Innovation is brewing at Tata Global Beverages Ltd (TGBL), formerly Tata Tea Ltd, with evolving consumer preferences.
The Tata Group company, which has been facing headwinds with higher tea commodity cost in North-East India, is depending on new launches and innovations to gain market share.
In India, the company has recently launched two new tea brands - Chakra Gold Activ+ and the Kanan Devan Duet - under the Tata Tea umbrella brand in southern region, whereas in the UK, it has launched products outside tea category.
Recently, it entered the squash category through the Tetley brand and has also launched Tetley Cold Infusions to cater to an evolving market which is seeing "a secular decline" in black tea category for a number of years.
During an analyst call with the TGBL management, Adil Ahmad, global chief marketing officer, said the whole portfolio in the UK, therefore, is changing more towards the non-black category.
Ajoy Misra, MD and CEO, said that for the first time Tetley has entered squashes, which is a large category in the UK and "nearly as big as tea as a category".
TGBL has reported a 6.55% decrease in its consolidated net profit at Rs 133.6 in the first quarter of the current fiscal due to an exceptional item of Rs 18.18 crore. Consolidated total income, on the other hand, grew 6.53% to Rs 1831.11 crore.
L Krishnakumar, executive director and group CFO, said that the exceptional items in the quarter were related to "redundancy and restructuring done in the international business". In the previous year, there was a gain on disposals.
Misra said that company has "seen an improvement in operating performance" in June quarter across its businesses in India and abroad, supported by revenue growths across branded businesses.
TGBL has reported a consolidated growth of 7% in its branded business in the quarter ended June 2018, whereas its non-branded business has faced headwinds, he added. The non-branded business includes Tata Coffee Ltd and other B2B businesses.
The quarter had seen the branded business in India growing at 6% led by a volume growth of 8%. Tetley green tea, the green tea brand has "gained 5.7% volume and 5.9% value in market share".
Responding to an analyst, Misra said that green tea has been a "significant play" for the company, although it is a small part of its overall tea portfolio. According to him, the company has been able to increase its market share and invested behind the brand in terms of campaigns that resulted in better value and volume growth.
According to Misra, in terms of pre-tax profits, the branded business has shown a 14% growth, whereas non-branded business has not done well. The profit before tax for the group, therefore, is minus 3% over last year.
