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ndzapak
Senior Member
Joined: 13/May/2007
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Posts: 229
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   Topic: Tata Tea : Towards becoming a beverage behemoth
Posted: 30/Jun/2007 at 10:23pm |
Tata Tea is in the midst of transforming itself to become a global beverage player.
After having sold its plantation business , the company is focusing itself to become a large player in the beverage space globally. It has been acquiring companies globally like its peers in the Tata group. After buying Tetley, Good Earth, Eight O’ Clock Coffee, Himalayan Water and selling 30% stake in Glaceau for handsome profit, Tata is likely to bid for US drinks arm of UK-based Cadbury Schweppes. Recently there were reports that Tata Tea is interested in joining a bid for Cadbury Schweppes' US beverage business to secure the Snapple range of fruit drinks and iced teas.
Rs 4,045 crore tea and coffee maker had picked up a 45.7 per cent stake in Mount Everest Mineral Water, which owns the Himalayan natural mineral water brand. The value of the company, according to Percy Siganporia, managing direcor, Tata Tea, lies in an aquifer in the Himalayas, which is one of the largest, purest and perennial sources of spring water.
“The aquifer is on a 99 year old lease from the government and barely one per cent of its potential which could be about a billion litres, has yet been tapped,” says Siganporia
In India, the space is fragmented with nearly 200 brands, most of them regional. But experts say that with investments coming in, there is bound to be some consolidation. In a price sensitive market, even those that have priced their products lower than Himalayan, are not finding the going easy. Nestle has reportedly withdrawn its product, taking a Rs 50 crore hit. Himalayan is priced at a premium—a one litre bottle retails for Rs 25 compared with Rs 14 for other brands. Foreign brands such as Evian and Perrier are, of course, priced far higher at between Rs 80 and Rs 110 a litre.
However the company believes that customers will upgrade. “Aspirations are growing and we believe that customers will be willing to pay a premium for spring water,”he says. it’s not just the home market that Tata Tea’s setting its sights on; Siganporia believes there’s tremendous potential overseas. That’s true. Sales of bottled water in the US market alone were about $1 billion in 2006 and the market is growing. Mount Everest,may be a small brand,but for Tata Tea it’s a good start The company is expected to position the Himalayan as the leader is the natural mineral water category to compete with Perrier and Evian, famous brands that source water from the Alps Mountains
Edited by ndzapak - 30/Jun/2007 at 10:26pm
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the Equitydesk is the best
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capstar410
Newbie
Joined: 13/Jul/2007
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Posts: 1
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Posted: 13/Jul/2007 at 8:45pm |
Beverage stocks have proven themselves as pivotal assets in
portfolio investments as well as individual stock investments...the questions
is, which one should you choose...Here's a report i found that might help.
http://www.pennysleuth.com/rpt/beveragestock.html
-Cheers!
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kg
Senior Member
Joined: 08/Mar/2007
Location: India
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Posts: 228
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Posted: 26/Jul/2007 at 10:59pm |
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shd i hold or sell
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Lets rock
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India_Bull
Senior Member
Joined: 19/Sep/2006
Location: United States
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Posts: 2296
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Posted: 26/Jul/2007 at 1:09am |
Krishnajee,
You have started asking questions just like Awwaz and TV 18 viewers. Jokes apart Tata Tea is a good company geting its act together , I am not sure about its relationship with Tata Coffee, but if Tata Coffee is subsidiary of this, then definately it shd do well, my commodity friends tell me good future for Coffee.
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India_Bull forever Bull !
www.kapilcomedynights.com
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basant
Admin Group
Joined: 01/Jan/2006
Location: India
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Posts: 18403
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Posted: 26/Jul/2007 at 10:58am |
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Tata Coffee is a subsidiary and Tata Tea consolidates results for coffee but finally it is a commodity and while Jim has been right on everything else his coffee call is yet to work out. But he is very bullish on coffee as I read somewhere.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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kg
Senior Member
Joined: 08/Mar/2007
Location: India
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Posts: 228
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Posted: 28/Jul/2007 at 11:18pm |
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@Indian Bull - thanks for reminding me that i shd acting stupid and do my own research also and not seek crutches - thanks a lot .
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Lets rock
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tyro
Newbie
Joined: 07/Aug/2007
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Posts: 4
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Posted: 07/Aug/2007 at 7:53pm |
Could someone please advice me on how to create new topics under this forum, I am posting some of my ideas on this thread which might not be relevant to the topic, sorry for the inconvenience.
Dear All,
I am new to this forum and am very excited to share and discuss investment ideas.
I have certain thoughts with regards Tea Plantation sector which I would like to share with you and would request you guys to voice your opinions and analyze the below mentioned idea.
Tea Plantations
Tea is one of the few agriculture commodities, which has not moved since the Bull Run in commodities started some 6 years back, it’s high time that the cycle turns in favor of producers the same fundamentals (inflations cost escalation of all input variables have gone up across the spectrum)
Tea Sector (sp. Indian plantations) has been in doldrums since last 7-8 years, even though some leaders in the sector have been making reasonable amount of money, sector at large has been an underperformer.
Some companies which a think are screaming buys: Mcleod Russel, Jayshree Tea and Dhunseri Tea.
Being a cyclical sector, I believe we could soon be witnessing an up move in the tea price.
Here I present SWOT analysis for the sector.
Strengths:
- Tea can be considered as a health drink (known of its antioxidant properties) as opposed to more favored coffee, which also has a lot of negative effects on health.
- Demand for tea has been growing at some 2% per annum and should accelerate further as the demographics of the tea consuming nations is favorable (all former British colonies – most of developing Asia, Africa and Middle East)
- Demand and Supply mismatch, which we would observe in coming years because of underinvestment in the production activities worldwide. Furthermore, it takes 5 years to reap the first tea crop from the time of plantation and no capacity has been added in last 4-5 years.
- Huge land holdings of tea estates could be used for farming of alternative crops alternative (with massive investments proposed for farm and farm related supply chain, in next few years we could see companies like Reliance retail acquiring tea estates for growing fruits and vegetables)
- Tea is one of the few agriculture commodities, which has not moved since the Bull Run in commodities started some 6 years back, it’s high time that the cycle turns in favor of producers the same fundamentals (inflations cost escalation of all input variables have gone up across the spectrum)
- Highly fragmented industry and consolidation could help price rationalization.
Weakness:
- The Indian labor laws are draconian and do more harm to industry and labor than help.
- labor intensive industry and therefore comes with all problems and constrains which are attached to such industries (labor unions, politics and low productivity)
- Scalability is limited; it’s a US $ 5 billion market globally and is growing at a very slow pace.
- Supply from more efficient players like Kenya, Vietnam and Sri Lanka.
- Climate change may do more harm to tea growing region, hence escalating prices but also resulting hampering the capacity.
- The downward trend might continue for some more time.
Opportunities:
- The trend towards the health drink is quite visible; it is up to the tea industry to make the consuming population at large to make aware of the facts.
- Tea has a distinct advantage over more popular beverage – coffee
- To make tea more acceptable and fashionable like coffee
- To come up with new flavors/formulation of the tea
Threats:
- 1. To retain the young population of the tea consuming countries mostly developing countries, from being lured by multination to aerated and flavored drinks.
- Labor problems
- cost escalation
- Fragmented production
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tyler_durden
Senior Member
Joined: 24/Oct/2006
Location: India
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Posts: 1615
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Posted: 07/Aug/2007 at 7:59pm |
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We have discussed tea stocks in some other topics...tata tea is the best bet...though tea is a commodity based business a su veru rightly said...so one needs to master the entry and exit of commoditty cycles....
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If you aren't fired with enthusiasm, you will be fired with enthusiasm.
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