tata Consumer Products Ltd: Tata Consumer being a food and beverage company; organic and organic growth on the table: Sunil D’Souza | So Good News


“For us, rural areas are growing more than urban areas but this is difficult because we always have a smaller share in rural areas than urban areas. We are increasing the number of sellers so that our reach is in rural areas and we are focusing on groups that go to rural areas. We want to increase it more,” he said. Sunil D’Souza, CEO & MD,

What are the products that are in demand, especially in terms of household goods given that in the international markets, inflation has been seen in the second quarter? What is the reality at ground zero?
Before I get into it, the most advanced form of our numbers; we announced the results on Thursday – 11% top line growth, 4% EBITDA growth and 36% Group profit. All our businesses are very strong; Indian drinks are almost flat – negative 2%; Foods on brand 29% growth, international 7%, business growth in India increased 50%, ready to drink 64%, Sampann 37%, Soulfull 112%.

Financially, we are on a strong wicket. We have raised margins in all our Indian businesses. India EBITDA increased by 25%, driven by packaged beverages. Group business is growing and raising margins by 30 bps. Technically, we feel we are in a good place. Yes there are soft drinks in India, but we have market share. Salt will continue to expand market share. We talked about 1.5 million stores by March and we are already at 1.4 million. So we’ll go beyond that.

A&P continues to lead, now at 6.4% for the half year versus 6.1% last year. We are getting power for the price. The cost of labor for example is 30 bps better, 2x efficiency what we introduced last year. So all of us, we are feeling good but there are two pieces that are showing our numbers this quarter: a) In the India piece there is a bit of softness which is needed especially in the rural, rural areas and more I would say. Hindi belt. But the good news is that everyone is predicting that as we get into the festivities and as the monsoon settles in we will see demand return. It’s very early days but we’re looking at the second half of September and early October.

We have to crunch the numbers for the festival. So I’m not making a comment. I think we will see pressure; it will be lower than the previous quarter but we will see pressure for the quarter in this sector. Outside of us, Covid is behind us and we are off. Our NourishCo businesses are mostly out of home and we’re up 64% and we’re enjoying it.

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Our Starbucks business is on a very strong wicket. We have increased by 57% compared to last year. Our same sales versus pre-Covid are up 24% and EBIT is positive. As for the countries, I am the storm that is hitting us out there whether it is inflation, demand and money. We have to deal with it and make plans. We are seeing more than expected inflation in the US and UK and we are preparing.

In the UK, the new prices are already in effect. In the US, we have already announced. Approval takes a little time with sellers. Money is a problem, we have both sales and translation because all tea around the world is bought in dollars but we sell in the UK in pounds. We know what the pound is doing and when one translates it into Indian rupees, the pound has depreciated. So that’s another piece.

All in all, there are many factors that move but what we feel is that one looks at all the major market segments KPIs or whether it is financial. I think we are in a good place. Incidentally, despite the pressure in international markets, in the UK we have gone through Twinnings and they are three players. So systematically, we are in a good place. We just have to put our heads down and deal with our demand and inflation.

How do you want to do this since there are almost no rural markets in the countryside? What is the end of growth statistics?
For us, rural areas are growing faster than urban areas but this is difficult because we always have a smaller share in rural areas than urban areas. So we’re doing two-three things to make sure we’re dealing with the numbers.

First, we are increasing the number of retailers so that we are reaching rural areas, focusing on groups that go to rural areas. We want to raise that number even more. Two, in some parts of the country, where we’re seeing softness, we’ve taken action on pricing and that’s why we’ve gained 10 bps on volume but we’ve come down 50 bps on premium because we’ve made pricing arrangements to achieve that. equal.

We think that the economy will come because of the good rains and everything that the government has done.

A large part of your business focuses on what happens to tea, what is happening to tea prices? Tea as a commodity has fallen and the decline started two quarters ago. This should have been filmed as things would have changed to make it look better but I don’t see it happening.
It is correct. If you look at the long-term trends, in India the supply is greater than the demand for tea so prices are bound to come down. It had gone up during the Covid era and after that, it was wild to come down. The pot is broken right now. First, there is the whole story of Sri Lanka and why orthodox tea is coming out of the market. Many Indian marketers have moved to Orthodoxy and hence there is a touch of CTC and hence it is useless.

Secondly, the floods in June-July affected crops in Assam in July and August. At present, we see them moving around Rs 10 more than last year but going forward, I expect tea prices to come down. It will come into our finances as we move forward. So in the medium term, not the long term, this is what will happen.

If the economy recovers, tea prices will remain stable, the discount food and beverage business will do well for you, so how will the second half be different from the first half? The first part was controlling the price, fighting inflation, trying to fix the house. If everything changes, then we are looking at a further jump in the second half?
I can break the second half into two parts. I would say this quarter, in India, it is still a wait and see point and although we are seeing early signs, but I would still reserve judgement. As for countries, as I said, we have to do something about prices and money. We have to do some expensive stuff that will take about a quarter.

So for us, this quarter is still in the same ballpark but going forward, once we get on track and think the macros will turn around, we’re in pretty good shape. I keep telling my teams that there are two important things that are the hallmarks of a strong business — market share that gives us strength in the market where we do well in tea. We continue to build momentum with all of our businesses growing on a very strong path.

The second is magnetic. Our margin is more or less back to where it should be. So if the volumes come back, by and large we are in a very good place.

You talked about tea prices and how the tea business is doing but now that coffee prices have been soft, what are your thoughts on how the coffee business will fare?
We have three separate businesses. We have Eight O’clock in the US. We have Coffee in India for business customers and we have it

which is helpful. Now Tata Coffee will obviously benefit from the increase in coffee prices as we go forward so we feel very good. Eight O’Clock Coffee in the US.

Coffee prices are rising steadily. We were fenced off for a while and now we are building new fences so it will be a little difficult but we are doing wooden steps. It should return to steam. The US business has the highest growth, the best margins and hence will come back in the next 45-60 days. In India, the coffee business grew by 39% even though we are still going ahead and sharing it. Overall, coffee is a big driver of growth for us and we feel good about it.

You talked about inflation and how you’re doing around the world. But the marginal image has been flattening year after year. Is the worst over when it comes to your limits then?
Again I break it into two pieces. I think in the Indian sector, the border pressure is over. Maybe they will be a little different-bound going forward. Globally, I don’t think we’re out of the woods in terms of having to do something about the trees and trees being played. It will probably take a quarter to get that.

Could we see a series of declines in global business? Let’s keep the money part aside because this is an assumption whether it’s a dollar or a pound or another currency.
No, I don’t think so. I feel very good about being interviewed. The total investment in international business will continue to grow. Last quarter, we grew 9%. This quarter there was a bit of pressure. We grew by 7%. I don’t think size is a problem. It’s just a matter of fixing the edges.

What does the non-drink industry do? There is price power with minerals because you don’t have any raw materials involved, but is that where inflation is felt?
If I’m going to take tea and dessert for a minute because we’re growing into a full beverage company, we feel good about all businesses. As I said, ready to drink is rising by 64%, although there are problems with the price. Sampann, which is pulses, spices etc is growing 37%; Soulful is growing 100% inclusive; Starbucks is growing very well.

Now specifically to your question about Sampann and pulses, the good news is a) we need to expand our shopping engine; b) we must have the correct information; and c) we need to expand our sales. All three are playing. We have started investing in the back of Sampann and we have got our own shopping engine.

The plans had a very good size. On top of that, GST on packaged goods including pulses helps us as this encourages the drive from unorganized to organized. So all in all, we feel good where we are and on top of that, Sampann is one of our biggest inspirations. The South has 40% of the market, we are just about to be established and when the sellers say that sir, we need more and we need to go to more areas because this is something that works, then you feel good.

Looking for courier services in Bisleri and I won’t let you leave a comment?
Here’s the thing. The media speculates on 10 different things so I wouldn’t comment on speculation around.

I ask you this question. Let’s dispel the speculation. Can you tell me yes, no and then the fantasy ends right now?
Let me know if something happens you’ll be the first to know.

Would you look at or be interested in a group of distilled water?
We will be a food and beverage company. We are in the beverage business, the food business, we are in the packaged tea business. So we’re looking at the whole game: natural and organic growth is on the table. I would just leave it at that.

You have had water in the past because of the Himalayan find. But you are in a niche category. Now looking at your growth and ambition, where is the opportunity?
I would like to correct one of those points. Himalayan is growing very well. We are growing at about 50%. We are at Tata Copper Water which is in the same drinking water segment and is growing 2x compared to last year. I would say that our RTD business is expected to be north of Rs 500 crores by the end of this year. So we are in a good place for drinking.


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