Tata Coffee expects international coffee prices to increase

Venkatachari Jagannathan
30 August 2003

Speaking about the international market trends, Tata Coffee managing director M H Ashraff says: "The coffee crop in Vietnam has come down while that of Columbia has increased. Last year, the production in Vietnam was high, resulting in a glut in the international market."

Though the domestic coffee plantations experienced a fall in production last year, the plantations owned by Tata Coffee bucked the trend. "Last year India experienced an 8-per cent drop in coffee production. But our plantations registered a 14-per cent increase in output," says Ashraff. "The yield increase was achieved by not cutting on any crop inputs."

The Rs 178-crore Tata Coffee is Asia''s largest integrated coffee company owning 20,000 acres across 26 estates in and around Coorg in Karnataka. The company produces 10,000 tpa of coffee and is the second-largest exporter of instant coffee from India. However, Tata Coffee was not able to break the stranglehold of Nestle in the domestic instant coffee market with its Tata Café and Tata Kaapi brands.

The filter coffee market, mainly in the South, shines bright for the company, though. "The market size of the roast and ground coffee in the South could be divided into three categories — pure coffee (price range per kg Rs 110-Rs 135; volume 7,500 tpa), coffee with chicory mix (per kg Rs 85-Rs 140; 10,500 tpa) and other varieties (per kg Rs 60-Rs.85; 11,000 tpa)," says Ashraff.

On the other hand, Tata Coffee is now focusing its efforts on the Southern filter coffee market by launching a new brand, Mr Bean, a chicory-mixed coffee in the ratio of 47 (chicory) : 53(coffee). Tata Coffee''s earlier chicory-coffee brand is Tata''s Pure Double Roast while its pure coffee brand is called Tata''s Coorg.

"In Kerala Mr Bean has been received well. In a short time, the brand has captured 17 per cent of the market share in its segment," says Ashraff. The direct competition for Mr Bean is Hindustan Lever''s Green Label and several other local brands. But HLL hasn''t introduced any new brand in this category.