Kolkata: Tata Tea Ltd. plans to set up a joint venture company in Russia and is keen on expanding its share of the U.S. beverage market, a senior company official said on Friday.
Tata Tea, the world’s second-largest branded tea company, has been expanding its overseas presence, buying herbal and fruit tea brands in the United States and eastern Europe, and recently taking 70 percent in a joint venture in China for tea.
“We are planning to set up a joint venture in Russia, which will look at opportunities in both tea and coffee, for Russia and adjoining areas,” R.K. Krishna Kumar, vice chairman of Tata Tea, told reporters after the annual shareholders’ meeting.
“We are talking to a few companies, and hope to set up the joint venture by the end of the current fiscal (March),” he said, without specifying the size of a potential investment.
Tata Tea, which owns the Tetley tea brand, is also keen to increase its portfolio of non-tea beverages.
It recently bought a stake in India’s Mount Everest Mineral Water Ltd. after selling its 30% holding in Energy Brands Inc. to Coca-Cola Co. for $1.2 billion.
It has been reported that Tata Tea, controlled by India’s diversified Tata Group, was evaluating Cadbury Schweppes Plc’s North American beverages unit and could also make a $2 billion offer for U.S.-based AriZona Beverages.
“We are looking at the beverage market in the U.S., since Tetley already has a footprint in Europe and Canada,” he said, adding he would not comment on market speculation on targets.
Tata also said the company might consider share split in future. He said restructuring or amalgamation of the company would also take place at some point in time since there were tax implications involved.
Tata said profits were low because of high interest costs due to loans which had been taken to fund acquisitions.
The company has divested its plantation operations in South India. The model would also be replicated in the north, he said. There would be guaranteed offtake from the two plantations at auction prices, he said.