Tata Global Beverages mulls entry into foods biz, eyes markets in South America

by Dave

Tata Global Beverages Ltd (TGB) is looking to enter the foods business to tap opportunities arising from the need to “address nutritional and lifestyle challenges”, Ratan Tata, chairman of the Tata group, told shareholders of the company, formerly Tata Tea Ltd, at its annual general meeting on Monday.

The foods business is competitive and vulnerable to fluctuations in prices of raw materials, but analysts still see it as among the most profitable businesses in the consumer products area.

For an established brand, gross operating margin from foods could be 35-55% though the business demands a lot of investment upfront, said Anand Ramanathan, advisory services manager at audit and consulting firm KPMG.

TGB’s chief executive officer Peter Unsworth said on Monday that his firm’s revenue from beverages should be around $5 billion by 2015, whereas at the 2009 annual general meeting, the company had said it was aiming for revenue of $10 billion in five years, or by 2014.

For the next five years, TGB expects operating profit to grow at 15% year-on-year, Unsworth said, adding that TGB would double its geographical presence to 100 countries over the next few years.

Also on the company’s radar are markets in South America, TGB’s vice-chairman R.K. Krishna Kumar said.