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TATA GLOBAL BEVERAGES

Deepa AgarwalMayur Bhagwat

Neha BaokarKunal Garad

Mayur MohiteShruti RailkarKunal Thakur

Akanksha Wattal

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DOMESTIC BUSINESS

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Domestic Scenario of Tea Industry

1962 to 1990-Pre Liberalisation Era Rising Input cost, High taxes and Dwindling margins

Tata Tea incorporated in 1962 as Tata Finlay J.V

1983 Finlay stake acquired-Tata Tea ltd

Decided to move from commodities market to branded tea market E.g. Kannan

Devan, Agni, Gemini and Chakra Gold

In 1987, Tata Tea set up a fully owned subsidiary, Tata Tea Inc., in the USA.

1989-52% stake Karnataka based Consolidated Coffee Ltd(Tata coffee Ltd)

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contd…

Post 1990-Post liberalization Era In 1992-J.V with Tetley

In 1994-Acquired 64.5% stake in Asian Coffee

JVC with Lankan partner acquired 20 tea estates

Acquisition of the Tetley Group 2000

In 2006, Tata Tea acquired Eight O'Clock Coffee, a U.S. based coffee

producer from Gryphon Investors for $220m

On 30 January 2012, 50-50 joint venture called Tata Starbucks Ltd

Current Tea Industry

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DOMESTIC SCENARIO-TATA TEA

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INTERNATIONAL BUSINESS

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PESTEL ANALYSIS

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• Government policy• Foreign law• Stability of the governmentPolitical

• Interest rates• Tax

Economical

• 800 millions cups of tea consumed globally• Green tea is preferred due to its health benefits• Innovation on tea productsSocial

• Providing unique products• Safety Factor

Technological

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PORTERS FIVE FORCES

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PORTERS MODEL

Rivalry :• Approximately 700 tea companies • Unorganised players • Industry growth rate 2%

Bargaining power of suppliers :• Large number of producers • Low switching cost

Bargaining power of Buyer :• Large number of buyers•Other available option

Threat from substitute :•Coffee•Pepsi• Energy drinks

Threat from new entrants:• 100 % FDI • Untapped rural market

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STRATEGY

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MERGER

• The first ever leveraged buy out , largest cross border acquisition by an Indian Company.

• The acquisition of Tetley made Tata Tea the second biggest tea company in the world.

• Vertical Integration

Tetley gets access to Tata Tea’s gardens and production base and the latter gets Tetley’s premium brands and global distribution network

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Structure of Merger

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FINANCE

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Post Merger Financial Performance

sales dropped by 8.3%

Rs 621.58 crore from Rs 677.86 crore

operating profit dropped down by 19.37%

Rs 121.43 crore from Rs 150.60 crore

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Financial Restructuring

• Producing tea company to selling tea company

• Tata tea decreased its

– total wage payment by 12.5%

– provident fund payment by 43%

– welfare payment by 40%

– Employee strength from 58,888 workers to 34,596 workers

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Revenue by Geography

Geography Sales Revenue (Rs. Lakhs)

India 150816.83

UK 123942.34

USA & Canada 144671.83

Rest 65356.48

Total 484787.48

31.11

25.5729.84

13.48

Revenue %

India

UK

USA & Canada

Rest

Source: http://www.tataglobalbeverages.com/docs/document-manager/tata_fact_sheet-v15.pdf?sfvrsn=0

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OPERATIONS

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MANUFACTURING PROCESS

Plucking

Rolling

Firing

Cooling

Packing

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STRATEGIC BUSINESS UNITS

NIPDSIPDPTD ITD

IBD

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RECOMMENDATION AND

CONCLUSION

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Recommendation and Conclusion

•Exploiting Rural markets

•Differentiation on the basis of quality

•Tea houses in tea consuming countries

•Promotion of Tata Global beverages products at Starbucks

•Promoting products like iced tea in countries where soft

drinks are consumed

•Forming JVs with competitors

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