Tata Coffee talks supplies with Starbucks

Tata Coffee is at an advanced stage of discussion with the Starbucks management to start manufacturing coffee for their retail sales.

“We are in talks with Starbucks management for a manufacturing arrangement, Hameed Huq, managing director, Tata Coffee, said.

“This basically means all coffee meant for retail sales by Starbucks will be produced and packaged by us. While talks are at advanced stage it will be difficult to put a timeframe as to when this deal will get concluded.”

Huq, however, did not specify if the manufacturing for retail sales will be specifically for the Indian market or include some of Starbucks’ international markets as well.

The deal, according to sector analysts, is in line with the Tata Coffee management’s strategy of building long-term relationships with coffee brands globally.

MD Kumar, executive director-finance, Tata Coffee, categorically said that the company is aggressively working towards becoming the preferred brand (of coffee manufacturer) for all the private label coffee brands globally.

“It’s an approach to put in place a more successful and sustainable business model without getting into branding ourselves. The idea is to be the brand behind the brands, build relationships with private labels and ensure continuous supply of coffee to established/leading brands globally,” said Kumar.

On the instant coffee front, the company is looking to expand current capacity from 6,000 tonne to over 8,000 tonne in the immediate future. The overall plan however, according to Huq, is to double the current capacity to 12,000 tonne within this financial year.

“We are building capacity at the Madurai plant which will see capacity addition of 2,000 tonne very soon. The overall capex required for this will be to the tune of Rs50 crore,” said Huq.

Having helped some of the Russian and Japanese coffee brands with their packaging in addition to manufacturing their requirements, Tata Coffee is also looking to set up a few packaging units in the international market.

“The idea is to save on the freight cost, create efficient logistics management and be able to make timely supplies to markets like Europe, Africa and Russia and Japan. Going forward we will be looking to set up a packaging plant in Europe to start with and a second one in Russia if the situation demands then,” Huq
said.

Tata Coffee’s profit after tax atRs12.92 crore was up 127% compared to the same period last year while its turnover at Rs120 crore was up 29% from the corresponding period last year.