We remain open to inorganic options across categories, says Tata Consumer Products’ Sunil D’Souza

In India, inflation, especially petroleum-driven inflationary pressures coupled with other factors, has impacted consumption for some time. The biggest impact that was visible was in rural regions, especially in the north, due to the higher cost of inputs for agriculture. We see rural growth coming back but it’s still not at the pre-Covid levels. Overall, the commodity-driven inflationary pressures have sort of now plateaued. I think from here on, we should start seeing demand coming back. In the short term, there have been inflationary pressures in terms of food prices but I would not read too much into this for the longer term. In terms of international markets, we saw overall inflation impacting consumer demand, and our internal margins were hit by commodity spikes especially coffee, and then currency swings, which impacted our tea business, especially in the UK. All those also seem to have stabilised now. Margins are back on track and commodities and currencies are broadly range-bound. The only thing is inflation is still pinching consumers. So we will need to focus on driving demand in international markets.

We are still relatively small in the beverage segment and have a huge runway for growth. The key focus is on scaling up the business significantly through portfolio and geographic expansion. We are offering differentiated products at affordable price points. For instance, Gluco Plus is a ₹10 product and we have maintained this price point as we are rolling it across the country. We are continuing to expand our plants and expand the portfolio. Despite adverse weather conditions during the summer, we ran out of capacity for our Gluco plus Jelly in the drinkable format. Similarly, we ran out of capacity for Tata Fruski Juice N Jelly. NourishCo business closed last year with ₹600 crore in revenues. We saw 60 per cent revenue growth in the first quarter alone clocking close to ₹300 crore. Our aspiration is to hit a four-digit number in revenues by the end of this fiscal. 

Sampann is all about a strong pantry play. We are focusing on strengthening our presence in categories which are large, offer decent margins, have a large runway for growth, and where there are challenges of trust deficit. For instance: we launched dry fruits as there was no national dry-fruit brand. We launched them online and are already at an annualised run rate of ₹70 crore. Now we are also rolling them out to retail trade. The categories that we get into need to meet certain parameters in terms of size, volumes, and margins among others. It also depends on our R&D and back-end logistics procurement capabilities. We have recently launched seeds and focusing on food mixes such as Gulab Jamun mix. So with pulses, spices, dry fruits, food mixes, and seeds, we have got our playbook ready.

Spices is an attractive category. It’s a ₹60,000-crore category out of which only about ₹24,000 crore is branded segment. So there is a huge opportunity for branded players as consumers shift from unbranded to branded products. We are one of the few big national brands having a presence in the segment and Sampann spices is on a great growth wicket. We were not present in the south and we have begun to make our moves in the south. The only thing is when it comes to spices, one needs to tweak the product specifically to cater to the consumer preferences of each State. We remain open to inorganic growth options and are exploring them across categories. But we will remain very disciplined in how we approach inorganic. It has to offer both strategic as well as financial value-addition.

We had said we will grow our distribution to 4 million outlets in three years and we are on track and trending at about 3.9 million outlets. Now we are working on the next level targets as the total number of outlets is about 8-9 million. So, there is a huge opportunity to grow our distribution further. We have been fine tuning our strategy with a focus on efficiency and ensuring our distributors are viable. We are focusing on growing not only the width but also the depth of our distribution reach. So for example we have been focusing on splitting routes in the one million plus cities and towns to strengthen the depth of the distribution. At the same time, we will appoint distributors in all 50,000 plus population areas to expand the width of the reach.