Tatas swallow 30% of Glaceau for $677 m

This acquisition marks Tata Tea’s entry into health drinks, which is the next step forward the company has been looking to take in its beverages business. It also strengthens the group’s presence in the US, coming close on the heels of its acquisition of the herbal tea company — Good Earth and Eight O Clock Coffee Company.

In a statement issued here, R.K. Krishna Kumar, Vice Chairman of Tata Tea and a director of Tata Sons, said, “Glaceau is part of a very exciting, strong business and provides Tata Tea an opportunity to be present in the unfolding crossover space in the beverages market. We believe that the whole Glaceau product line of vitaminwater, smartwater and fruitwater will help us expand our beverage business in North America.’’

The acquisition seeks to take advantage of changing consumer trends. While US sales of soda have been showing a downward trend, unit sales of noncarbonated drinks such as flavored water and sports drinks rose 14% to $18 billion. Glaceau brands include vitaminwater, which is nutrient-enhanced, smartwater which is electrolyte-enhanced, and fruitwater, which is flavor-enhanced.

“The really good news for our employees, distributors and retailers who are responsible for our success is that this partnership ensures our continued independence. We appreciate and value TSG Consumer Partners’ support for the company and its management,’’ said Mike Repole, President of Glaceau. Since its inception in 1996, Glaceau has experienced more than 200% compounded annual growth and now more than five million bottles are sold every day. It may be recalled at the recent AGM of Tata Tea Krishna Kumar had clearly stated that the company is now gearing for foray into health drinks and is intensely looking at the US. He had a year ago hinted at an acquisition far bigger than Tetley.

In fact, this investment is clearly way above any that India Inc has made abroad this far. Among the largest non-oil overseas investments thus far have been Dr Reddy’s buy of Betapharm for $572 million and Tata Steel’s acquisition of Natsteel for $ 486 mn.