Tata’s Amalgamated Plantations plans to launch own tea label
Kolkata: In a striking shift in strategy, Amalgamated Plantations Pvt. Ltd (APPL)—the enterprise carved out of the erstwhile Tata Tea Ltd (now Tata Global Beverages Ltd, or TGBL) 10 years ago to run tea estates in West Bengal and Assam—is looking to launch its own label to market tea as it struggles to stay afloat as a pure play plantation company.
Standalone plantations are not viable, said Jagjeet Kandal, managing director of Amalgamated Plantations, one of the biggest producers of tea in India with annual output of around 43 million kg. To survive, companies such as Amalgamated Plantations must consider ways of “value-addition”, according to Kandal.
Amalgamated Plantations will set up its own distribution network ground-up to sell tea in markets where market leaders such as TGBL and Hindustan Unilever Ltd are not strong. “We are a new player trying to create its own market,” Kandal said, adding that only about 50% of tea consumed in India is sold in packets. Amalgamated Plantations is eyeing the balance 50%, which is sold as loose tea.
The company already has a few packet tea labels such as Hathikuli, Anshi and Hattigor, but they are “very small” in scale, according to Kandal. Though the Tata Group owns 66% of the company, Amalgamated Plantations has no plans to use TGBL’s distribution channel to build its new line of business. “We are not looking to create another TGBL,” said Kandal.
So there is no conflict with the company’s principal shareholder TGBL, which owns 41%. Amalgamated Plantations is looking to sell its produce to bulk consumers such as resellers and wholesalers who either sell loose tea or have their own labels, according to Kandal. The company is unlikely to enter large cities, and would focus on smaller ones.
For the past few years, the privately held company has been making losses and is exploring ways to turn itself around. Recently, Tata Group chairman N. Chandrasekaran said at the annual general meeting of TGBL that the group was looking to “prune” its investments, referring to plantation companies that were carved out of erstwhile Tata Tea.