Godrej set to brew tea and coffee, ropes in veteran Barua

Mohini Bhatnagar
08 October 2002

Recently Godrej Industries incorporated a new subsidiary, Godrej Tea, in which the Godrej group will hold a 60-per cent stake, while Barua and two non-resident Indians will hold the remaining 40 per cent.

Senior Godrej officials reveal that initially Godrej Tea will identify a range of tea and coffee flavours accustomed to Indian consumers’ taste. At a later stage the group might look at picking up a stake in one of the national coffee retail chains. The officials add that the group feels this category has a lot of potential and there is room for more players.

The company’s manufacturing operations will be set up in the southern part of India, as tea is sourced from the auctions and blended and packaged there. The brand name of the tea has not been chosen yet though it will be launched under the Godrej umbrella.

The company is in the process of setting up a full-fledged top management team under Barua. The tea industry in India is at present going through uncertain times. With countries like Sri Lanka and Kenya giving stiff competition to Indian teas, the industry is gearing up for tough times ahead.

In the packaged tea market HLL is the market leader with a share of around 30 per cent, followed by Tata Tea at 20 per cent. There is cut-throat competition among the leading players in the packaged tea market with each player trying to outdo the other in offering freebies and prizes to keep sales moving. As a result, collections are actually falling.

But, in the past two to three years, out-of-home consumption of hot beverages has been on the rise and tea and coffee vending machines are fast becoming a lucrative source of revenue. HLL and Nestle have got into this segment in a big way.