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Informist, Tuesday, Jul 30, 2024

 

--Tata Consumer: Tea prices were 15-20% higher in north India Apr-Jun 

--Tata Consumer: Heat wave hit footfalls at Starbucks stores Apr-Jun 

--Tata Consumer: Intense summer affected demand for tea in Apr-Jun 

--Tata Consumer: Demand for tea from UK, Canada was stable in Apr-Jun 

--Tata Consumer: Didn't change prices of NourishCo pdts in Apr-Jun 

--Tata Consumer: Need to review strategy for NourishCo segment 

--Tata Consumer: Margins on Sampann products rising steadily every qtr 

--Tata Consumer: Better raw material price view aided Sampann margins 

--Tata Consumer: Launched pilot project to sell pdts via pharmacies 

--Tata Consumer: Look to sell pdts via hotels, restaurants, caterers

 

By Avishek Rakshit & Darshan Nakhwa

KOLKATA/MUMBAI – In a bid to improve sales, Tata Consumer Products Ltd is exploring new distribution channels to sell its products, the company's Managing Director and Chief Executive Officer Sunil D'Souza said today. The company has already launched pilot projects in six cities to sell its products in pharmacies, and plans to expand distribution through hotels, restaurants, and caterers to two cities in the coming months.

During an investor call after announcing the company's quarterly performance, D'Souza said that Tata Consumer has a product portfolio which is "well suited for pharma channels". He said that these days, apart from medicine, pharmacies also sell tea, coffee, and food products, which are already part of the company's portfolio. Hence, it is looking to expand these sales channels as a growth opportunity.

 

D'Souza said that the company's products will also be sold through hotels, restaurants, and caterers in the coming days. Many consumer goods companies have agreements with hotels and restaurants which use their products. However, Tata Consumer is yet to test sales through these channels.

 

The company has already implemented split routes which are expected to add about 35?ditional feet-on-street, or salespeople, catering to its outlets. In cities with a population of 1 mln people, the company's distributor will appoint three different salesmen, who will deal with three different portfolios. The first salesman will sell tea under the Tata Tea master brand and the Organic India brand; the second will focus on selling Tata Salt and Tata Sampann branded products; and the third will sell Tata Soulfull, Ching’s Secret and Smith and Jones branded products. For cities with a population count of 500,000, the distributor will appoint two salesmen, instead of three.

 

Tata Consumer believes that this segregation will boost product sales and help streamline sales in its outlets. However, the company is banking on modern trade channels like organised grocery stores, and online platforms as sales channels of the future, which will drive significant growth. In Apr-Jun, its sales from modern trade grew 28% on year, and those from e-commerce grew 61%.

 

As sector analysts questioned the company over its financial performance for Apr-Jun, which failed to meet expectations of many investors, D'Souza said that the company needs to re-look at its strategy for the NourishCo brand of beverages and has changed prices of products of this brand to maintain sales stability.

 

D'Souza said that the company now has a better negotiating power for procurement of raw materials for its Sampann brand of food products, which is helping to improve margins steadily every quarter. Revenues from sales of Sampann branded products increased 37% on year during Apr-Jun.

 

However, the heatwave across the country during the summers impacted sales of tea and also led to lower footfalls in the Tata Starbucks stores, D'Souza said. During Apr-Jun, the company's beverages business in India, largely comprising tea and coffee, grew only 6% on year. Discounting the revenue contribution from Organic India branded tea, which Tata Consumer recently acquired, its revenue growth was a paltry 1%. The heatwaves also led NourishCo to register only a 7% sales growth, and revenue from Tata Starbucks grew only 4?spite the increased store count and the introduction of new premium products.

 

Asked about trends in tea procurement costs and its impact on the company, D'Souza said that tea prices in the auction centres in east India, which is referred to as north India in the tea trade, increased 15-20%. He, however, did not specify how it affected the company's tea procurement costs in the June quarter or its potential impact in the coming days.

 

However, Tata Consumer's own plantation business, under its associate company -- Amalgamated Plantations Pvt Ltd -- continued to make losses during Apr-Jun despite the overall surge in tea sales prices. Losses from Amalgamated Plantations widened to 249 mln rupees, against a loss of 208.6 mln in the year-ago period. Eventually, this had a negative impact on Tata Consumer's consolidated net profit, which declined 8.3% on year to 2.9 bln rupees.

 

Today, shares of Tata Consumer Products closed 0.5% down at 1,194.9 rupees on the National Stock Exchange. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Tanima Banerjee

 

 

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