Tata Global Beverages

Tata Global Beverages Limited
Public
Traded as BSE: 500800, NSE: TATAGLOBAL
Industry Non-alcoholic beverages
Founded 1964 (Calcutta)
Founder J. R. D. Tata
Headquarters Kolkata, West Bengal, India
Key people
 Ajoy Misra
(CEO & MD) [1]
Products Tea, coffee, dairy products, water, pepper and other plantation crops
Revenue Increase US$ 2.27 billion (2013-14)
Number of employees
 3,166 (2011)
Parent Tata Group
Subsidiaries
Website www.tataglobalbeverages.com

Tata Global Beverages Limited (formerly Tata Tea Limited) is an Indian multinational non-alcoholic beverages company headquartered in Kolkata, West Bengal, India and a subsidiary of the Tata Group. It is the world's second-largest manufacturer and distributor of tea and a major producer of coffee.[2]

Tata Global Beverages markets tea under the major brands Tata Tea, Tetley, Good Earth Teas and JEMČA. Tata Tea is the biggest-selling tea brand in India, Tetley is the biggest-selling tea brand in Canada and the second biggest-selling in the United Kingdom and the United States[3] and JEMČA is the biggest-selling tea brand in the Czech Republic.[4]

Tata Global Beverages ventured into the Indian cafe market with a 50/50 joint venture with Starbucks Coffee Company. The coffee shops branded as "Starbucks Coffee - A Tata Alliance" will source coffee beans from Tata Coffee, a subsidiary company of Tata Global Beverages.[5]

History

1980 to 1990

In the early 1980s, the tea industry in India was experiencing rising input and labor costs and dwindling margins as well as high taxes. India was facing competition on the world market not just from China, but also from other countries entering the business.

In 1983, Tata Tea bought the stake belonging to the James Finlay group to form the individual entity Tata Tea. In the same year, the company decided to move from the commodities business to consumer branding. The first brand Tata Tea was introduced. This was followed by other brands like Kannan Devan, Agni, Gemini and Chakra Gold. In spite of being the largest market in the world, the concept of branded tea took time to be accepted.

In 1987, Tata Tea set up a fully owned subsidiary, Tata Tea Inc., in the United States.

1990 to 2000

In the 1990s, Tata Tea decided to take its brands into the global markets. It formed an export joint venture with Britain's Tetley Tea in 1992. Other new enterprises included a majority interest in Consolidated Coffee Ltd. (Tata Coffee Ltd.) and a joint venture to manage agricultural estates in Sri Lanka. Tata Tea Inc. in the United States processed and marketed instant tea from its facility in Florida, based on sourcing of instant tea products out of Munnar and Kerala. In 1993, they entered into a joint venture with Allied Lyons PLC in the UK to form Estate Tata Tetley.

In the mid-1990s, Tata Tea attempted to buy Tetley and the Lankan JVC acquired 51% shareholding in Watawala Plantations Ltd.

In 1997 the company was embroiled in a major scandal known as the "Tata Tapes controversy" which related to funds the company provided to the outlawed United Liberation Front of Asom (ULFA), an armed-struggle group operating in Assam.

By 1999, Tata Tea’s brands had a combined market share of 25% in India. The company had 74 tea gardens and was producing 62 million kilograms of tea a year, two-thirds of it packaged and branded. Towards the end of the year, the tea business was hit by a drought in much of India. In addition, Russia, once the largest buyer of Indian tea, temporarily withdrew from the market.

2000 to 2010

Tetley tea canister from Canada

An important step for Tata Tea was the acquisition of the Tetley Group (based in the United Kingdom) in 2000. It was a £271 million ($432 million) leveraged buyout. Tata Tea reportedly outbid the American conglomerate Sara Lee in what was described as the largest takeover of a foreign company by an Indian one to date. At the time, Tetley was the world's second largest tea company after Unilever's Brooke Bond-Lipton and had an annual turnover of £300 million. It was the market leader in Britain and Canada and a popular brand in the United States, Australia and the Middle East.

Established in 1837, Tetley was the first British tea company to introduce the tea bag to the UK in 1953. The tea bag was followed by the first round tea bag in 1989 and the 'no drip, no mess' drawstring bag in 1997. Tetley now contributes for around two thirds of the total turnover of Tata Tea.

From 2005, Tata Tea began a restructuring exercise to divest direct ownership of plantations in India, a process facilitated by subsidised loans from the World Bank's International Finance Corporation.[6]

In 2006, Tata Tea acquired Eight O'Clock Coffee, a U.S. based coffee producer from Gryphon Investors for $220m;[7] before being sold to Gryphon, the Eight O'Clock Coffee brand was originally owned by The Great Atlantic & Pacific Tea Company from its beginnings in 1859 to 2003.

In 2007, Tata Tea launched the campaign Jaago Re! to awaken youth to social issues. The campaign was extended into 2008. In 2009, their campaign revolve around the issue of corruption with a new adline 'Ab Se Khilana Bandh, Pilana Shuru'.

The international trade union IUF criticized the company in 2009 for not allowing statutory maternity leave to pregnant tea pluckers, and for locking out 1,000 workers on the Nowera Nuddy Tea Estate in West Bengal for so long that the local government began distributing food coupons for emergency rations to workers and their families.[8] In May 2010, a crop sprayer died of suspected poisoning on a Tata estate in Assam, leading to protests at which two more workers were shot dead by riot police.[9]

2010 to present

On 30 January 2012, Tata Global Beverages and Starbucks announced the creation of a 50-50 joint venture called Tata Starbucks Limited, which will own and operate Starbucks outlets branded as Starbucks Coffee "A Tata Alliance" in India. The stores will start beginning to operate in 2012, launching initially in Delhi and Mumbai.[10]

Operations

Tata's tea plantations in Munnar, India
Packages of Tata Tea in a store shelf.

The company was rechristened as Tata Global Beverages to include the range of health and nutritional beverages it wants to enter into. Via subsidiary companies, Tata Global Beverages manufactures 70 million kilograms of tea in India, controls 54 tea estates, ten tea blending and packaging factories and employs around 59,000 people.[11] The company owns 51 tea estates in India and Sri Lanka, especially in Assam, West Bengal in eastern India and Kerala in the south. The company is the largest manufacturer of Assam tea and Darjeeling tea and the second-largest manufacturer of Ceylon tea.

Set up in 1964 as a joint venture with UK based James Finlay and Company to develop value-added tea, Tata Global Beverages has now product and brand presence in 50 countries. It is one of India's first multinational companies. The operations of Tata Global Beverages and its subsidiaries focus on branded product offerings in tea, but with a significant presence in plantation activity in India and Sri Lanka.

The consolidated worldwide branded tea business of Tata Global Beverages contributes to around 86 per cent of its consolidated turnover with the remaining 14 per cent coming from bulk tea, coffee and investment income. With an area of approx 159 km² under tea cultivation, Tata Global Beverages produces around 30 million kg of black tea annually. Instant tea is used for light density 100% teas, iced tea mixes and in the preparation of ready-to-drink (RTD) beverages.

Tata Global Beverages owns five brands in India: Tata Tea, Tetley, Kanan Devan, Chakra Gold, and Gemini. The company has a 100% export-oriented unit (KOSHER and HACCP certified) manufacturing instant tea in Munnar, Kerala, which is the largest such facility outside the United States. Tata Global Beverages has subsidiaries in Australia, Great Britain, United States, Czech Republic and India.

Marketing strategy

In spite of a global presence, the brands are distributed differently depending on the location. As Tata tea is far better known in India and a powerful brand there, it is pushed on this market and countries with a large Indian population. Therefore, Tetley is the company's global face and the largest markets focus on the Tetley brand. Where both brands co-exist in one market, Tetley is positioned as the premium brand.

Social initiatives

Jaago Re!

Tata Global Beverages worked with Janaagraha on a voter registration drive, with the campaign name "Jaago Re!" ("Wake Up!"). Following this, the company moved the campaign on to opposing corruption. The Jaago Re! website encourages discussion on this and other social issues.[12]

Scholarships

Tata Global Beverages awarded the Tata Global Beverages Re-imagination Scholarships on 17 March 2013 to eight students from the 'Urban Scholars' program at Brunel University in London. The participating students were required to write an essay based on the following topic "A hot cup of tea on a cold morning, sharing a joke over a cup of coffee, a sip of cool water after a long trek. Beverages are part of our everyday life and yet they also sprinkle some magic on it- moments of reflection, sharing, inspiration and laughter...moments which take us away from the ordinary. What do you think makes a magical beverage moment?"[13]

Criticism

In January 2014, Tata Global Beverages and International Finance Corporation (IFC) which is part of World Bank were criticized for poor working conditions, low wages, and gross human rights violations in a report released by Human Rights Institute at Columbia Law School. The report alleges Amalgamated Plantations Private Limited (APPL) that is partly owned by Tata Tea and IFC is in violation of many of provisions of Indian Plantation Labor Act (PLA) on its tea plantations in Assam and West Bengal.[14][15]

In March 2014 a documentary on The Guardian news web site claims that Tata Global Beverages is underpaying the minimum Indian wage at an Assam tea plantation that Tata co-owns with Tetley and other major tea producers.[16]

In October 2015, a movement of 6000 women labourers calling themselves "Pempilai Orumai", or women's unity laid siege to the Munnar tea estates, one of Kerala's most popular tourist destinations and owned subsidiary of Tata teas plantation in Kerala. Trade and tourism were brought to a near standstill but, after nine days of protest and marathon negotiations overseen by the chief minister of the state, it gave in.

It was a stunning victory: a group of semi-literate women had taken on the most powerful interests in the state and won. The spark that ignited the protest was a decision to cut the 20% bonus paid to tea pickers, but its roots go much deeper than that. "Part of the women's complaint is that they live in one-bed huts without toilets and other basic amenities and, while they earn significantly more than the tea workers in Assam, they say the 230 rupees (£2.30; $3.50) they are paid for a day's work is half what a daily wage labourer in Kerala would get."[17]

Contrary to media speculation, it is a well known fact that every single worker in the Munnar plantations owned by Tata Global Beverages is provided with free education for their eligible children at the reputed High Range School, where they study along with the children of other employees in the company ranging from tea pluckers to managerial level staff. The workers are also afforded free access to a multi-speciality hospital set up and run exclusively by Tata Global Beverages; the hospitals equipment is modernized every year.

The company also maintains a facility for the differently challenged children, which provides educational and vocational training, through a trust created solely for this purpose.

The difference in wages between workers in Kerala and the workers in Munnar, is hugely offset considering these facilities provided by Tata Global Beverages.

See also

References

  1. ↑ "Tata Global Beverages names Ajoy Misra as new MD & CEO". The Economic Times. 30 January 2014.
  2. ↑ "Archived copy". Archived from the original on 11 November 2006. Retrieved August 30, 2006.
  3. ↑ "Archived copy". Archived from the original on 31 December 2013. Retrieved January 13, 2014.
  4. ↑ "Archived copy". Archived from the original on 12 November 2006. Retrieved August 30, 2006.
  5. ↑ "Archived copy". Archived from the original on 5 April 2013. Retrieved March 27, 2013.
  6. ↑ "UPDATE 1-Tata Tea sells stake in new plantation firm to IFC". Reuters. 2007-02-19. Retrieved 2016-04-01.
  7. ↑ "Tatas buy Eight O'Clock Coffee". The Economic Times. 26 June 2006.
  8. ↑ "IUF". IUF. 2009-11-23. Retrieved 2016-04-01.
  9. ↑ Press Trust Of India, Tetley accused of rights violation, Hindustan Times, 30 September 2010. Retrieved 7 October 2010.
  10. ↑ "Archived copy". Archived from the original on 2 February 2012. Retrieved January 31, 2012.
  11. ↑ "Archived copy" (PDF). Archived from the original (PDF) on 9 September 2006. Retrieved August 30, 2006.
  12. ↑ "Archived copy". Archived from the original on 26 January 2010. Retrieved January 7, 2010.
  13. ↑ "Archived copy". Archived from the original on 23 April 2013. Retrieved March 27, 2013.
  14. ↑ ""The More Things Change ..." : The World Bank, Tata and Enduring Abuses on India's Tea Plantations" (PDF). Web.law.columbia.edu. January 2014. Retrieved 2016-04-01.
  15. ↑ "Hopes, and Homes, Crumbling on Indian Tea Plantations". The New York Times. Retrieved 2016-04-01.
  16. ↑ "Assam's modern slaves: the real price of a cup of Tetley tea - video | Global development". The Guardian. Retrieved 2016-04-01.
  17. ↑ "The Indian women who took on a multinational and won". BBC News. 2015-10-19. Retrieved 2016-04-01.
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