Tata Consumer Products Limited (TCPL) will ramp up its advertising spends in the new financial year to increase the visibility of its newly acquired brands. With acquisitions like Capital Foods (Ching’s, Smith & Jones) and Organic India now under its belt, the company is consciously increasing its marketing outlay, aligning with its broader strategy to boost visibility and drive sales across urban and rural markets, chief operating officer Ajit Krishnakumar told Moneycontrol in an exclusive interview on March 31.
In 2023-24, the company spent Rs 977.69 crore on advertisement and sales, 12.87 percent higher than what it spent in FY23. Krishnakumar did not disclose the exact percentage increase in advertising spends in FY26
"The strategic logic for acquiring these businesses (Capital Foods and Organic India) included our ability to take these fantastic brands and make them nationally available. This ties to sales and distribution. My second point is getting both Organic India and Capital Foods to dramatically accelerate. Third, and something that we have been hoping for, is to continue to build brands. Ultimately, FMCG businesses are about building brands. So you will see the A&P (advertising and promotion) of the company pick up, partly because we now have these higher A&P-requiring brands like Capital Foods," Krishnakumar said during the interview.
In January 2024, the Tata group company acquired Capital Foods and Organic India, a health and wellness player, for a combined enterprise value of Rs 7,000 crore. Both the deals are expected to strengthen TCPL's pantry platform and current core portfolio, complementing the current offerings of the fast moving consumer goods (FMCG) company. Capital Foods' Ching's Secret is a market leader in the "desi Chinese" food category in India, known for its sauces, noodles and other related products.
Krishnakumar highlighted Ching's as a 'high branded category' that would require more recognition and visibility as TCPL's own brands mature. He emphasised that the company would focus on aligning sales performance with the rising advertising spend to ensure a balanced and strategic approach. "The colour of our P&L going forward, you will see a ticking up of advertising spending because of the mix. Ching's is a higher advertising category and we are slowly pushing it up as our brands mature," he added.
More deals that complement value chain
With a reach of 1.5 million stores, the company would continue to look for acquisitions adjacent to its value chain to expand its current portfolio.
When asked if TCPL would adopt a defensive strategy by expanding in core categories, Krishnakumar said, "I think it's important that organisations understand them well across the board, starting from sales all the way to branding to manufacturing. Therefore, it makes the most sense to do adjacencies. I wouldn't classify it, at least in our case, as defensive acquisition. Adjacencies are, for example, if you look at Organic India, you can argue it's an adjacency. About a third of Organic India's products come from infusions, which is effectively tea bags, tulsi and hibiscus and a lot of other good stuff in a tea bag sold very similarly to how, let's say, a Tetley is being sold."
Premiumisation
A prolonged downturn in urban demand has prompted most FMCG players to turn to the affluent segment to boost revenues and profit margins. TCPL, too, is betting on this strategy, and is looking to introduce premium variants in each of its product categories.
"You will see premiumisation across the board because that is also becoming the need of the day, so you will find each of our product pieces will start introducing more and more premium variants of it," said Krishnakumar.
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