Lukewarm Brew

Tata Coffee Limited (TCL) is one of the world’s larger integrated coffee plantation companies. It is present in every aspect of coffee making, from growing and curing coffee to manufacturing and marketing value-added coffee products. TCL owns estates where it grows coffee, processes the beans, exports green coffee, manufactures and exports instant coffee, and retails coffee under its own brands in the domestic market. It owns 19 coffee estates in Karnataka and Tamil Nadu. Over the last seven-eight years, the company has entered into the packaging and distribution of coffee products, as Tata Tea has done. In 2006 it bought Eight O’ Clock Coffee of the US, which packages and sells coffee in that country. Industry dynamics Globally the demand for coffee stood at 133 million bags while consumption stood at 134 million bags in FY11. India is the world’s sixth-largest producer and accounts for 3.9 per cent of total production. Approximately 75 per cent of the coffee produced within the country is exported. The price of coffee depends heavily on supply from Brazil, which is the world’s largest producer. Last year the price of coffee rose approximately 1.5-2 per cent due to below normal production globally. Strengths Integrated coffee producer. Being an integrated coffee producer, TCL can take advantage of the myriad opportunities in coffee production as well as marketing. It cures coffee at its world-class mills and then supplies it directly to the world’s leading retail chains such as Eight O’ Clock Coffee (its subsidiary) and Starbucks (it struck a deal in January 2011 for supplying coffee beans to the latter’s operatio