- While demand had softened in the December quarter, the trends in the months of December and January were relatively better, says Puneet Das of Tata Consumer Products
New Delhi: Tata Consumer Products Ltd is working on scaling its premium packaged coffee and tea, and offering more health and wellness variants under its beverages portfolio, Puneet Das, president, packaged beverages (India and South Asia), Tata Consumer Products told Mint. TCPL, which sells packaged beverages under brands such as Tata Tea Premium, Tata Tea Chakra, Tata Grand coffee and bottled water under Himalayan, reported a 5% dip in volume growth in the December quarter in its India beverage business on account of price corrections as well as demand slowdown in key markets. Das said while demand had softened in the December quarter, the trends in the months of December and January were relatively better. Edited excerpts from an interview:
Overall, is premiumization a key theme for your growth trajectory?
From a packaged beverage point of view, premiumization, convenience, and health and wellness are the three vectors we have been working on. In the tea portfolio, we launched Gold Care, which is an everyday tea with natural ingredients and fits in the health and wellness portfolio. After covid-19 immunity has found a resurgence in terms of a benefit consumers are looking for. In coffee, it’s a lot about offering convenience and premiumize the cost per serve. We are also growing the bottom part of the portfolio, which is Tata Tea Agni. In fact, we went through this exercise of integrating all our economy brands under one portfolio, which is Agni, so we can leverage the advertising behind it. This year has been a soft year for tea overall but in the long term it is a growth driver.
Was the softness in demand in the packaged beverages business in the December quarter, especially in tea, largely in the mass market?
Yes, we did see some tightening, there’s obviously an overall atmosphere of inflation, and people are feeling it across categories. Consumers tend to downgrade or go for lower pack sizes; rural demand gets a little bit impacted. Also, in the third quarter, there was also some delay in the onset of winter. So, it was a combination of all that. These are temporary phenomena and in the long run, there is action happening at the bottom of the pyramid and at the same time, premiumization is also happening. Consumers across tier-I cities are open to experimentation with food and beverages (F&B). When it comes to premiumization, the idea is that we want to cater to, and give consumers a lot of choices that they can afford daily. Tata Tea Premium Street Chai, for example, was born out of the idea of bringing localized flavours to consumers.
Are you seeing any improvement in demand in the March quarter?
December-January has been back-to-back good months, so there are green shoots visible in this quarter.
Will you continue to follow a localization strategy of launching region-specific products?
Yes, we will. That’s because F&B is a very localized play in India. In coffee, for instance, most of the southern markets prefer a chicory blend; within those markets, the ratio changes too. Non-south consumers prefer 100% coffee. So, in the last three-to-four years, we have been investing in it and have just launched a 100% coffee blend for non-south markets. In fact, we have launched a lot of innovations under coffee. For example, we launched a quick filter coffee, which is a pre-mix powder; we launched a cafe special, which is pre-mixes for a cappuccino.
As the cafe culture gets deeper in the market, does it help in-home consumption of tea and coffee?
The coffee category benefits a lot from the cafe culture, especially in non-south markets, where coffee is not a habit. In fact, for most of the non-south market coffee is actually consumed outside the home. It is seen as a lifestyle choice, unlike tea. But the good part is when consumers come back they want this experience at home. That’s where our brands come in. So, we can give them pre-mixes to replicate coffee at home. The cafe culture actually exposes consumers to more choices and then they want these experiences at home—that’s where packaged companies like us come in.
With so many new launches, will A&P spends get distributed to new launches or the core?
From a beverage portfolio, we harmonized a lot of our brands and got them under an architecture that allows us to synergize them with the parent brand. For example, Street Chai has been launched under Tata Tea Premium—our flagship brand. When we’re launching within the health and wellness range, Tata Gold is a premium brand, so Tata Tea Gold Care, came under it as a variant; similarly, saffron which is a premium flavoured tea sat very well under Gold etc.
Has the pace of new launches in innovation increased?
Yes, absolutely. Because when we integrated as a company, and then with Sunil D’Souza (managing director and CEO, TCPL) coming in, one of the big themes was to ramp up the innovation pipeline. The ratio of innovation has significantly gone up from where it was.
Is the company open to investments in homegrown direct-to-consumer tea or coffee brands?
There is a separate team for that; we keep evaluating opportunities. The management has said it openly. Obviously, we have not found anything so far.
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