Apeejay, Tatas snap up tea firms abroad

The acquisitions will allow the companies to expand in the faster-growing area of fruit and herbal teas while at the same time limiting their exposure to commodity prices.

Good Earth, founded by husband-wife duo Ben Zaricor and Louise Veninga in 1972, has sales of more than $16 million and 3.7 per cent of the US specialty-tea market. The business will blend and pack teas in Santa Cruz, California, and continue to sell them under the Good Earth brand name. The purchase will be funded through debt, Tata Tea said.

“This acquisition is an important contribution to our plans for growing the Tata Group’s tea business around the world,” Ken Pringle, chief executive of Tata Tea’s Tetley Group said. “We believe there is real potential for growth in the specialty-tea sector of the US market and elsewhere in the world.”

Tata Tea bought London-based Tetley for 271 million pounds ($473 million) five years ago.

Apeejay said the purchase of Premier Foods of the UK will help the company expand into retail. Kolkata-based Apeejay plans to boost marketing for business and spend more on product development, Paul said. He plans to make more acquisitions, though there is “nothing on the horizon” at the moment. “The last four or five years have been difficult” for tea producers, he said.

Apeejay produces more than 21 million tons of tea on about 30,000 acres.

Premier Foods decided to sell the business because it is No. 3 in the UK market. In order to compete better against market leaders Tetley and Unilever’s PG Tipps, Premier would have had to have its own plantations as those firms do, Premier CEO Robert Schofield said. That wasn’t feasible, so they decided to divest it to someone who already owns them.