FMCG major Tata Consumer Products (TCPL) has plans to pursue premiumization of its tea portfolio to drive growth and unlock value for shareholders, spurring the shares higher by nearly 3 percent in early trade on September 17, with volumes higher than the one-month average of 10 lakh shares.
The President of packaged beverages business for India and South Asia, Puneet Das confirmed the plans to seek premiumization of its portfolio to drive growth. TCPL offers packaged beverage products, including tea under different premium and economy brands, in both general trade and e-commerce routes with the offline mode contributing to 80 percent of sales. In the e-commerce channel, Tata Tea has sustained market leadership for three years, outpacing competitors, the company has said.
A news report by Informist Media quoted Puneet Das telling reporters in Kolkata that the company will aim to reclaim volume leadership in the segment, which was ceded to Hindustan Unilever in 2017-18. Das added that the difference between TCPL and HUL's sales is less than a percent in terms of volume, and around 4-5 percent in value terms.
Tatas are targetting a 6-8 percent total value growth in the tea segment for the fiscal, according to the June quarter earnings call.
TCPL recently launched premium offerings in the tea category, including a green tea with L-Carnitine, an amino acid that helps burn fat, as well as brought in Sachin Tendulkar to endorse Organic India, a brand that the Tatas acquired in 2024. Aside of new launches and deeper distribution network, Tata Global said it aims to expand into towns with populations between 50,000 and 100,000 to increase market reach.
Going forward, the management believes if the tea prices fall it may result in lower cost for consumers, but TCPL said it is confident of holding on to profit margins of 30 percent range by Q3FY26.
"If the tea prices come off rapidly, the locals will have access to lower tea prices. And therefore, as we see market prices moving, we will -- like I said, 34% to 36%, 37%, is a margin which we are comfortable with. I don't think this category, you can go beyond this and therefore, as -- if prices come down more dramatically, we will have to give up something in terms of consumer price as well. But overall, I would say, by Q3, you should see margins operating in this range.
On a YTD basis, Tata Consumer shares are higher by 22 percent, and down 8 percent over last one year.
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