Date:14/10/2005 URL: http://www.thehindubusinessline.com/2005/10/14/stories/2005101401670200.htm

Back Tata Tea acquires US co Good Earth

Our Bureau

Mumbai , Oct 13

TATA Tea Ltd, through its US subsidiary Tetley US Holdings Ltd, has signed an agreement to acquire FMALI Herb Inc and Good Earth Corporation.

The cost of acquisition has not been officially disclosed.

Good Earth Corporation owns the `Good Earth' brand, which is licensed to FMALI Herb Inc. Good Earthis one of the fastest growing speciality tea brands in the US, especially on the west coast. It has a 3.7 per cent share of the US speciality tea market and a turnover in excess of $ 16 million.

Explaining the synergy, Mr P. Siganporia, Managing Director, Tata Tea, pointed out that the traditional strength of Tetley in the US market, had been in areas such as New Hampshire and Boston. Good Earth offered the company presence in the attractive California market, which has been open to new and innovative offerings in tea.

"The acquisition offers us a product range at the top end of the market, above the products currently sold by Tetley in the US market," he said. Tetley's market share in the US has just reached double digits in the tea bag segment.

"This acquisition is an important contribution to our plans for growing the Tata Group's tea business around the world. We believe there is a real potential for growth in the speciality tea sector of the US market and elsewhere in the world. Good Earth's strong product portfolio means it is well placed to leverage this potential. The experience and skills of Good Earth and Tetley complement each other well and will combine to create a significant new force in the US tea industry," Mr Ken Pringle, Executive Vice-Chairman and Chief Executive Officer of the Tetley Group, said in an official statement.

Good Earth will continue to blend and pack teas at its base in Santa Cruz, California and trade under the Good Earth brand.

Mr Siganporia did not disclose the cost of acquisition. The statement said that the acquisition was being financed through borrowings. "The cost of acquisition is a price sensitive information. There are some IPR issues also involved," he said.

The US has traditionally been a market of coffee drinkers. But the positioning of tea as a health drink, along with the introduction of innovative products, has given tea a fresh lease of life. Mr Siganporia declined to comment on whether the company would stop at one acquisition or the US market was attractive enough for more.