Tata Consumer Products Ltd (TCPL) is transforming itself into a full-fledged fast moving consumer goods company (FMCG) with a rapid expansion of the food portfolio, backed by research and development and innovation, the company’s chairman N. Chandrasekaran informed the shareholders on Tuesday.
Speaking at the 60th annual general meeting of the company, which took place virtually, he said TCPL would look at acquisitions to enter categories where it is not present. Branded tea and coffee represent 58 per cent of the revenue while the rest is accumulated by the non-branded and foods business. The company will continue to grow the beverages business alongside foods.
“The company is transforming itself into a full fledged FMCG company but it cannot be done overnight. We are expanding both the food and beverages business at present. We are investing in R&D and innovation.
“While we are doing that we are looking at new categories and looking at acquisition opportunities in those categories, so that we can kickstart and accelerate our journey towards becoming a full fledged FMCG company,” answering to shareholders’ questions, the Tata Sons chairman said.
TCPL was formerly known as Tata Tea. The name was changed to Tata Global Beverages in 2010, reflecting the transition from a single category (tea) to multiple beverages (coffee/water).
After Chandrasekaran became the Tata Sons chairman in 2017, the company went into another rejig round. The consumer facing businesses under Tata Chemicals were transferred to TGBL which was later renamed as TCPL.
The company, which reported a 70 per cent rise in R&D spend, launched 34 products last year, apart from expanding its reach by beefing up the distribution network. The capex for FY24 has been pegged at Rs 400 crore. Foods business (staples, spices and breakfast cereals, salt) rose 26 per cent by revenue in FY2023.
Going forward, TCPL plans to pivot itself towards India where the growth will be ‘much higher’ than the international market. The growth from the company’s major overseas markets viz. the US, Canada and UK, will be limited as they are matured markets. However, they are important geographies as they generate cash flow for the business.
Nourishco, Starbucks
Nourishco, a wholly owned subsidiary of TCPL, is expected to touch a revenue of Rs 1,000 crore in FY24. It clocked a turnover of Rs 621 crore in FY23, up 80 per cent and a profit of Rs 33 crore. The division used to be a 50:50 joint venture with Pepsi till about 2020 before the Tatas bought the partner out. The entire water portfolio, including Himalaya, is part of it.
The Tata Starbucks coffee chain is now EBIT positive even though cash flow continues to be negative as the JV ploughs in surplus for expansion. It opened 71 stores in FY23, taking the count to 333.
