Ta Ta, Gryphon, Hello Tata

India-based coffee, tea company buys Eight O' Clock Coffee

Published in CSP Daily News

MONTVALE, N.J. -- New Delhi, India-based Tata Coffee Ltd., a 51%-owned subsidiary of Tata Tea Ltd., has signed a definitive agreement to acquire Eight O' Clock Coffee Co. USA from Gryphon Investors, San Francisco, for a total acquisition price of $220 million.

Eight O' Clock has more than 100 years of brand history and retail coffee experience in the United States. It is the leading player in the branded whole bean market and the category leader in the value gourmet segment in the U.S. retail market, the company said, and within the U.S. food category, [image-nocss] it is the third largest coffee brand by volume behind Folgers and Maxwell House. It has significant retail distribution strength with approximately 67% of all commodity volume penetration of the U.S. retail coffee market, it said.

Headquartered in Montvale, N.J., Eight O' Clock operates its roasting and packaging facility in Landover, Md. In calendar year 2005, it had net sales of $109 million and EBITDA of $27 million. The company has a management team led by its CEO Barbara Roth, who has more than 20 years of experience in the U.S. consumer industry.

Eight O' Clock provides a sizable entry platform and an established brand to Tata Coffee in the $21 billion U.S. coffee market. The acquisition, which will be financed through a combination of equity and nonrecourse debt, will transform Tata Coffee from a regional coffee player in the Indian market to a significant global player with strong and powerful brands in the global markets, including in the United States. This acquisition is in line with Tata Coffee's objective to move up the value chain and become a leading and fully integrated player in the global coffee industry.

The acquisition is also in line with the vision of the Tata Tea group to become a global beverage player. It follows a string of acquisitions by the group in various geographies including Tetley globally, Good Earth in the United States and JEMCA in the Czech Republic. Following this acquisition, the group will now have significant scale in all important markets in Asia, Europe and North America.

R. K. Krishna Kumar, chairman of Tata Coffee, said, "Tata Tea is today one of the fastest growing beverage companies in the world and by the end of the decade, we expect the Tata Tea group, including Tata Tea, Tetley, Tata Coffee and Eight O' Clock Coffee, to become one of the largest and most admired beverage players in the world. This move is fully in line with the Tata Group's international strategy."

Added M. H. Ashraff, managing director of Tata Coffee: "This acquisition is a strategic fit with our growth plans and helps Tata Coffee in attaining its objective to become an international and fully integrated player in the coffee industry."

Roth said, "This transaction creates a beverage player that is in a unique position to tap growth opportunities in the huge coffee market in the U.S. and globally. With the backing of the Tata Group we will be able to leverage our brand equity to capture new markets and new geographies."