PepsiCo, Tata Global Beverages to sell health drink in India

Tata Global Beverages Ltd, which sells Tetley Tea and Eight O’Clock coffee, plans to market a nutrient beverage in India with PepsiCo Inc’s local unit to profit from rising sales of ready drinks in the country.

NourishCo Beverages Ltd, a joint venture between the two beverage makers, will start selling Tata Water Plus nutrient water in the southern Indian state of Tamil Nadu, it said in a statement in Chennai today. Tata Global shares rose as much as 7.4 per cent in Mumbai trading.

“There is a growing trend towards health and wellness in the beverages category,” said Ashok Namboodiri, chief of sales and marketing at NourishCo Beverages Ltd. “We believe there is immense potential, which will evolve over a period of time.”

Tata Global’s sales may grow 7 per cent to 8 per cent in the year ending March 31 2012, Vice Chairman RK Krishna Kumar said today. This compares with a 3.5 per cent increase to 59.8 billion rupees ($1.2bn) a year earlier.

The company won’t see real impact from the joint venture until 2014, said Mehul Desai, a Mumbai-based analyst at KR Choksey Shares and Securities Pvt.

“Even in the urban markets, health products haven’t penetrated because the knowledge of the product is not there,” he said. “NourishCo would take time to gain penetration.”

The new product will help both companies expand in India’s growing beverage market, which has expanded with rising incomes. The country’s soft-drink market is expected to double to 12.9 billion litres in 2015 from 6.2 billion litres in 2010, Euromonitor International predicts.

PepsiCo India and Tata Global Beverages, a unit of Indian conglomerate Tata Group, announced the joint venture to develop non-carbonated, health beverages in 2010. NourishCo currently sells GlucoPlus, a glucose-based energy drink and Himalayan mineral water in India.

Tata Global Beverages shares gained 4.5 per cent to 123.05 rupees in Mumbai at the 3:30 pm close local time, the highest level since November 15, 2010. The benchmark Sensitive Index rose 0.7 per cent.

Tata Global Beverages on January 30 signed a venture accord with Starbucks Corp to open Starbucks coffee shops in India. The company said it plans to reduce dependence on tea and coffee based products after rising commodity costs decreased its profits.