Good volume growth in the branded business segment and improved performance in some of its associates has boosted the prospects of Tata Global Beverages (TGB) during the second quarter of 2017-18. TGB has interests in tea, coffee and water.
The company’s branded business comprises packet tea, coffee, tea-based beverages and health beverages. Its non-branded business is from subsidiaries like Tata Coffee, associates such as Amalgamated Plantations Pvt. Ltd., Kanan Devan Hills Plantation Co. Pvt. Ltd. and its instant tea business.
Incubatory businesses
This aside, the company also has some incubatory businesses including joint ventures — Tata Starbucks and Nourishco Beverages Ltd., which markets TGB’s water products.
The parent company, Tata Global Beverages Ltd., has 40 subsidiaries, six joint ventures and four associate companies. During the quarter ended September 30, 2017, branded business increased to ₹1,507.4 crore from ₹1,434.7 crore a year-earlier, even as the non-branded business slid marginally to ₹197.4 crore from ₹204.1 crore.
The profitability of the branded business too increased during this quarter against a drop in the profits of the non-branded segment. In an investor presentation, TGB said that the branded business sales improved during the quarter and year-to-date, on the back of good volume growth in the latter half of the quarter.
In India, there was the pilot introduction of a tea cafe in Bengaluru, the unveiling of a ready-to-drink tea-based beverage Fruski, Tata Tea Elaichi, and Tata Coffee Grand, a roast and ground coffee in sachets and jars. In the U.K., the 180-year-old heritage brand Tetley gained market share, driven by its focus on the non-black tea category, the company said. TGB’s consolidated revenues from tea rose from ₹1,166.4 crore in the second quarter of fiscal 2017 to ₹1208.4 crore in the second quarter of this fiscal. In the U.S. market, TGB saw strong topline improvement in its branded coffee Eight O Clock.
The company said that APPL, KDHPC had seen good performances driven by higher volumes and improved realisations. It may be mentioned that APPL’s losses had risen from ₹9.6 crore in 2015-16 to ₹15.3 crore in 2016-17, while KDHP narrowed it in from ₹5.3 crore to ₹0.37 crore over this period.
TGB also recently completed the recast of its Russian operations recently, selling equity in its two subsidiaries against a one- time consideration and a licence fee.
