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Sunday, October 25, 2020

Tata Consumer Products to focus on distribution, enter new categories

Packaged consumer goods company Tata Consumer Products Ltd. said it will work on building its reach and distribution in the Indian market after it moved to consolidate its businesses over the last one year.

Tata Consumer Products, was formed in May 2019 by merging Tata Global Beverages and the foods business of Tata Chemicals.

The new business, Tata Consumer Products Ltd (formerly known as Tata Global Beverages), now includes a variety of food and beverage brands—Tetley Tea, Eight O’Clock Coffee, Tata Tea, Tata Salt and Tata Sampann, which sells packaged pulses and spices.

“One of the problems we have in Tata Consumer Products is many of our products are not fully available, the distribution has to be strengthened,” N. Chandrasekaran, Chairman at the company, told shareholders at the company’s virtual annual general meeting held on July 6.

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Now with more brands in its portfolio that collectively compete with the likes of Hindustan Unilever—the key player in the packaged tea market, ITC—that has a strong portfolio of essentials including wheat flour and recently acquired spices company Sunrise Foods, and beverage company such as Coca-Cola, Tata Consumer Products wants to build a nationwide presence.

“We will go to nationwide reach, so we will definitely deepen and strengthen the distribution to make sure all our products are available, and we will spend on marketing and come out with programs to ensure that it is pretty visible.”

In May, Tata Consumer Products Limited (TCPL) also acquired PepsiCo’s stake in Nourisho Beverages Limited—a 50:50 joint venture between the two companies that housed brands such as Himalaya packaged water and GlucoPlus.

The company will now look to enter new categories in the FMCG market, he said. “We will launch products and get into other categories in a very calibrated manner in the years to come,” Chandrasekaran said.

The company that is also present in markets overseas such as the UK, USA, Canada, and Middle East, now has a broader FMCG play in India beyond just beverages.

In the year 2019-20, its India business accounted for slightly over 60% of the company’s consolidated branded revenues, it said in its annual report for the year ended 31 March, 2020.

“Now our immediate focus will be to strengthen distribution and make the products available both online and physically,” Chandrasekaran said. “We have a lot of tie-ups to ensure that the online availability of Tata Consumer Products portfolio is widely available. Many tie-ups have already been done, more will be done and there is a Tata digital platform being launched later this year and Tata Consumer Products will be also available on the Tata product platforms.”

For the year ended March 31, 2020, the company’s revenue from operations stood at Rs 9,637 crore.

In terms of value contribution, foods contribute to 58% of sales in India’s fast moving consumer goods market. Panic buying during the early phase of the lockdown helped the company’s India and international business.

“We saw a mixed response across our different businesses—panic buying and closure of restaurants led to a spike in retail and online sales for both our Indian and International branded businesses, however food service sales and our Out-of-Home businesses were impacted significantly,” he said at the AGM.

The company also faced significant logistical impediments in its operations in India such as limited worker availability. However, the situation has changed. “Now we are able to almost perform very normally and our demand levels are very good at this point in time,” he said.

On the company’s out of home business, Chadrashekharan said that business at both Tata-Starbucks (the company’s 50:50 JV with Starbucks) and Tata Cha (the company’s tea services business it piloted in Bengaluru) had seen impediments due to the covid-19 lockdown.

The Starbucks business is slowly moving to open up. Close to 50% of the Starbucks outlets are now open for delivery and takeaway. The company has 185 stores.

However, new store additions have slowed down due to the pandemic.

“We have an aggressive plan which we have developed for opening more stores and penetrating Starbucks into multiple cities; specifically in FY21 we will probably be slow because of the pandemic but we will pick it up—we are confident and very positive about this business,” he said.

“Tata Cha we only did pilot in Bengaluru and we will have to take a look at it post covid,” he said.

SourceLive Mint
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