Tata Tea creates three global 'power brands'

They may fight a pitched battle around the world for your tea cup, but when it comes to branding, Tata Tea is taking a page out of Hindustan Unilever’s (HUL's) marketing manual. So, just like HUL of the 90s, Tata Tea too has come up with its own ‘power brands’, which will get a global push.

And, there are three of them, which will be taken to developed markets like the US, Canada and Europe, and the emerging ones of Africa and the CIS countries under the Tata Global Beverages banner, the erstwhile Tata Tea. These include Tetley, Good Earth and Himalayan. Tea Pix will continue as an exclusive offering for the select set, world over.

Interestingly, all three brands were acquired over the last decade and they have not been in-house successes. What’s more? Flagship Tata Tea is yet to make the global cut and will continue as a regional brand for the time being.

“Tata Tea and Eight O’Clock Coffee are managed as regional brands right now. But, they can certainly make it to the list in the future,” Percy Siganporia, deputy chief executive officer, Tata Global Beverages, told Business Standard.

Surprising, feel brand consultants. “Brand Tata has the potential to be leveraged,” says Harish Bijoor, chief executive officer, Harish Bijoor Consults. “I don’t think the company can afford to keep Tata Tea out of their global portfolio. Recall for brand Tata is high. The company should take advantage of it.”

Santosh Desai, chief executive officer of Future Brands, goes a step forward. “This is about the company playing it safe, using international brands internationally. As far as Himalayan goes, it’s a bold move of including it into the list.”

The global brand push reflects the organisational shift the company is going through. Sitting in London, John Nicholas, the innovation and brands manager, will be responsible for them. He is part of the newly-constituted five member global executive office, the apex decision making body, of the company. The other members are CEO Peter Unsworth, Deputy CEO Percy Siganporia, CFO L Krishna Kumar, and human resources head Nalin Miglani.

The branding aspect should not be seen in isolation, say analysts who cover Tata Tea. It also signifies that tea, coffee and water are their principal verticals. “At the end of the day, it’s about understanding which brands in the portfolio can have a potential global acceptance…Coffee is still a weak link, compared to tea,” says an FMCG analyst from a foreign brokerage firm. “You still don’t have a global coffee power brand yet.”

“The future will be in value-added products. We have the cash, so we will look at acquisitions in markets such as Russia and the West Asia,” CFO L Krishna Kumar told Business Standard. “That’s where Himalayan has a big role to play… We will invest heavily around that brand.”

They need to. Himalayan closed last financial year with a net loss of Rs 14.10 crore. If the company wants to wipe out the losses, chinks in the armour have to be plugged, such as tapping the institutional segment, which the company is looking to do.

The new 50:50 joint venture with Pepsi, in a sense, will take the effort forward. Tata Tea officials say they have identified four main categories — vitamin water, energy drinks, iced tea and sports drinks — where the JV will play. All of these are in the bottled water segment.

By the end of this year, Tata Global Beverages is set to come out with a road map for the future, including doubling turnover from Rs 5,782 crore. But, will this global branding initiative work, when HUL itself has aborted that strategy? One may argue for every HUL, there is a Cadbury and a Britannia, companies who have made a success story out of power branding. The Tatas, too, are getting ready with their heady brew.