Financial Daily from THE HINDU group of publications
Thursday, Feb 19, 2004
Tata Coffee to focus more on value-added segment
Bangalore , Feb. 18
TATA Coffee sees value-added products accounting for nearly 80 per cent of its sales in the next three to four years.
At present, a little over 40 per cent of the 10,000 tonnes coffee that the company grows in its 24,000 acres estates is sold in the value-added form.
"We are consciously trying to get out of the commodity game and focus on value-added segment," said Mr M.H. Ashraff, Managing Director, Tata Coffee.
The company is looking at increasing its value-added sales to between 70 per cent and 80 per cent over the next three to four years.
Towards this, it has decided to pump in resources to rev up its branded business in the domestic market.
"Our Mr Bean brand has had a good beginning in the southern markets. Once it becomes an established flagship brand nationally, we will look at other brands that are not doing well now," Mr Ashraff said.
The company is also trying to enhance the value-add component in its export sales by strengthening market presence in Russia and the Europe. While its joint venture plans for a manufacturing unit in Russia currently takes a back seat, the company is making moves to gain a foothold in the east European market through an outright purchase or strategic stake buy in an established brand.
The company has had initial talks with a player in Serbia. "A deal of this sort will help us to become the preferred supplier to the acquired brand and give us access to a roastry in that part of the world, which will become part of the European Union," he said. Mr Ashraff expects Tata Coffee to clinch a breakthrough in this regard within two years.
Meanwhile, the company is targeting a network of 10,000 coffee vending machines in a years' time, he said. The vending machine business, started three years ago has been registering a 100 per cent growth and the company has sold about 4,000 machines till now.
"We are concentrating on institutional sales to grow this business," he said adding that it would help the process of value addition.
The company, which made a feeble entry into the branded pepper business some years ago, is likely to revisit it now.
"We are taking a re-look at value-added pepper, which is one of the important allied commodity grown along with coffee," he said adding that the company sees tremendous opportunity in this space.
Tata Coffee expects its organic coffee growing estates to get a certification this year, which would help it to fetch substantial premium in the US market. At present, the company grows organic coffee in about 80 hectares but has ruled out expanding it in the near term.
"We are a little cautious about expanding as we want to see how the market evolves for the Indian organic coffee," he added.
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