Tata Coffee eyes Russia
August 9, 2007
Tata Coffee is exploring the possibility
of a joint venture in Russia and CIS countries
for soluble coffee.
Analysts predict that
the market for coffee in Russia will grow
to become as big as western Europe and the
Spain's Seda Solubles
and Switzerland's Alma Foods already have
tieups with local companies in Russia.
Tata Coffee is on the
look-out for joint venture partners in eastern
Europe but for mature markets such as western
Europe and the US, it will take the acquisition
"In Russia and CIS
countries, our largest export market, we
are exploring joint venture tieups. However,
we are yet to start talking to potential
"Creating a coffee
brand for Russia will take a year or two.
We are yet to decide on the mode. With the
Russian economy doing so well, any coffee
brand from India will be successful in the
lower end of the market," M.H. Ashraff,
managing director of Tata Coffee, told The
Tata Coffee also plans
to move up the value chain in the Russian
coffee market by producing and processing
higher grades of coffee. Global majors such
as Seda Solubles and Alma Foods have tie-ups
with local partners for packaging and logistics.
Seda sells coffee in glass bottles, while
Alma uses cans and sachets.
Last year, Kraft Foods
built a $100-million freeze dried soluble
coffee plant in Russia. Tata Coffee would
also export freeze dried coffee to Russia
from its new plant, which was inaugurated
in March this year. Nestle also has a coffee
processing plant in Russia.
Ashraff feels that for
developing markets like Russia and eastern
Europe, joint ventures work well but for
more mature markets, the acquisition route
is the best. Tata Coffee had acquired the
Eight 'Clock coffee brand in the US.
The Russian coffee market
rose 4 per cent in volume to 108,000 tonnes
in 2005. Demand for natural coffee grew
9 per cent. Soluble or instant coffee and
coffee mixtures rose 3 per cent in volume