Tatas recasting Tetley

The Tata group is restructuring Tetley's global operations. Tetley's private label business in the US, which supplied tea to giant retail chains like Wal-Mart, has been sold to Harris Tea for an undisclosed amount.

Tetley was the largest player in this segment in the US, but margins from the operations were low.

What is more, the entire manufacturing operations of Tetley, Australia, located at Yara, are being shut and transferred to India.

This will not only save significant sums for Tetley, but also more than double revenues for Tata Tetley, the Kochi-based manufacturing joint venture.

The restructuring, the third in the past 15 months, comes ahead of a major expansion of Tetley's global operations that will see the company enter several countries in East Europe, the Middle East, the Commonwealth of Independent States, and some other countries in Asia.

Explaining the restructuring, Tata Tea Deputy Managing Director Percy Siganporia said: "While the private label business in the US gave us the volumes, its margins remained very low. It was a business that called for a relook. The recast of the Australian operations will also lead to large savings."

Last year, the Tatas infused £30 million in Tetley, in addition to the £271 million spent on the acquisition, of which £20 million was put in by Tata Sons.

The financial restructuring was to pay off several high-cost loans on Tetley's books and reduce the interest burden.

Earlier this year, Tetley also closed the Greenford factory in West London, which turned out a range of products, from drawstring tea bags and black tea bags to speciality teas.

The entire facility was shifted to Eaglescliffe, which houses the world's largest tea bag factory, near Middlesborough, in northeast England.

When the latest round of production rationalisation is complete, Tetley will be left with three processing and packaging units globally, one in the UK and two in the US, in Georgia and Pennsylvania.