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Informist, Friday, Nov. 21, 2025

 

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--Tata Consumer MD: Plan to enter health supplements category in 3 months
--CONTEXT: Tata Consumer MD Sunil D'Souza in an interview with Informist
--Tata Consumer MD: Plan to sell health supplements in capsules
--Tata Consumer MD: Heath supplement capsules to display exact dosage
--Tata Consumer MD: To sell health supplements from pharmacies, modern trade
--Tata Consumer MD: To launch health supplements under Organic India brand
--Tata Consumer MD: 1,000 Starbucks stores by FY28 will not happen
--Tata Consumer MD: Need to revise store growth plan for Tata Starbucks
--Tata Consumer MD: Will talk to Starbucks for revising store target plan
--Tata Consumer MD: Expect GST cut to shift consumer demand structurally
--Tata Consumer MD: GST inverted duty structure may raise costs 50-80 bps
--Tata Consumer MD: To use Organic India brand for pharmacy channel foray
--Tata Consumer MD: Expect pharma sales channel to strengthen in 6 months
--Tata Consumer MD: See tea, commodity costs benign for rest of FY26
--Tata Consumer MD: Plan to launch nearly 50 products in Oct-Mar
--Tata Consumer MD: Plan to launch nearly 100 products in FY26

 

By Avishek Rakshit

 

KOLKATA - Tata Consumer Products Ltd. is set to enter the health supplements category in the next three months by launching capsules offering health benefits under the Organic India brand which it will sell from pharmacies, Managing Director and Chief Executive Officer Sunil D'Souza told Informist in an interview.

 

"It's in line with our whole hypothesis of (entering) trust deficit categories. People want to make sure that whoever they are buying from is giving the right stuff. So, we are now looking at extractions of supplements and taking the supplements to the next level," D'Souza said. He emphasised that products the company launches will have the "exact dosage" on the labels, something that is missing from products currently available in the health supplement extractions market.

 

Rapid urbanisation and consumer demand for preventive healthcare are the key factors driving the growth of the $178 billion health supplements industry in the country. Added demand from health conscious people who spend substantial time in gymnasiums and who aspire to stay fit and build muscles are also driving demand.

 

While Tata Consumer has maintained that it will not aim for aggressive diversification to grow its foods business, it keeps eyeing foods categories where the growth potential is high and consumers do not fully trust the products they are buying. These categories are dominated by unorganised players and products sold in these categories are sometimes unbranded. Tata Consumer calls these "trust deficit" categories. It entered the pulses, dry fruits, and other product segments with its Sampann brand to open new revenue streams from these trust deficit categories.

 

For decades now, Tata Consumer has been operating successfully in another trust deficit segment - tea, where it is the second-largest player in the country.

 

Tata Consumer will use its new-found pharmacies channel to launch and sell health supplements. This new channel of sales, which Tata Consumer came up with earlier this year, is spread across 40 cities and currently covers 25,000 pharmacies. The capsules will also be sold in modern trade channels and on online platforms.

 

"We're doing the commercial runs and we needed to make sure that the dosages that we identify are right, the claims are right, the packaging looks premium. So, all that is ticked off and now we are starting to get underway," D'Souza said.

 

However, at a time when Tata Consumer is expanding its own portfolio, the company is internally revising its growth plans for the Tata Starbucks joint venture where it has a 50% stake.

 

"We had an ambition of getting to 1,000 stores by FY28 (Apr. 1, 2027 to Mar. 31, 2028). But in the last three quarters, I have applied the brakes – let's not get ahead of demand. So, we slowed down store opening a bit. But now, with the same store sales growth starting to come back, I think now we will start ramping it up again. The only big limiting factor for rapid expansion for us is that in India there is limited good retail space available. Quality real estate, when it comes up, gives us options to open more stores very quickly," D'Souza said.

 

Although D'Souza hasn't taken any final call on the same, Tata Consumer is going to hold talks with its joint venture partner, US-based Starbucks Corp. to agree on a realistic expansion plan to grow the business in India.

 

"We know 1,000 stores by FY28 will not happen. As a board, we need to sit down as a team, and need to agree on what the number is going to be. Both Tata and Starbucks are aggressive and optimistic on the India story. So, it's just sitting down and recalibrating the numbers," D'Souza said. As at September end, Tata Starbucks had a total of 492 stores across 80 cities.

 

In FY25, the loss of Tata Starbucks widened to INR 1.4 billion from INR 821.6 million in FY24 as revenue rose only 5% on year to INR 12.8 billion.

 

In the interview, D'Souza outlined his vision to further strengthen the company's position in the foods category and global sales. With commodity prices projected to stay stable in the second half of the current financial year, the company is confident of maintaining its margin guidance of 15% for the financial year.

 

Below are edited excerpts from the interview:

 

Q. With the GST rate reduced, consumption is expected to rise as prices drop. Has this achieved the desired outcome?

A. I think, in terms of driving demand, the government has fired all their bazookas. When all of a sudden there is more money in the hands of the consumer and a resultant windfall with consumers, they would first go and buy a new scooter, a new television, a new car, or a refrigerator, and then, once it stabilises for about three to four months, they figure out that they still have money left. That is when consumers either consume more or upgrade consumption. So, either of these two things can happen down the line.

 

Q. How much time do you think it will take for demand, particularly urban demand, to normalise?

A. I would think it is too early to tell, but given past data, my gut feel is it will go up.

 

The good part is, even without the GST cut we saw the (low) inflation figures for last month. Those kind of things will spur food consumption anyway. I remain quite bullish, at least in the short term, saying it will continue. But in the longer term, structurally, consumption will start to shift.

 

Q. So things are not that bright currently. When do you think things will start improving?

A. I would say probably Q4 (Jan-Mar). I mean, it will take about three to four months for the consumer to figure out that there's really money coming in.

 

Spending on discretionary items has already started. For it to flow down into the staples (category), I would say probably anywhere from January to March is my assumption.

 

Q. Do you think that consumer demand in FMCG is going to bounce back to pre-pandemic levels?

A. I wouldn't wager about how high it will go but mid-to-high single-digits is quite possible.

 

Q. Since discretionary spending is up, what's your plan on Starbucks that is positioned largely on discretionary sales proposition?

A. I think Starbucks has got a phenomenal runway available in India. We've had a great run on Starbucks about four or five quarters back but when the overall QSR category (quick service restaurants) and discretionary category took a hit, Starbucks was no exception.

 

The good part is from a negative 12% sales growth about four quarters back, we are now at plus one.

 

Q. Returning to GST, the inverted duty structure is causing issues and the industry is indicating a need to renegotiate with vendors. What is the impact on Tata Consumer?

A. Inverted duty is going to create issues because services is still taxed at 18%.

 

While 80-85% of my portfolio is at 5% (tax rate), I still have 15% of my portfolio at 18% (tax slab). I could previously offset the services incoming GST on that portfolio and therefore, there was no trapped duty. Now, effectively, my incoming products are at 5% (GST), my outgoing is at 5% (GST), but my incoming services is at 18% (GST), which I'm not able to claim. The government will give refunds for goods, not for services. Therefore, we need to figure out.

 

Negotiating with vendors is not an option. I mean, the vendor is not going to drop his rates because we have a GST problem. They might give us some leeway, but it's not going to offset the entire thing.

 

There will be an impact on costs. It's just how much we can minimise that impact.

 

Q. To what extent is it going to hit your costs?

A. If we don't do anything, I would say it's about 150 bps. But I think we are fairly confident we should be able to land between 50 bps to 75-80 bps of impact.

 

Q. Will you increase prices to cover up for the costs or absorb it?

A. We got to find ways for it. We have put together a team to look at various different options and passing on to consumers would be the last option because ultimately, there will be an impact on demand, market share, etc. if we try to do that.

 

Therefore, we are looking at various other mitigation methods across the supply chain to try and figure out to deal with it.

 

Q. Coming to your tea business, tea prices at auctions have been stable most of the time now. But in September, there has been a decline in production which again ideally will pull up auction prices. So, how do you see your procurement costs in the coming few months?

A. We do our sourcing strategies for the entire season. So, we start active buying sometime in May, though the auction season starts in Mar-Apr.

 

Last year, tea prices went up 30% and this year, for a brief period, they went down 25%.

 

We enter and exit auctions at the right points. We've injected a lot of technology, data, analytics, and artificial intelligence into our procurement systems. While auction prices will go up and down in a range for some time now, I would say tea cost will largely be benign for the rest of the year.

 

Q. For your foods business, how do you plan to scale up the Capital Foods and Organic India divisions?

A. We are quite bullish on both of these businesses. They are important ones because they expand our portfolio and our addressable market into higher margin and higher growth categories.

 

In both these businesses, we're clearly focusing on specific platforms. In Organic India, it's going to be infusions, supplements and organic food. So, there is expansion of the portfolio happening in all these three places. In Capital Foods, it is cooking paste, noodles, chutneys and other snacks.

 

So, on all these things, you'll find a lot of launches happening. There's a huge range of expansion happening in organic food. We've just entered jaggery, khandsari sugar, amla powder and so many other categories.

 

On Organic India, we have signed a memorandum of understanding with the Uttarakhand government and we're working with them because Uttarakhand has the highest amount of organic farming available. We've partnered for a range of products that we will come out from there.

 

So, you'll find a portfolio expansion, innovation happening, apart from, of course, distribution. Even in distribution, we are tweaking our distribution systems to make sure we are giving more focus to Capital Foods and Organic India because we do believe distribution and availability has a huge role to play.

 

Q. How do you think Capital Foods and Organic India are going to fare in global markets?

A. Internationally, I think we're on a good wicket. In the US, the focus is on leveraging Amazon. We've got into Walmart and all the mass merchandisers with specific-sized stock keeping units.

 

We had expected to drive growth 30% and broadly we're in that ballpark. We are building on our partnerships strongly with all the retailers internationally, whether it is Patel Brothers in the US, or Sabrini Foods in Australia or Mustafa in Singapore.

 

The frozen foods category is growing strongly at about 30-40% for us right now because we've partnered very well. So, we've just ramped up our engagement with those partners to make sure we understand what's trending in the market and then we deliver what they want.

 

Q. You launched a new distribution channel placing your products in pharmacies. What is the plan on this?

A. So, I've got a bunch of things in my portfolio, which I can launch in the pharma channel. It's just I've got to create that channel and then throughput through it. So, we're using Organic India as the lead. I would say we're about six months away from seeing a strong, stable pharma channel system.

 

Q. At the same time, you're also quite bullish on quick commerce driving growth. How do you plan to take it forward?

A. Quick commerce and e-commerce are helping us jump shift our distribution handicap. If you look at competition, they're ahead of me in distribution. But if I equate distribution, my hypothesis is I'll equate market share.

 

But on e-commerce, it's brand to brand fight and we are ahead. Quick commerce contributed 10% to our business in Q1 and this quarter, we are at a 14%.

 

My hypothesis and my direction to the team is very clear - we will go where the consumer is. And we have ramped up both our capabilities as well as our investments on quick commerce to make sure we are there when the consumer is going online.

 

Q. What is the range of product lineups you envisage for new launches in the coming few quarters?

A. In the first half, we've launched about 50 new products and you'll probably see a similar number for the second half. But it is not the number of launches that we target.

 

What we target is at least 5% of my top line coming from innovation, and innovation is defined as products launched in the last three years. So, we need to drive at least 5% of the business from innovation.

 

Q. You have said you expect benign tea prices for the rest of the year. What's your outlook on the other commodity prices?

A. On the commodity piece itself, I see largely benign prices. Most of the commodities that we are in are largely benign. Pulses might see a little bit of a moment because I think the unseasonal rains in Sept-Oct have impacted a little bit of the crop.

 

But we are not playing this game quarter on quarter or say year on year. We are building a business for the longer term. We have come a long, long, long way, and we've figured out how to play the commodity game.

 

Remember, we have built two businesses into brands from commodities - tea and salt. So, the DNA of the organisation knows how to do it. We're just applying the same playbook to all the other commodities that we play.

 

During the quarter ended September, Tata Consumer reported nearly 11% on year growth in its net profit at a little over INR 4 billion with a 17.8% on-year growth in its revenue to INR 49.7 billion. During the first six months of the ongoing financial year, the company's bottom line increased 12.8% on year to INR 7.4 billion and revenue increased 13.8% on year to 97.4 billion.

 

The beverages business in India, of which tea is the most substantial part, accounts for 33% of its revenue. The foods business, of which Organic India and Capital Foods are a part, accounts for 32% of the sales, and global operation, largely accounting for tea and coffee, comprise 23% of the revenue. Its unbranded business, including solubles, comprise the residual 12% of sales.

 

At 1423 IST, shares of Tata Consumer were up 0.8% at INR 1,182.80 on the National Stock Exchange.  End

 

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

 

Edited by Ashish Shirke

 

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