BANGALORE: Tata Coffee, India’s largest producer of the commodity, said Friday it will sell instant coffee under the Eight O’Clock brand name in its overseas markets after buying the US company for $220 million (Rs974 crore) last year.
Tata is also setting up a coffee processing plant in Uganda that will export to China under the brand name Crane, owned by the government in Kampala, said Managing Director Hamid Ashraff.
The plan to export Eight O’Clock to Russia, the Ukraine and other former Soviet states is part of a drive by Tata Coffee to move into branded operations from being a commodity-based company, Ashraff said.
It is starting production of so-called freeze-dried instant coffee, a high-end variety, at a new 2,500-tonne plant by March that will be sold overseas under the Eight O’Clock brand, Ashraff told reporters.
Freeze-dried coffee results from brewed coffee that has been frozen before the water is evaporated. It is more expensive and flavorful than regular instant coffee that is “spray-dried.”
“The consumption of spray-dried coffee is on the decline in Russia and other export markets while the consumption of freeze-dried coffee is growing by leaps and bounds,” said Ashraff. “It sells for three times the price” of the low-end variety.
Tata Coffee now exports bulk coffee overseas to be packaged and sold under private labels.
The company plans to convert the entire production of soluble coffees and the new freeze-dried variety into branded operations and transform itself from being a commodity trader into a “branded player in key markets,” he said.
The Indian company, which exports half its annual production of 10,000 tonnes, has 16 coffee plantations in the southern state of Karnataka, of which Bangalore is the capital, and one in neighbouring Tamil Nadu.
It reported a profit of Rs223 million on sales of Rs1.91 billion in the year ended 31 March 2006.
Tata Coffee acquired Eight O’Clock in June last year from Gryphon Investors to gain a foothold in the lucrative US market where the brand is sold by popular retailers including Wal-Mart.
Tata Coffee produce isn’t sold in the US under the brand name, but “they are seriously looking at our coffees,” said Ashraff.
The US brand also isn’t sold in India, which imposes a tariff of as much as 106% on imported coffee, he added.
“The product, if it’s sold here, will be that much more expensive.”
India has traditionally been a nation of tea drinkers, consuming 10 times as much tea as it does coffee.
Average per-capita consumption of coffee in the nation of 1.1 billion people is 80 grams a year, which Ashraff said is “laughable.”
Yet consumption of coffee is rising, jumping to 80,000 tonnes in 2006 from 60,000 tonnes the year prior, Ashraff said.
“The growth is coming mainly from coffee bars mushrooming all over the country and more young people drinking coffee,” he said.
Bangalore will host a three-day international coffee festival bringing together growers, roasters, brewers and tasters starting Friday evening.