“Building a Stronger Agribusiness”: Sunil D’Souza, CEO, Tata Consumer Products
The group reviews the full spectrum of FMCG products under Tata Consumer Products. What is the plan?
It actually emanated from two big Bombay House themes. First, we have the biggest brand in the country. But, with this brand name, why weren’t we making progress in the mainstream space? Number two is this whole philosophy of simplification, synergy, and scale.
If you look at the Tata Group’s consumer businesses, so far they were housed in three different pockets. There was tea and coffee at Tata Consumer. There was salt and a very small Sampann business in Tata Chemicals. Tata Industries had just launched into ready-to-eat with Tata SmartFoodz. And we had this joint venture hanging in the middle with PepsiCo.
You build basic runtime platforms and run through multiple product portfolios, that was the whole idea. So starting with merging the consumer products business of Tata Chemicals, integrating them into Tata Global Beverages, the idea was to build a base platform. As we continue to improve our capabilities, we will also begin to examine how we grow beyond where we are.
We have defined five platforms, on which we will focus. The first is tea, coffee and salt. The second is the entire pantry segment under Sampann. The third is breakfast, mini meals and cereals. Fourth, ready-to-drink beverages under the NourishCo brand. And finally, protein.
So those five platforms you described are where you’re going to grow.
We are supposed to become a total FMCG company. But, in the short term, we are focused on building a stronger food and beverage business. In food and beverage, we will focus on these five platforms and make sure to grow on these platforms. For example, in coffee, we just launched quick filter coffee. In proteins, we have launched alternative meats. We will focus on portfolio growth and scaling.
How does inflation affect your business?
From the context of Indian consumption, tea is in deflationary mode. Tea prices rose dramatically in September 2020, following the initial lockdown, which occurred when the supply-demand equation collapsed. After that, tea prices went down. But we are seeing inflation in different parts of the business, especially in our salt business. [Salt prices] surged last year because there were prolonged rains in Gujarat.
But the biggest impact is energy. When oil prices rose, coal prices rose. Also, much of the coal we import, whether for calorific content or environmental ash residue, the movement of the dollar has not helped. There we took prizes. Over the past year, we have experienced an increase of approximately 30% in the price of salt.
We’re also seeing cost increases in freight, packaging, all that kind of stuff, but that’s something we have to constantly monitor, either to continue to optimize costs or to make sure we pass on prices on consumers. if they are willing to pay. It’s a fine balance between trajectory of volumes, maintaining market share and balancing margin with rising costs.