Tata Global to take PepsiCo JV products to Gujarat, Madhya Pradesh

Tata Water Plus, currently available in the south, will be launched in the two new markets in FY15

NourishCo, the 50:50 joint venture between Tata Global Beverages (TGB) and PepsiCo, will take its fortified  water Tata  Water Plus  to Gujarat and Madhya Pradesh in the next fiscal. The move comes in the wake of TGB's endeavour to widen the footprint of the JV's products, notably Himalayan and Tata Water Plus, which are products added by it in the company. The third product Tata Gluco Plus, a glucose drink, has been created by PepsiCo.

Himalayan, the flagship water brand of TGB,  has already been taken to Singapore, where it is available in Starbucks stores. The next phase, according  to  Ajoy Misra, executive director and deputy CEO, TGB, who will take over as MD & CEO from Harish Bhat on April 1, will see Himalayan move to the Middle East. This is even as the brand is aggressively pushed in other markets in South East Asia.

Tata Water Plus and Tata Gluco Plus, meanwhile, will see a similar trajectory, says Misra, moving to more cities within Tamil Nadu and Andhra Pradesh, where it is currently available, besides expanding to new states in the country.

Revenues from water are under five% currently for the Rs 7,270-crore TGB, with plans to take the number up to about 10% in the next five years. Coffee, another key vertical for TGB, which gives it about  20-25%  of  its revenues,  is expected to contribute about 35-40% to company topline in the next five years, Misra said.

The contribution from tea, which gives TGB about 70% of its revenues, is expected to come  down  to  about  55% in the next five years. But the proportion of speciality teas, notably green teas, is expected to grow within this pie, Misra said.

The company has already accelerated its efforts in green tea under the Tetley brand in line with consumer trends, launching a new advertising  campaign last week featuring actor Kareena Kapoor. The endeavour comes even as rival Hindustan Unilever (HUL) has been aggressively pushing its green tea line-up under brands Lipton and Taj Mahal. Actor Anushka Sharma is the brand ambassador of Lipton green tea in India.

In the December quarter, TGB launched new variants in its green tea portfolio in markets such as Canada and the US besides India. The company closed the three months ended December 2013 with net sales of Rs 2,053.91 crore, a growth of 8.09%  over the corresponding period a year ago. Growth in consolidated net profit was 49% to Rs 120 crore, aided by profit from associates  and tax credits.

Notably, TGB sold its stake in a US functional beverage company during the  December quarter. The maker of Tata Tea did not specify the name of the company or sale proceeds from the transaction. This will be the second exit for TGB in the US market, the last being  Energy Brands, the maker of Glaceau vitamin water, in 2007.

Misra reiterates that the company has no plans to abandon its inorganic growth strategy because of the above-mentioned exits. The company is expected to continue scouting for acquisitions and opportunities to strike alliances and  JVs in speciality teas, coffee and water.