Tata Global Beverages (TGBL) expects more than a third of its sales to come from premium products, shoring up margins in the next 2-4 years.
The contribution of premium products is currently a ‘high single-digit’, said Ajoy K Misra, Managing Director and CEO, TGBL.
The Tata group company ventured into the premium beverage segment around 2 years ago with the launch of ‘Tata Tea Veda’ in India, and ayurvedic tea brand ‘Tetley Balance’ in Canada.
TGBL’s focus on its premium products has helped improved the company’s margins in the last two years; the operating profit margin rose to 23.33 per cent during FY18, against 13.38 per cent in FY17.
New offerings
Misra said an increasing number of consumers now opt for premium products, driving higher growth in the segment. The growth would also be aided by the launch of new products, both in India and overseas.
With a focus on health and wellness, the company relaunched its green tea variants for the domestic market under the Tetley brand.
TGBL has also launched two products catering to the South India market.
The Tata Tea Chakra Gold is a blend of Assam tea with natural extracts of kokum, amla and lemon grass. The product has been able to grab a “good market share” since its launch earlier this year. TGBL has also launched the Kanan Devan Duet – a blend of black and green tea.
Both offerings were conceptualised keeping in mind evolving lifestyle needs, Misra said.
TGBL has also launched three new products in the overseas markets. In the UK, it has come up with Tetley cold infusions to brew fruit and herbal teas in cold water.
“We launched this about 2-3 months ago. The growth rate has been impressive in the UK, where tea is otherwise not setting things on fire,” the CEO said.
Based on the initial success of the category, TGBL is mulling the launch of cold infusions in other markets, and also in India.
It has also entered the squash market under the Tetley brand.
Retail stores
TGBL is also exploring the possibility of setting up tea retail stores to move up the value chain.
On a pilot basis, the company has set up four ‘Tata Cha’ stores in Bengaluru across various formats: high-street, mall and kiosk.
“We saw the trend of tea retail and tea shops slowly becoming popular and decided to test the proposition to capture the value-chain,” he said.
While Tata Cha outlets would largely focus on beverages and tea retail, it would also serve certain authentic Indian food menu, he said. The company would, however, wait to see the success of its pilot before finalising its plans for retail foray on a country-wide basis.