PepsiCo, Tata Global Beverages to Sell Health Drink in India

Tata Global Beverages Ltd. (TGBL), which sells Tetley Tea and Eight O’Clock coffee, plans to market a nutrient beverage in India with PepsiCo Inc. (PEP)’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 percent 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 percent to 8 percent in the year ending March 31 2012, Vice Chairman R. K. Krishna Kumar said today. This compares with a 3.5 percent increase to 59.8 billion rupees ($1.2 billion) a year earlier.

The company won’t see real impact from the joint venture until 2014, said Mehul Desai, a Mumbai-based analyst at K.R. 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 liters in 2015 from 6.2 billion liters 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 percent to 123.05 rupees in Mumbai at the 3:30 p.m. close local time, the highest level since Nov. 15, 2010. The benchmark Sensitive Index (SENSEX) rose 0.7 percent.

Tata Global Beverages on Jan. 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.

To contact the reporters on this story: Ganesh Nagarajan in Chennai at gnagarajan1@bloomberg.net; Malavika Sharma in New Delhi at msharma52@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net

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