Cost Cuts, New Investments Paying Off, Says Tata Global
Tata Global Beverages Ltd.’s efforts to restructure its business and unveil new products have started paying off, said Chief Executive Officer Ajoy Misra.
The world’s second-largest maker of branded tea took steps to manage costs by restructuring the existing business and making investments in new areas, Misra told BloombergQuint in an interview. The company has launched several new products in India and outside, including ready-to-drink tea to sparkling water to flavoured beverages.
A global fall in tea production has only helped. Output declined in India and Kenya, the world’s biggest exporter of black tea, pushing up prices. That drove a rally in tea stocks. Shares of Tata Global have surged 150 percent, five times more than Nifty 50 Index.
It’s also betting on the Goods and Services Tax. Branded tea contributes half the consumption in India and GST implementation will boost profit growth, Misra said. Tea is taxed at 5 percent under the new indirect tax regime compared to 7 percent earlier.
Joint ventures with coffee chain Starbucks and ready-to-drink beverages maker NourishCo Beverages Ltd. have shown good growth, Misra said. He expects the momentum to continue.
The company launched new premium products in both domestic and international markets Australia and Canada, he said. It recently unveiled its first retail tea store—Tata Cha—in Bengaluru.
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