INDIA BUSINESS WORLD - APRIL - MAY 2007
The Month that was ...

TATAS ACQUIRE POLISH TEA BRANDS VITAX & FLOSANA

TATA Tea has acquired two Polish tea brands Vitax and Flosana from Premium Foods SA, a local company headquartered in Krakow, for an undisclosed amount.

The acquisition, made through its subsidiary Tetley Group, catapults Tetley to the second position in the Polish tea market with a 10.5% value share and a turnover of $36 million. The combined turnover of Vitax, which is one of the leading players in the Polish speciality tea segment, and Flosana brands is $23 million, Tata Tea said in a release. Premium Foods currently distributes the Tetley brand in Poland alongside Vitax and Flosana and this distribution arrangement would continue, the release added.

Tetley Group managing directors (Europe and Emerging Markets) Garry Nield said, "Tetley already has a strong business in Poland build on black and Earl Grey teas. There is significant potential to grow the fruit and herbal market in Poland and it makes sense for us to acquire an established and successful range of fruit and herbal products, rather than start afresh with a new Tetley range."

With the stagnation in demand for black teas, Tata Tea is increasingly focusing on speciality teas to drive growth in the branded tea space worldwide. The acquisition of two Polish speciality tea brands - Vitax and Flosana - from Premium Tea, by Tata Tea subsidiary, The Tetley Group, is part of this strategy.

This is Tatas Tea's fourth acquisition in the speciality tea segment. In February 2000, Tata Tea first made an entry in the speciality tea space by acquiring UK's Tetley Group, which has a strong presence in flavoured, herbal and ice teas, at a consideration of POUND 271 million. Subsequently, the company acquired other speciality tea brands - Good Earth of the US in October 2005 and Jemca in the Czech Republic in May 2006 for undisclosed sums. Incidentally, Good Earth is the fastest growing speciality tea brand in US with particular strength on the West Coast.

Tata Tea is increasingly leveraging the trend in the global beverages market. The

traditional concept of tea as a beverage is changing worldwide, especially with consumers around the world seeking more benefits and exciting tastes - at home as well as when they are out. This 'new face' of tea that is redefining the competitive landscape of the tea industry has opened up new vistas for Tata Tea.

"Even though the market for speciality teas isn't big compared with black tea, the unit price realisation in speciality tea is much higher compared with black teas. Which is why, real growth will come from this segment in coming years," said a Tata Tea source.

The scrip of Tata Tea ended the day with a gain of more than 2% (Rs 17.20) at Rs 790.55 on BSE with volumes of 3.15 lakh shares. The acquisition comes amidst reports that Coca-Cola, the world's largest beverage maker could bid for Energy Brands, the makers of Glaceau wellness drinks, in which Tata Tea holds 30% stake. Tata Tea had, last year, acquired 30% stake in America's largest growing health beverage company Glaceau for $677 million in its bid to become a global player.