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Tata Coffee to beef up branded lines

Business Standard - June 30, 2006
Tata Coffee is moving from being a supplier to third-party labels to a company that owns labels in the instant coffee market. The company has only a small presence in the branded market through its labels Mysore Gold and International Tata Cafe. Meanwhile, it is a major supplier of instant coffee to Russia, Ukraine and East European markets through distributors.

With the acquisition of Eight O' Clock Coffee of the US, Tata Coffee is looking at making its presence felt in the Commonwealth of Independent States (CIS) and a few South East Asian countries via the brand. Confirming this, M D Kumar, vice-president - finance, Tata Coffee, said, "The perception in Russia and other CIS markets is that anything from a western country is good. Keeping this in mind, we plan to introduce coffee under the Eight O' Clock brand."

At present, Tata Coffee exports 4,000-5,000 tonne of instant coffee. Of this, the share of the company's own Mysore Gold and International Tata Cafe is negligible, he said. The 70,000-tonne Russian market - mainly centred on instant coffee - is one of the largest and grows 14 per cent year-on-year. To cater to this market, the company is setting up a Rs 72 crore freeze-dried plant in India. The plant is expected to be operational by the end of this financial year.

Keeping Russia in mind, the company, which used to export through Beeyu Overseas, has decided to form a joint venture company - Alliance Coffee Limited. This company will undertake sale of its instant coffee products globally. Beeyu Overseas has a strong presence in Russia and the CIS countries. It has been selling tea from India for the past 15-20 years. Tata Coffee plans to leverage this to expand to other markets, said Kumar.

On the possibility of India being a sourcing base for Eight O' Clock Coffee, Kumar said there was no plan at this juncture to change the sourcing pattern. "In future, for value added products, India may figure. Currently, we will not disturb the supply chain and quality of the products," he said.