MAJOR ISSUES

1. Not famous globally - Acquired global brands

Tata Tea is India's second largest tea firm, after Hindustan Lever, and it owns the country's
most popular tea brand, Tata Tea Premium. In India, the company has five key brands that
serve to all major tea consumer segments. Tata Tea Gold, Tata Tea Premium, and Tata Tea
Agni are three brands in the Tata Tea portfolio that cater to the premium, popular, and
economy segments, respectively. Tata Tea also has three very strong regional brands in
India's four southern states, all of which are number one or two in their respective
geographies. Tetley, Kannan Devan, Chakra Gold, and Gemini are the four. Though the
regional brands were famous in the homeland, the predominantly domestic operations didn’t
help it to acquire global presence. 

It had to think about something other than exports to be a global market leader. Tata Tea has
mapped out its aim to be the country's market leader and expand its global reach as part of its
stated globalisation plan. For this, the corporation has pursued a strategy of building
subsidiaries or forming alliances in countries with major tea market presence, both from a
producer and consumer standpoint.

The company also realised that acquiring an international brand rather than building one from
scratch would be preferable to going global, and in 1995, it unsuccessfully bid for Tetley, a
well-known innovator in tea packaging, buying, blending, and logistics management, and the
world's second largest seller of tea after Unilever. However, when the opportunity arrived in
the year 2000, the corporation did not hesitate to seek out again. When the business bought
Tetley in that year, it was a watershed moment in the company's history.

Tetley, which was acquired in 2000, is the market leader in the UK and Canada. Despite the
fact that the Tetley acquisition was viewed poorly by the market for the following three years,
the business adopted a method to integrate the processes and investigate synergies between
the two companies without any time constraints and while retaining operational
independence. Throughout, the focus was on income and expansion rather than cost
reduction. After a discussion in a joint management group of the two organisations, a single
Mission-Vision-Values statement and strategy for both companies was established. A
structure was put in place that allowed for collaborative work in a variety of areas. For the
integration, a well-thought-out procedure was used with some of the highlights being: 

 Identification of common beliefs

Later, the company acquired, joint ventured with, and took subsidiaries of many major
foreign players to expand its market and have a global presence, including a subsidiary in the
United States that oversees operations in the country, as well as joint ventures to sell tea in
Pakistan and Bangladesh.
 2. Focussed only on black tea which didn’t work in global markets - Adaption to
packed tea and fruit and herbal flavours

Tata Tea Ltd and Tetley currently operate in countries that account for 53% of global
packaged tea volume. As a result, the global brush has yet to tarnish a significant canvas. The
face of mature markets like the United Kingdom and Canada is shifting. Consumer demand
for ordinary black tea is dwindling, while demand for specialty, green, fruit, and herbal
infusions is fast increasing. To capitalise on this trend, Tata Tea must maintain important
products, anticipate, and respond to consumer wants with a variety of new product
developments, and make acquisitions to expand its business in these high-value industries.

Tata Tea continues to invest in new product releases and explore geographic development,
owing to its brand leadership role in key markets and the current upturn in domestic demand
in most nations. Out-of-home is a significant opportunity that the corporation is pursuing. Tea
consumption outside of the home is becoming more common in India and other parts of the
world. The fragmented nature of the global tea market makes it ideal for consolidation, and
many tea markets already have strong, established brands, making organic expansion slow
and expensive. Acquisition is, and will continue to be, a critical component of Tata Tea's
growth strategy in current context.

Tetley also offers a variety of fruit and herbal teas, as well as specialty teas. In addition to the
manufacturing and supply activities of Tetley's subsidiary firms, the combined portfolios of
branded offerings of Tata Tea and Tetley serve primarily to the US, Canada, Western Europe,
Australia, Middle East, West Asia, Africa, Poland, Russia, and Kazakhstan markets. More
than 70% of the company's consolidated sales currently come from outside India. Tetley has a
unique portfolio of teas for each country, including black, green, fruit, and herbal teas, iced
ready-to-drink teas, and a wide variety of unusual specialty teas.

Tata Tea paid USD 32 million for Good Earth, a specialty tea brand in the United States, as
part of its claimed global expansion ambition. Good Earth is one of the fastest growing
specialty tea brands in the United States, with a revenue of USD 16 million. Green, white,
crimson, herbal, vanilla, and medicinal teas are all available under the Good Earth label. It
mixes and packs tea at its headquarters in Santa Cruz, California, and has a 3.7 percent share
of the US speciality tea market. Tata Tea's US portfolio has improved because to the Good
Earth and Jemca brands, which have helped it become the market leader in the Czech
Republic.
 3. Countries like Canada and Australia favouring Iced tea, Ready-to-drink tea

In India, the Tata Tea brand has the largest market share in terms of both value and volume,
but this is not the case in many countries. The craze for ready to drink beverages has
increased as people do not have that much time to put in the effort to make tea or coffee. This
has increased the competition of the company with not just Unilever but also with Pepsi and
Coco-cola and to overcome this they came up with the ready to drink Iced tea segments.

The world retail packaged tea market is worth USD 20.3 billion and the ready-to-drink tea
market is 24.5 USD billion. The company has made advance in this heading through Genuine
Brew Iced tea concentrate within the US and Comic Vending machine, a genuine
breakthrough. In March 2009, the company forayed into the Rs 100 crore branded cold drinks
market by launching the TION - a tea and fruit-based beverage. 

Tata also acquired Tetley in 2000, which is a market leader in UK and Canada with 26% and
40% market share respectively by value. Under the Tea of Life brand in the UK, Tetley has
launched iced tea which is making excellent progress in the market. Tetley Ice T is also
launched in US and Australia, to make its presence in the ready-to-drink segment. Tetley also
has a unique portfolio of teas for each country, including black, green, fruit, and herbal teas,
iced ready-to-drink teas, and a wide variety of unusual specialty teas.

Chai Latte brand in the UK, recently launched a Chayya, the first of its kind and which is
showing great market. Packaging innovations such as the "stay fresh" flip top carton are
being introduced in order to grow the company's business in these high-value categories. Tata
Coffee has the distinction of having six of the world’s ten best coffees in its line-up. With the
purchase of 8 O’Clock it now owns a strong brand in the US.
 4. Diet conscious people not preferring tea - Moving towards healthy beverages

As the need for a healthy lifestyle has increased, people started supplementing black tea with
healthy beverages. So, during 2010-2011, Tata Consumer Products Ltd decided to be in that
area as well so they made a joint-venture with PepsiCo calling it NourishCo Beverages Ltd.
that will make the non-carbonated ready-to-drink beverages that primarily focuses on the
health and wellness of an individual. This joint venture has the motive of widening the foods
and beverage portfolio. 

NourishCo has centred on building brands within the sound hydration space. Both companies
had 50% equity capital in the venture. Tata Water Plus - India’s first nutrient water and Tata
Gluco Plus - a healthy glucose-based flavoured drink - are the two things that are being
produced and marketed by NourishCo. The popular Himalayan water is also marketed and
distributed by NourishCo. The Group obtained a 31% stake within The Rising Refreshments
Company LLC. Rising Refreshments makes and markets a run of vitamin and enhance
upgraded water utilizing special powder apportioning innovation beneath the 'Activate' brand.

Amid the year 2009-10 the company marked an MOU with Pepsi Co. Inc. USA for
investigating the plausibility of the arrangement of a Joint Wander within the zone of non-
carbonated ready-to-drink refreshments centred on wellbeing and improved wellness. Their
stakes in the subsidiary Mount Everest Mineral Water Ltd has increased from 35.99% to
40.92%.

The company marked an MoU with Kerala Ayurveda Ltd to enter into a 50:50 joint wander
for encouraging the improvement of a run of driving edge utilitarian and incredible tasting
refreshment and nourishment items based on demonstrated Ayurvedic formulas actives and
detailing with fundamental inquire about improvement and commercialization capability.

Tata Tea also spent USD 32 million for Good Earth, a specialty tea brand in the United
States. With a sales of USD 16 million, Good Earth is one of the fastest growing specialty tea
businesses in the United States. Under the Good Earth label, you can find green, white,
crimson, herbal, and medicinal teas.
References:

https://www.ibef.org/download/Tata_Tea.pdf

https://economictimes.indiatimes.com/news/company/corporate-trends/tata-teas-strategies-
for-that-global-cup-of-tea/articleshow/2585865.cms?from=mdr

https://www.business-standard.com/company/tata-consumer-557/information/company-
history

https://www.business-standard.com/article/companies/tata-global-s-india-appetite-grows-as-
foreign-tea-markets-slow-down-118052700700_1.html

https://economictimes.indiatimes.com/tata-tea-growth-strategy/articleshow/3693638.cms

https://economictimes.indiatimes.com/tata-consumer-products-ltd/infocompanyhistory/
companyid-12929.cms

https://www.referenceforbusiness.com/history2/94/Tata-Tea-Ltd.html

https://www.tataconsumer.com/news/tata-consumer-products-strengthen-its-liquid-
beverages-portfolio