Presented by-Group 5

Mohit Bagla (H005)Aditya Gupta (H015)

Debashish Hota (H018)Ridhi Nayyar (H039)

Kanwar Pal Singh (H059)Global Growth Strategy

Introduction: Tata Global Beverages

Set up in 1964 as ‘Tata Finlay’ when the Tata group created an alliance with Indian Tea Giant James Finley and Company

In 1983 Tata Tea was born after James Finlay sold his shareholdings to Tata

The Company went global in 2000 with the acquisition of Tetley (UK)

Tata Coffee acquires Eight O’Clock Coffee in 2006

Tata Global Beverages formed in 2010 after integration of beverage brands

Tata StarBucks Ltd. formed as a JV between Starbucks and Tata Global Beverages

Major Subsidiaries

Tata Tea Holdings Pvt. Ltd., India

Tata Coffee Ltd., India

Mount Everest Mineral Water Ltd., India

Lyons Tetley Ltd., UK

Eight O’Clock Coffee Inc., USA

Tata Tea is the market leader in India with Strong Brands such as Tata Tea Gold, Tata Tea Premium, Kanan Devan

Tata Coffee is the largest integrated coffee plantation company in the world. It is present in all aspects of Coffee Making Process

Introduction: Eight O’Clock Coffee

Created by the Great Atlantic & Pacific Tea Company in 1859

In 1919 A&P asked people about the time of day they preferred to drink coffee; it got named Eight O’Clock Coffee

In 1930s EOC had gained over a quarter of the U.S. Market share and was the most popular brand of coffee in the states

In 1979, the Company licensed its branding division, Compass Foods, Inc to sell EOC to other retailers including competing supermarket chains

In 2003, A&P sold EOC to Gryphon Investors who then created the Eight O’Clock Company

Gryphon sold the company to Tata Global Beverages in 2006

The Global Coffee Industry in 2005-06

The coffee industry saw an uptrend in

prices in 2005-06 as productions fell in key countries while

consumption continued to grow

In 2006, the industry moved out of a tight situation to a near supply-

demand imbalance due to higher

production in Brazil and Vietnam

The industry was also plagued by weather related

problems such as Hurricane Katrina which led to lower

consumption in 2005-06

The demand for certified coffee was increasing globally and people were willing to pay for

coffee brands which were certified by

independent auditors

Vision of Tata Global Beverages

Challenging for leadership in tea around the world- Tata Tea Ltd. Annual Report 2005-06

To be the most admired natural beverages company in the world by making a big and lasting difference in tea, coffee

and water

- Tata Global Beverages annual report 2012-13

The geographic scope of our vision; building a global business by leveraging and building our brands and forging partnerships

to mutual advantage

Eight O’Clock Coffee in 2005-06

EOC enjoyed significant distribution strength with approximately 67% of all commodity volume penetration of the US retail coffee market

The sales had been growing at a CAGR of over 14% for the last three years then

The EOC brand was uniquely positioned in the coffee marketplace at a mid-level price point

Within the broad USA retail coffee category, EOC was the third largest brand by volume behind Folgers and Maxwell House

The company distributed its products at Wal-Mart, Publix, Alberton’s, A&P, Super Valu and Food Lion

Leading roaster and distributer of branded “Value Gourmet” and “Whole Bean” coffee with a market share if 52% and 46% respectively

Acquisition of Eight O’Clock Beverages

Tata Coffee Ltd., a 51% owned subsidiary of Tata Tea Ltd., signed a definitive agreement to acquire Eight O’Clock Coffee from Gryphon Investors in mid 2006

The total acquisition price was set at $220 million (Rs. 1,015 crores)

J.P. Morgan was an exclusive financial advisor to Tata Coffee on the acquisition, while Robo Bank arranged the funding

Tata Tea borrowed heavily about $600 million which raised the debt to equity ratio of the company to 2.5

Reasons behind the acquisitionTata Coffee was non-existence in the global coffee industry and was looking to become an international and a fully integrated player in the coffee industry

With the backing of Tata Group, TGB wanted to leverage their brand equity to capture new markets and new geographies

The acquisition gave Tata Coffee a large and instant presence in the US, where people preferred Coffee to Tea as their morning beverage

The acquisition was significant for Tata Coffee as within the road US food category, the EOC was then the third largest coffee brand by volume, behind Folgers and Maxwell House

EOC presented a sizable entry platform and an established brand to Tata Coffee in the $21 billion US Coffee market

Tata Coffee had been primarily been a Coffee Plantation Company, which had been striving to establish brands in India, this acquisition made sense as it was an attempt to move up the value chainEight O’Clock Coffee had a brand presence of over 100 years and an established distribution network, instead of launching their own product their and investing humongous amount in setting up a distribution networkTata Coffee found it difficult to make an impact in branded coffee with well-entrenched players like Nestle and Brooke Bond, they thought it would be easier to move out of India

Immediate Effects of the Acquisition

During the 8-month period from its acquisition in 2006 to the end of the fiscal year 2006-07, EOC registered a

sale if 25.772 million pounds

EOC registered a turnover of Rs.482.85 crores in

terms of value

The EBITDA of EOC was Rs. 78.08 crores and the PAT

was Rs.10.95 crores

Tata Coffee’s turnover witnessed a growth of 293% moving from 190 crores to

750 crores

In the value gourmet segment, EOC registered a growth which was higher

than the growth in the segment as a whole

Tata Coffee saw its PBT grow by 67%, PAT by 27%

and EPS by 15%

EOC was the fastest growing brand when

compared to its competitors

Tata Tea Ltd. witnessed an increase of Rs. 921 crores in its turnover out of which Rs. 558 was on account of new acquisitions (Jemca,

Good Earth and Eight O’Clock Coffee)

Conclusion

Tata Global Beverages has always has a

vision to become a

global beverage brand and they believe the way

to do this is through large acquisitions worldwide

Their strategy also includes moving away from being primarily a plantation

company and get into

marketing brands

TGB accurately envisioned the

change of consumer

preference to healthy

beverages and for audited brands, and

they took appropriate steps in this

direction

Since the acquisition of Tetley, Tata

Global Beverages have had a string of

acquisitions around the

world including brands such as

Good Earth, Vitax,

Himalayan Water and the most recent

Maps

They have entered

markets such as Russia and

Australia through these acquisitions

TGB’s future strategy we

perceive is to make its brands

truly global

They are also looking at building a

strong presence in the complete value

chain