Brewing a successful multi brand beverage business

Tata Global Beverages Ltd, formerly Tata Tea Limited, is engaged in processing, marketing and distribution of tea and various other beverages. Besides strong presence in the domestic market, it operates in the UK and has significant businesses in the US, Canada, Australia, Poland and the Czech Republic, as well as a number of joint ventures in South Africa, Pakistan and Bangladesh. The company operates in three segments: tea (cultivation and manufacture of black tea and instant tea, tea buying/blending and sale in bulk or value-added form); coffee, pepper and other plantation crops, sale of natural mineral water etc. Its famous brands are Tata Tea Premium, Tata Tea Agni, Chakra Gold, Tata Tea Gold, Gemini, Tata Tea Life, and T!ON.

Going ahead, this beverage company is looking forward to introduce children food products as a part of its strategy to diversify into food space, beyond beverages. The company, which has grown inorganically over the past few years, is also open to the idea of acquisitions in the food space.
To begin with, it is eyeing the nutritional food and wellness products with an introduction of nutritious food like fortified candies for children, a market easy to target.
Main aim of the company is to provide products in the market that deliver physical and functional benefits along with satisfying emotional and well-being needs. Management is also eyeing acquisitions in the beverage space, both in India and abroad, to become a $5-billion company by 2015.
Apart from the expansion plans the company is getting into partnerships which will help in acquiring interests in new, emerging, fast-growing business categories. The company recently announced a non-binding MOU with Pepsico to form a joint venture that will enable it to market non-tea liquid bottled products. It also acquired a 51% stake in the consolidated group of Suntyco Holding - a Russian beverage company owning the Grand brand. This will open up avenues for coffee and tea business in market like Russia which have high consumption.

For the quarter ended June 30’2010, the company’s consolidated net profit was up at Rs 45 crore. Its consolidated net sales were up at Rs 1,374. This company having strong fundamentals and sound growth and expansion projects is an attractive buy.

The stock is currently trading at the price of Rs.123 and we see it touching the levels of Rs.140 in near future.