In a strategic move, Tata Tea has sold Tetley's private label tea business in the US to Harris Tea for $15 million.
The private label tea business came into the Tata Tea's kitty through the acquisition of the Tetley group.
R K Krishnakumar, vice-chairman of Tata Tea and chairman of the Tetley group, said, "We have contracted to sell the private label business to Harris Tea, another private label manufacturer for $15 million." He has also confirmed having received an advance for the deal.
Tetley's private label business which controls 60 per cent of the business in US has a turnover of around $6 million.
For the period, March to December 2001, Tetley Group reported a 3 per cent increase in sales over the same period of last year. Earnings before Interest and tax has increased by 34 per cent.
Tata Tea has appointed Boston Consulting Group to work out an operational integration agenda of Tetley with itself, and its findings will be discussed by the two companies. Senior officials from Tetley and Tata Tea will meet in Goa in February 2002 to kick start the process and develop a structure. "We expect to create a task force consisting of neutral members from the two entities", Krishna Kumar added.
The task force will take up two 'live' projects. First, launching of Tetley in the subcontinent.
It will start with packet teas, ice tea and ready-to-drink tea. The second project will be the launch of Tetley iced tea in the United States, where it is now present only in the tea-bag segment.
Tata Tea has the competency to develop instant products (it already supplies the ingredients for these to Snapple, the largest player in the ready-to-drink segment). Tata Tea Incorporated, a subsidiary of Tata Tea, will work jointly with Tetley to market the latter's products in America. These are two of the exercises being undertaken to fuse the organisations together.
According to the management, the easy approach would have been to let Tata Tea run its business and Tetley do its own thing. But the strategic intent was to break down the two separate identities and make them one entity, have one central command that takes decisions, without any geographical bias, in matters such as restructuring global facilities, entry into new markets like Bangladesh, Pakistan, Dubai, Russia, Egypt and Saudi Arabia.
Meanwhile, Tata Tea has finally launched Tetley, the world's second largest tea brand in India. Tetley will be positioned at the premium segment of the market. Priced at Rs 58 per 250 gm pack , Tetley will have a national presence shortly.
The company plans to launch a host of variants and specialty products in the coming months and will be supported by vending machine operations across the country.
