Tata Consumer Products (TCPL) has acquired the tea and spice company Organic India and food processor Capital Foods. The two companies have a combined enterprise value of $842 million.
Based in Uttar Pradesh, Organic India buys tea and spices from thousands of family farmers cultivating organic acreage. The company produces a range of wellness teas and blends, earning $52 million in the fiscal year ending March 31, 2023. The company is operating at a loss.
Capital Foods, founded in 1996, generated $114 million in 2023. It is profitable and valued at $615 million. Brands include Smith & Jones and Ching’s Secret condiments and prepared meals. The company owns and operates three automated manufacturing facilities.
Tata Tea and Tetley account for 21% of the Indian tea market, second to HUL (Hindustan Unilever) and more than double Wagh Bakri at 9%. HUL owns six tea brands, including Lipton, Taj Mahal, and Red Label, accounting for 23% market share.
The acquisition significantly increases the availability of organically grown teas and signals a shift from commodity and premium packet tea to a wellness brand. Organic India is known for its Tulsi Green Tea blend. Approximately 40% of sales are from North America. TCPL will boost domestic and global revenue with expanded distribution and marketing might.
Tata MD and CEO Sunil D'Souza said that in the short to medium term, “we will build food and beverage before we get to the FMCG spaces.”
He said both acquisitions operate in areas that offer a "huge runway for growth," where margins are "far accretive," and business is growing at a healthy pace.
"This is the very start of our journey. We have a long way to go,” he said. Tata generated revenue of $1.7 billion in FY23.