations of Tata Global Beverages and its subsidiaries focus on branded product offerings in tea, coffee and other non alcoholic beverages.Tata Global Beverages markets tea under major brands like Tata Tea, Tetley, Good Earth Teas and JEMCA the biggest-selling tea brand in India. Tata Tea is the biggest-selling tea brand in India.Tetley is the biggest-selling tea brand in the United Kingdom and Canada and the second biggest-selling in the Unites States. JEMCA, on the other hand, is the biggest-selling tea brand in the Czech Republic.Tata Global Beverages owns five brands in India: Tata Tea, Tetley, Kanan Devan, Chakra Gold and Gemini.Investment RationaleTata Global Beverages is an integrated beverage business that has set out to become a global leader in branded, good-for-you beverages through innovation, strategic acquisition and organic growth.TGBL, led by its various acquisitions in recent years, has become a global non-alcoholic beverage company.The company has a commanding position in tea and coffee categories in North America and South Asia. With leadership positions in India, UK and Canada in the tea market, TGBL has been consistent in maintaining its market share. Joint Venture with Pepsico: Nourish CoTata Global Beverages strengthened its initiative to provide consumers with nutrient enhanced hydration products. The company entered into a joint venture with PepsiCo India with the objective to introduce a number of nutritionally positive drinks in India. NourishCo, the joint venture, launched Tata Water Plus, India’s first nutrient water brand.This was more than a product launch as the launch created the category in India. The nutritionally rich brand, available in zinc and chromium variants, extends beyond the mere quenching of thirst to the overall promotion of good nutritional health.NourishCo also launched Tata Gluco Plus, a glucose-based lemon flavored drink in a unique cup format, with the promise of providing instant energy. Conceived as an affordable on-the-go re-hydration solution, the product is targeted at the mass consumer segment.The breakthrough of the product was the convenient 200ml cup that ensured product quality at a low price point without compromising on taste or aroma. The launch was supported by large scale sampling activities in other states and sizeable investment in branding activities.ConclusionMost of the uncertainties related to volatility in raw material prices have been adequately factored in the share price. We believe higher revenue visibility from the recent joint ventures and further expansion in non-alcoholic beverages would result in higher revenue growth and the ability to pass on cost escalation will improve margins, going forward. Though the hardening of raw material prices and the failure of new launches will negatively impact the profitability for the company.Source: Nirmal Bang's Beyond MarketClick here to read the full magazine Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
