After buying out its partner PepsiCo’s share in NourishCo Beverages, Tata Consumer Products is gearing up to make a bigger play in the packaged water and healthy hydration space.
The FMCG arm of the Tata Group bought PepsiCo’s stake in the 50:50 joint venture in May last year. This was one of the first key strategic decisions the group made after deciding to consolidate its packaged food and beverage consumer goods business to form Tata Consumer Products.
Sunil D’Souza, CEO & MD, Tata Consumer Products said, “The reason we took over the business is because under the JV, it was only operating in about 25% of the geographies in the country. The regions where it was operating, it enjoyed a very strong franchise. And so we felt we can now expand the geographical reach with a stronger go-to-market strategy for the existing products, as well as add new products.”
Tata Consumer Products is now swiftly looking to ramp-up the distribution to newer geographies for this portfolio, which consists of Tata Water Plus, Tata Gluco Plus and Himalayan mineral water. It has also re-launched Tata Fruski, an iced tea-based ready-to-drink beverage that was earlier piloted in select regions.
D’Souza said the company has already expanded the distribution of the portfolio to regions such as Karnataka, Jharkhand, Bihar and West Bengal. “Wherever we are entering, we are seeing a very strong response because the product portfolio we are offering appeals to the masses,” he added.
“We have just about re-launched our Fruski brand in Andhra Pradesh and Telangana, and it has got off to a great start, “D’Souza said. He added that the company is just about scraping the surface when it comes to the NourishCo portfolio, and there is huge potential to strengthen its presence in the hydration space.
According to a research report by Edelweiss Securities, the NourishCo business recorded a 9% revenue growth in the December quarter, which is a sharp acceleration from a decline of 18% in the preceding quarter. The growth was primarily driven by Tata Water Plus and Tata Gluco Plus, it noted.
On out-of-home consumption trends, D’Souza said the channel has seen a “smart recovery” compared with the initial phases of the lockdown, and has been seeing month-on-month and quarter-on-quarter improvement.
Tata Starbucks and the NourishCo business are the key levers for the out-of-home business. Tata Starbucks reported a strong sequential recovery in the December quarter with 92% stores having reopened. The chain also continued to expand its footprint last year across different formats.
“While the second wave (of the pandemic) is worrying, as the vaccination pace is picking up and as we focus on the longer term, we expect the out-of-home consumption demand to come out of this stronger.”