Tata enters instant coffee market with Coffee Grand

The beverage arm of the Tata Group on Monday announced it was venturing into the Rs1,300-crore instant coffee market with a new brand, Tata Coffee Grand.

The move comes as the Rs7,833-crore Tata Global Beverages (TGB) looks to increase revenues from the coffee division, one of two areas the company has identified as future growth drivers.

TGB gets 75 per cent of its revenue from tea. Coffee and water contribute around 18 per cent and two per cent respectively. The plan is to take coffee and water revenues to 35 per cent and 7 per cent, respectively, in the next few years, as the company wishes to reduce its dependence on tea.

TGB had set the process in motion a few years ago with a tie-up with global coffee house major Starbucks. At the time, there was big gap in the packaged coffee space in India.

Globally, TGB has brands such as Eight O' Clock Coffee and Grand in its portfolio. The initial plan was to extend subsidiary Tata Coffee's packaged coffee bean brand Mr Bean into the instant coffee space in India. However, this was shelved for a new product altogether.

Sushant Dash, regional president for TGB, said Tata Coffee Grand was developed in-house, after months of research and consumer studies.

A 50g bottle has been priced at Rs130 in the north, west and eastern regions; in the south, it is seven to eight per cent lower, he said. The southern region accounts for 80 per cent of coffee consumption in India and is also driving the shift from roast and grounnd to instant coffee, Dash added.

The brand will also be available in 50g pouches and sachets priced at Rs3, Rs5 and Rs10. Rivals such as Bru from Hindustan Unilever and Nescafe from Nestle are also available in these formats, implying TGB is taking the fight for share to their respective doorsteps, analysts tracking the market said.

TGB will be the third player in this market. Bru and Nescafe make up the bulk of the instant coffee market in India. Bru's market share, according to industry sources, is around 49-50 per cent, while Nescafe's market share is around 51 per cent.

While Dash of TGB did not indicate what was in store for promoting Tata Coffee Grand, he did indicate that advertising and marketing communication for the new product would roll out in a fortnight from now.