An African safari for Tata Tea

The South African market has become a hot destination for Indian consumer companies. Tata Tea is the latest to enter that market with another acquisition, though much smaller in size compared to its other ones. Its acquisition of a 33% stake in Joekels Tea Packers, a SA-based tea company, gives it a foothold in a fast growing market. The company’s turnover is just $5m or Rs 23 crore, small in comparison to Tata Tea’s consolidated turnover of Rs 3,124 crore.

But, their interest seems to stem from gaining entry into the region, and Joekels’ management strength. It fills a gap in Tetley’s global footprint. Tetley plans to sell its own products through Joekel, which will also produce them, in South Africa and its neighbouring markets. The fresh investment from Tetley will give an impetus to Joekels’ sales growth, too. It has a 5% share and is the third largest player in the market, which offers scope for improvement in its share of a $100-m market.

The minority stake is similar to its Glaceau deal, where it acquired a 33% stake. That will mean that it will retain the existing management, and over a period of time hike its stake in the firm, depending on the performance of Joekels.