Siganporia: Looking ahead

Calcutta, May 2: Tata Tea (GB) Ltd, UK, a subsidiary of Tata Tea Ltd, has signed a definitive agreement to acquire the assets of JEMCA, the leading tea company in the Czech Republic.

The acquisition of the $12.5-million JEMCA is being funded by The Tetley Group.

“Through our Tetley brand we had a presence in Poland but were not able to make any significant headway in the Czech Republic or the eastern European market. This acquisition, therefore, is not only in line with growing the Tata Group’s tea business around the world but also make an entry into a market where the company was previously not represented,” said Percy Siganporia, managing director, Tata Tea.

JEMCA is part of the Czech food processing company Alima Znac kova Potravina a.s., which plans to concentrate on its frozen foods business and therefore divested the tea division.

The company sells a wide range of black, green, fruit and herbal teas and has a factory in Jemnice, 200 km Southeast of Prague.

Tata Tea officials declined to comment on the commercial value of the deal.

JEMCA is the leading tea company in the Czech Republic with a 26.6 per cent market share, while its nearest rival has a share of around 21 per cent.

JEMCA has been in the business since 1974. It was originally part of a state-owned company, which was later acquired by the Alima group.

Siganporia said JEMCA would continue to pack teas at its production facility in Jemnice and sell it under the JEMCA brand.

“We believe that Tetley and JEMCA will compliment each other well and combine to ensure a significant presence in eastern European markets,” Siganporia said.

In February, Krishna Kumar, vice-chairman of Tata Tea, had indicated that the company was looking at a greenfield business in China in the tea beverage space and would spin off plantation businesses in Sri Lanka and north India.

The tea beverage space, on the lines of a health drink, would be a new segment where the company has had no prior presence, Kumar said.

Traditionally, China has a strong domestic green tea market.

The details of the project is being worked out and it would be placed before the board in six months time.

The company is also planning to acquire two brands in North America.

The greenfield project in China was over and above the company’s acquisition plan, the cost of which would broadly be around $1 billion.

Tata Tea is close to acquiring two brands in north America for around $100 million each. It had shortlisted some brands from north America in the beverage space, including flavoured and herbal teas.

The Tetley deal was worth $475 million.

The demand for herbal and speciality tea has grown over 50 per cent in the last four years in the UK and the growth rate was nearly 8 per cent in the US.