Tata Tea, Coke in Tie-Up Talks
Indian Express
November 8, 2007

In a surprise move, cola major Coca-Cola India and Tata Tea Ltd, the world's second-largest tea company, are believed to be planning a strategic alliance to enter new categories in the Rs 69,000-crore Indian FMCG market. Both companies are in advanced talks in New Delhi to clinch an agreement, key industry sources said.

"Tata Tea, in association with Coca-Cola, is planning to enter the enhanced water sector as well as iced tea category in India. Coke chief Atul Singh held a series of meetings with senior Tata Tea officials in Delhi," added a source in the know.

When contacted, a spokesperson for Coca-Cola India said, "We will not comment on market speculation."

Atlanta-based beverage giant Coca-Cola Company has just completed the acquisition of shares in US energy drink maker Energy Brands Inc (also known as Glaceau). In May this year, Tata Tea sold its 30% stake in Energy Brands to Coke for Rs 4,900 crore. Currently, Glaceau's portfolio includes the brands VitaminWater, FruitWater and SmartWater.

Coca-Cola arch rival PepsicCo India is also planning to enter the enhanced water sector in the near future. PepsicCo India already has a strategic alliance with Hindustan Unilever Ltd to market Lipton Ice Tea across the country.

According to industry analysts, Tata Tea's strategy is in line with the company's vision of becoming a global beverages player. "Recognising the tremendous growth potential for value-added water in India, the company is now joining hands with Coke to enter this niche sector," said an analyst based in Mumbai.

The Rs 1,500-crore packaged water industry in India has taken to the enhanced/energy water segment with unusual zeal. Recognising the need for energy water in their portfolios, major players are now entering the niche sector. On June 1, Tata Tea acquired management control of Mount Everest Mineral Water Company, owners of the Himalayan brand of bottled water.

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