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Tata consumer gets more to chew

Tata consumer gets more to chew

the Tata group is betting big on food and ready-to-eat categories and is restructuring all businesses into one entity
November 23, 2021
3 min read
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the Tata group is betting big on food and ready-to-eat categories and is restructuring all businesses into one entity

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the last two years have changed the way people eat. perhaps for good, or at least for the long haul. quick meals and ready-to-eat foods that satisfy all cravings are popular now. to make the most of this trend, Tata group wants to diversify its FMCG company, Tata Consumer. 

for that, the company has already acquired its sister entity, Tata SmartFoods, for Rs 395 crore and is now eyeing a mix of organic and inorganic growth. here, organic growth would mean setting up new stores and entering product categories, while inorganic would include more mergers and acquisitions. the plan, in a nutshell, is to bring all the food and allied categories into one bucket.

this will be the second-such transaction between the parent company and Tata Consumer. In 2019, Tata Chemicals moved its consumer brands, including Tata Salt and Tata Sampann, to Tata Consumer.

so, what’s the game plan?

Tata group chairman N Chandrasekaran wants to simplify the structure of its consumer business. instead of having multiple entities in similar categories of food, the aim is to have one large company handling this business. 

in the ready-to-eat category, Tata SmartFoods claims to be the second biggest player. it sells pasta, noodles and heat-and-eat meals under its Tata Q brand. now this business has moved to Tata Consumer. 

the idea here is to leverage Tata Consumer’s distribution footprint to expand the business. there is also a plan to digitise the business to go direct-to-consumer.

how do the numbers stack up?

in the September quarter (Q2), the company saw a 9% year-on-year increase in consolidated revenue of Rs 3033 crore, beating analyst expectations. Tata Consumer had a consolidated revenue of Rs 11,602 crore in FY21. there was a 14% rise in beverages business and 23% rise in food business in India while the growth in international markets stayed flat.

to spruce up its value proposition, Tata Consumer has also brought international players, such as Eight O’clock coffee, as a D2C brand to India. simultaneously, it has also exited from markets such as China, Russia and Sri Lanka. 

With the TataNeu super app launch being planned for early 2022, Tata Consumer is readying itself for the big digital switch.