The group is looking at the entire spectrum of FMCG products under Tata Consumer Products. What is the plan?
This actually emanated from two big themes in Bombay House. One is, we have got the biggest brand name in the country. But, with that brand name, why is it that we were not making a headway in the consumer space? Number two is this whole philosophy of simplify, synergise and scale.
If you looked at the consumer businesses in Tata Group, till now it was housed in three different pockets. There was tea and coffee in Tata Consumer. There was salt and a very small Sampann business in Tata Chemicals. Tata Industries had just embarked on the ready-to-eat products with Tata SmartFoodz. And we had this hanging JV in the middle with PepsiCo.
You build basic execution platforms and go through multiple product portfolios, that was the whole idea. So starting with the merger of consumer products business from Tata Chemicals, putting it into Tata Global Beverages, the idea has been to build a basic platform. While we continue to improve our capabilities, we will also start looking at how we expand to beyond where we are.
We have defined five platforms, which we are going to focus on. The first one is tea, coffee and salt. The second is the entire pantry segment under Sampann. The third is breakfast, mini-meals and cereals. Fourth is ready-to-drink beverages under the NourishCo brand. And lastly, protein.
- Airbus-Tata consortium to manufacture 40 transport aircraft for IAF in India
- How Tata Group is transforming itself into modern business group
- 'Makes sense to have simplified structure': T.V. Narendran, MD and CEO, Tata Steel
- 'We are bullish about overseas expansion': C.K. Venkataraman, MD, Titan Company
- 'In five years, Tata Motors should have 10 EVs': Shailesh Chandra, MD
So, these five platforms that you outlined are where you will expand.
We are supposed to become a total FMCG company. But, in the near term, we are focused on building a stronger food and beverage company. In the food and beverage space, we will focus on these five platforms and make sure we are growing in these platforms. For instance, in coffee, we have just launched quick filter coffee. In protein, we have launched alternate meats. We will focus on growing the portfolio and getting scale.
How is inflation affecting your business?
From the India consumer context, tea is in deflationary mode. Tea prices went up dramatically in September of 2020, post the initial lockdown, which happened when the supply-demand equation went for a toss. After that the tea prices have been coming down. But we are seeing inflation in different parts of the business, most notably in our salt business. [Salt prices] jumped up last year because there were extended rains in Gujarat.
But the bigger impact is energy. When oil prices went up, coal prices went up. Not only that, a lot of the coal that we import, whether it is for calorific content or environmental ash residue sort of thing, the dollar movement has not helped. There, we have taken pricing. In the last one year, we have taken about 30 per cent price increase in salt.
We are also seeing cost creeping up in freight, packaging, all this kind of stuff, but that is something we have got to be constantly on our toes about, either to keep optimising cost or to make sure that we are passing on prices to consumers if they are willing to pay. It is a fine balance between the volume trajectory, maintaining market share and balancing margin with increasing costs.