Reeling under a constant threat of price-war from unorganised local players, Tata Tea Limited is rapidly expanding its exposure to non-traditional segments of the market like ice-tea and organic tea to sustain its growth in earnings.
TTL, considered a leader in traditional hot-tea segment, will shortly launch its ice-tea products under the international brand Tetley.
"Currently, we are tasting the product at our Bangalore centre and the product would be out in the market by end of the current financial year," TTL executive director V Venkiteswaran told a group of visiting journalists at Munnar, a hill-station which houses 27 TTL tea estates.
Venkiteswaran said that there had been a gradual fall in tea prices in India in the last three years because of low-priced products offered by the small local players and this had put operating margin under severe pressure.
TTL is a dominant player in the branded package tea market under the names of Kanan Devan in South and Tata Tea in North India.
Its acquisition of the international brand Tetley some years ago added value to the packaged tea portfolio.
However, the demand for packaged tea has remained stagnant and prices have been declining in recent years following the entry of local operators both in the packaged and loose tea segments.
"Now we intend to leverage our brand name by introducing beverage products like ice-tea..... we want to be present at every point of offerings,: he said.
Tata Tea has been growing organic tea in its 250-hectare plantations in Munnar since 1999 and is actively pursuing foreign bulk buyers for exporting the organic tea, mainly to Europe and USA.
Tata Organic Tea comes in orthodox black tea and green tea variants which is fully certified by the Institute for Marketecology of Switzerland.
"Our future focus would be deepening our marketing network both at home and abroad since the world market is for organic tea in the order of three million kg per annum," Venkiteswaran said.
While the domestic market for organic tea is insignificant, the world market is dominated by Chinese products and the prices also dropped from $4 per kg to $2.50 per kg due to low offerings by Chinese traders in past two years.
Though the price is not economically viable for Indian firms to get into such specialised tea markets, he said looking at the fast changing behaviour of the traditional hot-tea market big firms TTL need to be present in every segment of the market.
Other countries like Sri Lanka and Kenya were also major exporters in the global organic tea market.
TTL's South India plantation division contributes about 25 per cent to the company's total turnover of Rs 80 crore (Rs 800 million).
The value addition comprises 45 per cent of TTL's tea production.
TTL buys only 15-20 per cent of its requirements from weekly tea auctions at Kochi, Kolkata and Guwahati.
It was the first to introduce 100 per cent instant tea to the USA for institutional trade there. It has an installed capacity to produce 2,170 tonnes of 100 per cent instant tea per annum at Munnar.
UNI