Durban - Tata Tea, the largest tea manufacturer in India and part of diversified multinational Tata Group, is planning to buy a South African tea packing company to gain access to distribution networks and well-established brands.
UK company Tetley, a subsidiary of Tata Tea, launched its brand in South Africa last year without much success. It now appears to be looking at either buying or partnering with a South African company.
A spokesperson for Tetley said: "We have a vision to grow the Tata Tea business and selective acquisition forms part of our growth strategy. We are always looking for appropriate acquisition opportunities."
The Tata Tea group of companies is the world's second-largest global branded tea operation, with products in 40 countries.
News of the proposed deal emerged yesterday in an article in the Times News Network, which is part of Indiatimes.
The article quoted a Tata Tea company official saying: "The company is a relatively small player in the South African market and we would be looking at either an acquisition or a joint venture. It is a black tea producer with a good distribution system in place. We are looking at leveraging this for our brand."
The big players in the local market are Unilever, with tea brand Lipton, and National Brands, which owns Five Roses, Freshpak and Trinco. There are also about 26 smaller tea packing companies. One of the smaller players, which declined to be named, said: "The South African tea market is very competitive. Everyone is vying for market share and prices are being cut."
About 24 000 tons of black tea are consumed in South Africa a year, a figure that has remained stable for the past 10 years.
Last year Tata Tea bought Fmali Herb and Good Earth through its US subsidiary, Tetley US Holdings, for an undisclosed amount. This week it was announced that Tata Tea's net profit rose 39 percent for the year to March.
Tata Group already has interests in South Africa through Tata Motors. Through Tata Steel, it plans to build a R650 million ferrochrome smelter in Richards Bay.