Chandrasekaran: Tata Consumer's Domestic Business Primed for Robust Expansion, Evaluating Opportunities for Food and Beverage Acquisitions
Chandrasekaran, Chairman of Tata Consumer, reveals the company's positive outlook on the domestic business with a focus on strong growth and potential food and beverage acquisitions
According to Chairman N Chandrasekaran, Tata Consumer Products Ltd (TCPL) is expected to experience significant growth in the domestic market. The chairman also conveyed the company’s willingness to consider acquisitions and explore opportunities for expansion into new product categories.
Chandrasekaran, responding to shareholders during the 60th Annual General Meeting, stated that India’s business growth is projected to surpass that of the global market. He also highlighted that the proportion of revenue derived from the Indian market is anticipated to rise.
The executive stated that India business has a higher margin, particularly for branded businesses (around 14%), as well as international business (11%).
“At present, we’re extending both the refreshments and food organizations. We must scale these businesses because there is a lot of focus on them. And furthermore we are putting resources into Research and development and advancement. “We are looking at acquisition opportunities and new categories,” he stated.
Last year, TCPL effectively sent off 34 items. Currently, TCPL’s branded tea accounts for 47% of total revenue and is primarily driven by the Indian market. Coffee, on the other hand, accounts for 11% of total revenue and is dominated by international business.
The company has allocated a capex plan of Rs 400 crore to encourage growth.
Chandrasekaran, who is also the chairman of Tata Sons, said that NourishCo Beverages, the company’s subsidiary, wants to make Rs 1,000 crore this year, up from Rs 645 crore in FY23.
He further accentuated TCPL’s emphasis on the South Indian market, where they are executing limited methodologies to further develop circulation, adjust notice crusades, and modify items to take special care of southern preferences.
He noted the potential of millets, despite their current small share, and expressed optimism regarding their inclusion in the company’s food portfolio.
In the international market, TCPL aims to strengthen its portfolio by expanding its non-black tea business, increasing its presence in the coffee market and launching ethnic edibles and convenience products.
Chandrasekaran also mentioned the growth and expansion plans of TCPL’s Starbucks joint venture coffee chain, which currently operates in 41 cities. Last year, the chain opened the most stores (71).
The company Is progressing with its efforts to simplify its corporate structure, and the merger between Tata Coffee and TCPL is anticipated to be finalized within this year. As part of a reorganization plan aimed at realizing synergies and improving efficiency, the company declared its intention last year to consolidate all of Tata Coffee’s operations.
Tata Coffee’s plantation business (TCL) is set to undergo a demerger, wherein it will be separated and transferred to TCPL Beverages & Foods (TBFL), a wholly-owned subsidiary of TCPL, as per the recently announced scheme. Tata Coffee’s extraction and branded coffee business will be combined with TCPL, resulting in a merger that is expected to create synergies and fuel a robust growth rate in the high single digits for the coffee business.
Sunil D’Souza, CEO and Managing Director of TCPL, affirmed that the ongoing process of consolidating the legal framework will result in improved efficiencies and a reduction in the number of entities from 45 to around 25.
Tata Coffee is nearing the completion of its merger process and is currently implementing corrective actions across different markets. As part of this initiative, the company is strategically consolidating its operations and winding down activities in smaller and less significant markets. These markets include Australia, Czech Republic, South Africa, and Bangladesh, where the company has established a presence.
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