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HLL eyes Rossell to consolidate its tea business - Views on News from Equitymaster
 
 
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  • Dec 4, 1999

    HLL eyes Rossell to consolidate its tea business

    Hindustan Lever Limited (HLL) is on the prowl yet again. This time it is eyeing Rossell Industries, a tea major, to consolidate its leadership status in the packet tea business.

    HLL - a 51% subsidiary of US consumer products major Unilever Plc, is Indiaís top FMCG company with interests in personal care, soaps and detergents, culinary and food businesses, oils, dairy products and ice-creams and the beverages segment. The company is the market leader in most of the segments it operates in. HLLís strong distribution reach (over 1,000,000 retail outlets) and strong portfolio of brands makes it one of the most efficient marketing outfits in India. The companyís current thrust is on consolidating its distribution network in the rural areas, which it believes, will outpace growth in urban areas in the next few years.

    HLL is the market leader in the branded tea segment with a 41% share (as per figures in June 1999). The move to acquire quality tea estates under Rossell Industries is a positive one for its tea business. It will enable integrate backwards and shore up its tea requirements. The move will also give it ready access to the export market. Rossell currently exports about 30% of its 10 million kg output per annum.

    HLL has off late been facing heated competition from Tata Tea (30% market share). Tata Tea is now aggressively pursuing a strategy, which will see it introducing more brands across all segments of the tea business. It is also in advanced stages of negotiations to acquire the UK-based Tetley, which would also, give it access to Tetleyís well known brands.

    The move to acquire Rossell will consolidate HLLís market leadership position and further insulate it from competition from Tata Tea. The move is also in line with HLLís strategy to dominate all segments it operates in.

     

     

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