Tata Group to merge coffee business with consumer division, eyes full ownership of UK business

INDIA – Indian multinational conglomerate has announced plans to merge its coffee business which trades as Tata Coffee with its consumer product division.  

This is the second major restructuring its foods and beverages in recent years after the Group merged the salt and branded lentils business of Tata Chemicals with Tata Consumer to create Tata Consumer Products Limited (TCPL).  

The merger will see the plantations business separated from Tata Coffee and housed under TCPL Beverages and Foods. 

Tata Consumer will infuse about Rs 8 crore (US$1.05 million) in this company, the company said in a statement.

The remaining businesses of Tata Coffee which cover branded coffee — including the ownership of American brand Eight 0’clock will then be merged with Tata Consumer.  

Tata Consumer Products Limited owns 57% of Tata Coffee, while the public holds the remaining 43%.  

To effect the transaction, Tata Group plans to issue three equity shares of Tata Consumer for every 10 shares held by them in Tata Coffee. 

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After the share allocation, public shareholding in Tata Consumer will go up to 66% from 65%.  

The plantations business, which includes 18 coffee & pepper estates and the roast & ground coffee facility in Kushalnagar works in Karnataka, had a turnover of Rs 376 crore (US$49.5m) in fiscal 2021.  

The turnover represented 51% of Tata Coffee’s standalone turnover of Rs 737 crore (US$97.1 million) during the said period.  

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Meanwhile, Tata Consumer has said it will issue shares worth Rs 571 crore (US$75.2m) to Tata Enterprises (Overseas) to buy out its 10% stake in its British arm Tata Consumer Products UK Group.  

Tata Enterprises, an arm of sister company Tata International, will own 0.80% in Tata Consumer after the share-allotment. 

 Tata Consumer UK, which clocked a revenue of 228 million pounds (US$300m) in fiscal 2021, markets Tetley and other tea brands in Britain.

It also has subsidiaries in the US, Canada, Poland and Australia and has joint ventures in South Africa and Bangladesh. 

Earlier, Tata Coffee said its board has agreed to extend the contract of company Managing Director and CEO Chacko Purackal Thomas for another three years starting April 1.    

The Board of Directors also approved the reappointment of K Venkataramanan as Executive Director – Finance and Chief Financial Officer of the Company for a term of one year starting from October 25, 2022. 

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