After a phase of relative silence over the past few years, Tata Global Beverages (TGB), which on Tuesday reported a consolidated net profit of Rs 51 crore for the March 2017 quarter, is keen to ramp up inorganic growth. This feature had characterised the beverages major during 2000-2010, when it wrapped up as many as 10 acquisitions across the world. In 2016-17, the company launched five new products and wants to sustain the momentum in the current financial year, TGB Managing Director and Chief Executive Officer Ajoy Misra says in an interview with Viveat Susan Pinto. He also says the company is ready for the goods and services tax (GST). Edited Excerpts:
What is your assessment of TGB's performance in 2016-17?
This was a year when we launched a number of products in various geographies. But the maximum action was in the India market where we saw as many as five launches. The idea was to cover white spaces, basically states where our market share is in single digits. These include Maharashtra, Gujarat and Rajasthan. In 2016-17 (FY17), we launched a special blend for the Maharashtra market under Tata Tea Gold. 2017-18 will go into other such states where our share is low. Besides, there were other forays such as an elaichi tea and our first formal entry into the ayurvedic tea market with Tata Tea Veda in FY17. A super green tea variant under Tetley green tea was also launched apart from new extensions of Tata Coffee Grand, our instant coffee brand.
Acquisitions have been a key to TGB, though the company has been reticent in recent years on that front. What are your plans on that front?
We are currently in a mix of developed markets and developing markets. While we are not fussing about any particular market, I think Asia, including India, will be a place we will keep our eyes open in terms of acquisitions. In the past, we had done acquisitions in countries such as UK, Europe, US, Russia, South Africa and Australia, but our China foray recently, where we tied up with Alibaba.com to retail Tetley tea, signals our keenness in Asia. So, yes, we are eyeing this part of the world closely in terms of acquisitions.
You are also getting into the ready-to-drink beverage market in India. Can you share details about it?
We have been preparing to enter the ready-to-drink market for a while now. This is basically a tea-based drink with a fruit flavour. It is called Fruski and a pilot launch has just happened in north India. The plan is to take it to the rest of India in the near future. It is a refreshing drink, which is low on sugar and is competitively priced between Rs 10-12 for 150 ml and 180 ml cups. There is also a 500-ml PET bottle, which is priced at Rs 35.
At one stage TGB spoke of getting into foods. Is that plan still on?
For now, there is no plan to get into foods, though we will continue to expand our presence in beverages. We are in the mood to sustain our 2016-17 momentum in terms of product launches and innovation (in the new financial year), and there is much work happening on that front, which will be rolled out in the forthcoming months.
How prepared are you for the GST, and does it worry you that trade has expressed concern about transitioning to the new regime?
We have been working on getting GST-ready for the last 18 months. So, we are prepared for it on July 1. Yes, there have been some concerns expressed by trade, but my view is that disruption in terms of destocking will not be severe in an essential category such as tea. It (tea) has been kept in the 5 per cent tax bracket in GST. There is no impact on prices as result, which is a good sign.
As far as instant coffee is concerned, which falls in the 28 per cent tax bracket, that is a small percentage of our business. Our strategy will be to try and minimise impact for the consumer by either keeping price hikes low or not taking a price hike at all (in instant coffee). We are still evaluating that.
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