Tata Consumer said the plantation business of Tata Coffee would be demerged into Tata Consumer Products' beverages and foods unit, which is known for brands like "Tata Tea" and "Tetley".

The remaining business of Tata Coffee, which houses extraction and coffee brands, would combine with Tata Consumer.

Analysts at Nomura said they believed the merger would add to Tata Consumer's earnings by 3%-4%, while also improving the company's supply chain.

Tata Coffee, which makes instant coffee, pepper and tea, was up 10.5% at 216.90 rupees, as of 0402 GMT, while Tata Consumer climbed 4.7%.

(Reporting by Rama Venkat in Bengaluru; Editing by Subhranshu Sahu)