Tata Tea to outsource herbal tea manufacturing in US

February 2nd, 2009 - 7:27 pm ICT by IANS  

Kolkata, Feb 2 (IANS) Tata Tea Ltd will outsource manufacturing of Good Earth, its herbal tea brand in the US, to an existing joint venture in that country to save “over $1 million” (about Rs.5 crore) annually, a top company official said here Monday.”We have decided to opt for an outsourced model within the US as the yearly savings that would accrue to us would be anything over $1 million,” Tata Tea managing director Percy Siganporia told reporters at a press conference.

Siganporia, however, did not indicate from when such savings would get reflected in the company’s financial results.

Tata Tea has acquired the Good Earth brand from Good Earth Corp, apart from several other buyouts in the US.

Good Earth, which is manufactured at Tata Tea’s own facilities in the US, will now be produced by Southern Tea, an existing 50:50 joint venture the Indian company has with Harris Freeman, an American importer and distributor of spices, tea and coffee.

Southern Tea currently manufactures Britain’s tea brand Tetley for the US market.

Tata Tea employees at Good Earth’s manufacturing unit will be shifted to Southern Tea.

Good Earth’s current scale of manufacturing in the US is “miniscule” and does not support the costs associated with it, Siganporia said, without mentioning the current scale of Good Earth’s manufacturing facility.

Tata Tea is also planning to restructure its management set-up in the US that takes care of operations of tea wholesaler FMali Herb Inc, Eight-O-Clock Coffee Co, and a plantation at Plant City in Florida apart from the Tetley and Good Earth brands, he said.

FMali belongs to Tata Tea US subsidiary Tetley US Holdings, while Eight-O-Clock Coffee belongs to another subsidiary, Tata Coffee.

“We plan to consolidate our management set-up in the US under a unified command as this will eliminate large chunks of administrative costs,” Siganporia said.

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