VIETNAM – Tata Coffee an Indian coffee and tea processor, has received the board’s approval for a significant investment of US$54.01 million in the capacity expansion of its wholly-owned subsidiary, Tata Coffee Vietnam Company.
The board has given the green light for the establishment of an additional 5,500-tonne freeze-dried coffee facility in Vietnam, signalling the company’s strategic move to meet the escalating demand for freeze-dried products.
The current capacity of Tata Coffee Vietnam Company stands at 5,000 tonnes, with a notable underutilization of about 96%.
The proposed additional capacity, slated to be implemented in the next two years, aims to address the growing market demand for freeze-dried coffee products.
The funds required for this expansion will be sourced from internal accruals and bank financing, demonstrating Tata Coffee’s commitment to its growth initiatives.
The company sees this investment as a crucial step in aligning with market trends and ensuring a robust response to the evolving consumer preferences in the coffee sector.
Tata Coffee’s stock experienced a notable surge, reaching its 52-week high mark of ₹280 per share on the Bombay Stock Exchange (BSE) during morning trading.
Despite a slight dip in the closing hours, the company’s scrip concluded the day 0.40% higher at ₹277.25 per share. Over the year, Tata Coffee’s share value has witnessed a significant improvement, rising by 27.44% year-to-date and by 19.17% in the last twelve months.
In an official statement, Tata Coffee highlighted that the decision to expand the freeze-dried coffee facility in Vietnam is part of the company’s broader strategy to focus on branded coffee. The move aligns with Tata Group’s overarching strategy of “building core categories for the future.”
Puneet Das, President of Tata Beverages, emphasized the tremendous opportunity that the coffee business presents for the Tata Group.
“Coffee is an opportunity that is staring us in our face. We are now on the right trajectory in the coffee business and we have to maximize our offerings and up our coffee play,” he stated.
Tata Group, traditionally known for its core categories like tea and salts, is diversifying its focus to include coffee as a prominent core category for future growth.
Over the past three years, Tata Coffee has substantially increased its focus on the coffee segment, recording impressive growth rates.
“Last year we grew 31%, last quarter saw coffee growing 21%, overall, we are seeing double-digit growth in this segment and will continue to grow in the 30% range in the future as well,” Das said.
“This strategic move not only positions Tata Coffee as a key player in the coffee industry but also underscores its commitment to meeting the evolving needs of consumers while contributing to the growth trajectory of the Tata Group.”
