Tata Consumer Products to see good demand and growth: N Chandrasekaran

Says impact of pandemic on firm was mixed; while panic buying and closure of restaurants led to spike in retail and online sales, food service sales and out-of-home biz were impacted significantly

Lockdown measures to contain the Covid-19 pandemic had created logistical challenges in India for Tata Consumer Products, but the situation has progressively improved, said N Chandrasekaran. He was addressing shareholders at the company's first annual general meeting after the merger of the consumer products business of Tata Chemicals with Tata Global Beverages Limited.

Addressing the company's first e-AGM, Chandrasekaran said, "In the last month of FY 2019-20, our business was impacted by the lockdown restrictions imposed by various governments across the globe to manage the Covid-19 pandemic. "While we managed continuity in production and supply chain operations internationally; we faced logistical challenges in the Indian market." 

Limited availability of workers due to large scale migration, restrictions on movement and transport and time taken to streamline retail operations were some of the key challenges, said Chandrasekaran, adding that while some of the challenges would persist in the short term, the situation had progressively improved.

The impact of the pandemic on the company, however, was mixed. While panic buying and closure of restaurants led to a spike in retail and online sales for both Indian and international branded businesses, food service sales and out-of-home businesses were impacted significantly.

Responding to shareholder queries, Chandrasekaran said that the company was doing well and demand was holding up. In certain markets, demand has been a little higher than usual because people are stocking in packaged category and the company would see good growth and good performance in the coming year, he said.

However, the Tata-Starbucks joint venture may slow down reopening of stores for the year. Chandrasekaran said that an aggressive plan had been developed for opening more stores and penetrating into multiple cities but specifically for FY21, it will probably slow because of the pandemic. "But it will pick up. We are very confident and positive about this business," he said.

Tata Starbucks clocked in a 21 per cent growth in revenues  in the year gone by on the back of new store openings and in-store performance. It added 39 new stores during the year, taking the current store count to 185 stores across 11 cities in India, said Chandrasekaran. Currently, however, 50 per cent of the stores were open.

Chandrasekaran also outlined the growth plans for the newly formed foods and beverages company under Tata Consumer Products, from the earlier tea and coffee company. The final approval on the merger of the consumer products business of Tata Chemicals with Tata Global Beverages came through in Febuary 2020.

Chandrasekaran said, this marked a new strategic direction with a much wider scope and exciting opportunities for growth in the new decade. The product portfolio currently spans a mix of iconic and emerging brands in tea, coffee, water, salt, pulses, spices and packaged food. 

The immediate focus would be to strengthen distribution and make products available both online and in physical format; entry into new categories will be in a calibrated manner in the years to come. Tata Consumer products would be available on the Tata Digital platform which would be launched later this year.

Under the Sampann brand, which managing director and chief executive officer, Sunil D' Souza referred to as a "diamond in the rough" the company would be launching more and more products. Tata Consumer Products would also cater to the health and wellness segment, which had emerged as key consumer trend, in both beverages and foods. 

Covid-19 impact:

• Spike in retail and online sales for both Indian and international branded businesses 
• Food service sales and out-of-home businesses impacted significantly
• Starbucks store reopening and ramp-up to depend on pace at which normalcy is restored