Tata Tea restructures US ops

Tweaking its country-specific strategies, Tata Tea has gone for a major recast of its US operations and implemented some changes in operations in Great Britain and Canada.
Tata Tea is working on a “cost-based” strategy in the US market, company managing director Percy Siganporia said.

It has shuttered Tetley operations at Shelton, Connecticut, and is in the process of moving its administration, marketing and sales operations of Good Earth Tea from Santa Cruz, California, to near Montvale, New Jersey, where it has its Eight O Clock Coffee operations at present.

“Growing the revenue was challenging in the US and especially where our equity is not strong as it is in Canada or Great Britain. We will eliminate large chunks of operations. We have closed Shelton operations and will move lock, stock and barrel our Good Earth operations to Montvale. Barbara Roth, CEO of Eight O Clock Coffee, will be heading the US operations,” Siganporia said. Tata Tea Inc will continue to operate from Florida.

The next stage would be outsourcing the production of Good Earth Corporation through Southern Tea, the joint venture between Harris Tea and Tata Tea. “Currently, the JV outfit looks after the manufacturing arrangement of Tetley. We could use this as a vehicle to outsourced teas of Good Earth,” Siganporia said.

 Incidentally Siganporia, who will be relocating to London, will be responsible for global manufacturing operations as well as buying and blending supply chain and related activities for the US and Asia Pacific markets.

The strategy is different in Canada where the group has a 40-45% market share in the black tea market.

“The black tea market has been shrinking and there was a need to protect volumes and we decided to increase market share by introducing green tea, herbal tea and special teas. Canada is cutting edge for us,” the MD said. Tata Tea launched Red tea, or the African exotic ‘Rooibos’ (red bush herb), in Canada recently.

With a market share of around 30% in Great Britain, the strategy is to protect the topline, while doing away with discounting measures.

“The recessionary pressures were felt much earlier and we went in for a contrarian strategy. We implemented a price increase in the beginning of the year and eliminated all deep discounts, a main feature for FMCG staples in the country,” Siganporia said.
Back home, the company grew its topline with price strategies in place.

Tata Tea invested Rs 58 crore during the nine months of the current fiscal on its new initiatives across the globe. “We had a war chest of funds from Energy brands, which could have been frittered away in the last nine months. There was a value to be captured by not accelerating acquisitions,” Siganporia said.