News: Tata Tea eyes more US acquisitions

(DNA 09/08/2006) Kolkata - The Tata Tea group, comprising Tata Tea, Tetley and Tata Coffee, aims to grow its business to Rs 7,000 crore in the next three years. After three recent acquisitions of tea and coffee brands across countries, the Rs 3,100-crore group has set its eyes on acquisitions in the ‘advanced beverage’ category over the next few months.

Acquisition proposals are likely to brew in the United States, a phenomenal market that sets trends in the global beverage business.

The Tata Tea group, so far, has notched up almost 45% of the beverage space worldwide. The group intends to cash in on the global trends in increased consumption of different tea formats.

“Well, this time, the acquisitions may be in the specialty tea segment or an advanced beverage, which draws its base essentially from tea. It could be a large acquisition comparable to Tetley. However, we are examining many such proposals at present. There has been a morphing in tea formats globally and we should be at the cutting edge,” R K Krishna Kumar, vice-chairman, Tata Tea, said on the sidelines of the company’s annual general meeting here on Tuesday.

“For most of our acquisitions, we are looking at the US intensely. This will help us expand our markets into China , Russia and Europe,” Krishna Kumar said.

The next generation business of the group will be to enter into tea-based products, which may again be driven through the inorganic route. Broadly, this may include tea-based cosmetic products as well.

In fact, Ratan Tata, chairman, Tata Tea, earlier in the day, said that brand growth will be the priority area for Tata Tea’s growth. “We have embraced the idea that tea is not just a drinkable beverage, but has many other attributes. It is product-oriented and we are leveraging on this,” he said.

According to Krishna Kumar, raising funds, particularly through debt, was not a problem. Rabobank International and Rabo India Finance Pvt Ltd (a 100% subsidiary of Rabobank International) have just concluded financing the acquisition of Eight O’clock Coffee, US, by Tata Coffee Ltd for a total value of $231 million.