Tata Consumer Products plans re-entry into non-foods FMCG business

Tata Consumer Products will not restrict itself to the foods business but will transition to being a fast-moving consumer goods (FMCG) firm.

After exiting the non-foods FMCG space in the 1990s, the conglomerate is looking to re-enter the field.

“Tata Consumer was created to be the FMCG flagship for Tata Group. Step number one was to bring together the salt and the tea businesses of Tata Chemicals and Tata Global to create Tata Consumer,” Sunil D’Souza, managing director and chief executive officer of Tata Consumer Products, told Business Standard in an interview.

D’Souza added: “You will always build from strength and that is why we said first we’ll build a stronger portfolio in food and beverages, and then venture into the larger FMCG space.”

This is the conglomerate’s second entry into the non-foods space. In the 1990s the company sold Tata Oil Mills Company, which used to sell soaps, detergents, cooking oil, glycerine, etc, to Hindustan Lever (now Hindustan Unilever).

The company used to house brands such as Hamam, Ok, and Moti. It later sold its stake in the personal care business, Lakme, to the same company.

However, D’Souza did not say if the company would look at entering the space organically or inorganically.

“That the Tata name brings value, especially in a category that has low trust. If you put the Tata brand name, we have a head start.”

He said the reason the company entered the dry fruit category was the lack of a brand name there.

“We are sitting on cash and got a strong backing from the parent group. We have got to be mindful about where we invest and what we do. We have to create value,” D’Souza said.

“We will not be chasing categories for categories’ sake or top line and growth for growth’s sake. It has to be profitable growth.”

The company plans to strengthen its foothold in foods and beverages. D’Souza said when the company looked at a category it had to pass through a strategic and financial filter and also the category needed to have scale.

Also, the company will find out if there are too many players or too few. Both can be a problem, he said. Along with that, the company will check if the category has enough margin and if it requires significant capital expenditure.

Tata Consumer will also gauge if it has the R&D and the technological backbone to make it work in those categories. In 2019, Tata Chemicals and Tata Global Beverages merged the consumer businesses to form Tata Consumer Products.

Tata Salt, Tata Tea, Tata Sampann, and Tetley were brought under Tata Consumer.

The company is focused on expanding its distribution reach and it told investors in a conference call that it intended to reach four million outlets by FY23 and take its direct reach to 1.5 million. It will focus on ramping up distribution network in semi-urban and rural areas.