Tata looks to take Tetley to small grocery stores in China

Tata Consumer Products is transferring its tea chain ‘Tata Cha’ to newly launched Qmin brand of IHCL.

“Tata Consumer Products continually evaluates its businesses in line with its strategy and business objectives. As a result of this process, the Company has decided to transition its Tata Cha business- a tea café format Quick Service Restaurant (QSR) chain to Qmin-Shops operated by a subsidiary of Indian Hotels Company Limited (IHCL),” shared the statement from the brand.

With this Tata Consumer Products wants to better focus on its core FMCG business.

Tata Cha currently has 12 stores across Bangalore serving beverages (tea, coffee, coolers), snacks and merchandise. The business is a good strategic fit for IHCL, and can be synergized with their Qmin brand.

“This is in line with our strategy of streamlining and simplifying our operations. Though it is a relatively small venture in its current form, exiting Tata Cha will enable us to sharpen focus on our core FMCG business,” shared Sunil D’Souza , MD & CEO, Tata Consumer Products.

TCPL also operates coffee chain Tata Starbucks, a 50:50 joint venture with Starbucks Corporation and Tata.

Tata Global Beverages posted a 39.1% rise in net profit to Rs 120.25 crore for the June-September quarter in comparison with the same quarter of the previous fiscal, which saw Rs 86.32 crore.

Net revenues stood at Rs 1,692 crore, up by 6% from Rs 1,621 crore in the comparable quarter in 2016. Operating profits were up by 23% to Rs 208 crore compared to the corresponding quarter of the previous year, due to improved operating performance, good cost management and lower finance costs.

Group has completed the restructuring of its Russia operations, resulting in the sale of two of the company's overseas subsidiaries, Sunty LLC and Tea Trade LLC.

L Krishnakumar, Chief financial officer of Tata Global Beverages said “The company witnessed a good performance in its India business. While July was a slow month due to GST, August and September saw double digit growth. The quarter saw a number of new product launches across geographies and continued investment to strengthen our brands. The company will continue to innovate in tea, coffee and water with new blends and beverage experiences”.

Tata Global Beverages, the world's second largest tea company, announced the pilot launch of its first tea cafe "Tata Cha.”

Tata Global Beverages Regional President Sushant Dash said “It is our first entry into retail space; this is the pilot project we are starting with. We are planning to open four stores in the pilot phase in Bangalore. We will then consolidate, understand how the pilot goes, before we think about what the next step should be. His whole idea behind entering into Quick Service Restaurant (QSR) and tea cafe space was twofold. The first was this was a growth segment as eating out had been growing at an exponential rate second 70 per cent of consumption in the country in terms of one drink as beverage even out of home was tea”.

Company official said in a statement “The idea behind was to match the two of them given that people are going out, people drink tea, and Tata Global Beverages is best positioned to bring tea to customers, so we thought of getting into retail space and talking of tea cafe," he added. Tata Cha is designed to reflect the heritage of Tata Global Beverages while embracing local culture. The core objective was to create a space that was warm and nurture a "renewed love" for tea”.

Tata Cha will have three formats of stores large which will be about 1300-1400 sq ft, abbreviated around 700 sq ft, and kiosk which will be mostly at malls, IT parks, institutions and offices. Over the next three months the company intends to operationalize all the four stores in Bangalore. Responding to a question about launching in Bangalore, Dash said it "is one among the most cosmopolitan cities of the country and it might surprise many that there are more cups of tea that are had in country, than Coffee, our internal number show that 37,000 cups of tea as compared to 17,000 cups of coffee. It is significant difference in terms of tea and coffee."

Tata Global Beverages (TGBL) is set to enter the RTD (Ready to Drink) market by introducing a green tea-based drink, led by Tata tea in india and Tetley in Canada, reports said. The company is piloting the new product segment it recently entered to diversify its Indian portfolio, to target youth. The drink will be available in the orange and mango flavours. The company has claimed that this is a first of its kind combination in the Indian iced tea market, with an offering that is innovative with herbal extract, low in sugar and relevant.

Globally, particularly in Europe and North America, traditional black tea consumption has been on a decline. The fruit and herbal infusion segment is on a growth trajectory. In the company's annual report for 2016-17, the RTD tea market in India is pegged at Rs 140 crore, with a nine to 10 per cent annual growth rate. "We haven't been really playing in the iced tea segment in the recent past but have been studying the scope," said Ajoy K Mishra, managing director and chief executive. He says black tea was about 85 per cent of Britain's beverage market only seven or eight years earlier but has shrunk to 68-69 per cent. In Canada, black tea consumption accounts for half the market. "In USA, by tea, people understand iced tea and RTDs. The fruit and herbal beverage segment, however, is growing faster," he said.

In India, on the other hand, black tea accounts for 90 per cent of the market and is a growing category. "However, even in India, the growth of green tea outpaces the growth rate of black tea," said Mishra.

The company has come up with six new launches in India in the past 15 months, which is more than that in past 5-6 years. 

Tata Global Beverages, once known as Tata Tea, is set to launch a host of fruit-based drinks like mango and orange, sources said. The company has been working on several brands like Fruski and Pep before zeroing in on the former.

The Kolkata-based arm of the Tata Group said in a disclosure to the exchanges that the brand Fruski is expected to be launched on May 10, adding that the product will cater to the domestic market only without disclosing the nature of the product.

The fruit juices would be value-added containing extracts of green tea or Amla or other naturally occurring ingredients depending upon the nature of the variant, sources said.

The products would also be made available for sale on online commerce platforms like Amazon.in.

Country's low per capita consumption of tea and a secular yearly growth of just 3% are some of the reasons that can be attributed to factors affecting the decision.

Despite significant spend on brands, Tata Global Beverages saw a measly 1% during the nine-months period till December over 2015 levels and just 3% during the third quarter.

It recently brought products like Tata Tea Elaichi and Tata Tea Gold Mixture (TTG), specially crafted for the Maharashtra market.

It also collaborated with Starbucks to create an innovation especially for the Starbucks Teavana portfolio in India called the India Spice Majesty Blend.

Alongside, it launched Tea Veda range that tries to capture the goodness of Ayurveda in the daily cup of tea.