Tata Consumer Products announced its results for the quarter ended June 2020. For the quarter, revenue from operations is higher by 13% (11% in constant currency) compared to the corresponding quarter of the previous year, led by volume and value growth in branded businesses in India and International. EBITDA at Rs 486 crore and profit before exceptional items and tax at Rs 436 crore is higher by 37% and 42% respectively, as compared to the corresponding quarter of the previous year, mainly on account of higher revenue and lower level of expenditure including commodity costs.
The company and its subsidiaries and affiliates continue to manufacture and supply essential food and beverage items in domestic and international markets in the current Covid environment. The demand for the food and beverage products for in-home consumption was buoyant, whereas segments in out of home consumption were adversely impacted. Based on the trends observed, there is some tapering of demand across geographies and significant hardening of commodity costs in India. Impact on future operations would, in no small extent, depend on how the pandemic develops. The company mentioned the following business in a press statement.
India business update
– For the quarter, India branded tea business clocked a 4% volume growth and 8% value growth, despite the decline in April, when the lockdown had just begun.
– Tata Tea Chakra Gold launched a campaign in Tamil Nadu to garner support for the Hot Tea Shop segment currently struggling financially due to Lockdown and Covid impact. The brand recorded good growth in Q1.
– For the quarter, the India Foods business clocked an 8% volume growth and 19% value growth. There has been excellent growth across pulses and spices due to a significant increase in demand. The salt portfolio recorded steady growth during the quarter.
– Post the merger of the consumer product business of TATA Chemicals with TATA Consumer; a new combined organization structure has already been announced and implemented.
– As part of the integration of the foods and beverage businesses in India, the combined sales and distribution re-design is underway. The objective of the re-design is to expand the direct reach and enable effective revenue and cost synergies.
– During the quarter, the International beverages business registered a 15% revenue growth, driven by improvements in retail and online sales due to Covid related stocking across our key markets.
– The good earth fruit and herbals range was launched in the UK to create new teas and beverages for a new generation of consumers. The portfolio includes a range of fruit & herbal, green and black teas and original and flavored kombucha (a gently carbonated tea).
– Eight O’ Clock Coffee (EOC) in the USA registered growth across its portfolio. Its recent innovations such as EOC Barista series, Flavors of America and new SKUs in K cups have achieved distribution gains.
– Tetley Cold Infusions, a range specially formulated to brew in cold water, was launched in Canada and has received good consumer feedback.
Tata Starbucks Update
– Tata Starbucks’ operations for Q1 were adversely impacted due to Covid-19. As of 30 June 2020, close to 60% of the total 186 stores have reopened.
– It also launched its first drive-thru store in India at the Ambala Chandigarh Expressway in Zirkapur. The drive-thru format offers added convenience for customers who want to pick up their orders from their car, or travelers on the go.
Sunil D’Souza, managing director and chief executive officer of Tata Consumer Products, said, “ We have recorded good revenue and profit growth in Q1 due to increased demand in some categories, strong marketing campaigns and adopting new routes to reach the end consumer effectively. The integration of our foods and beverages businesses in India is progressing well and unlock significant synergy benefits. In our international markets, we invest in our core brands and drive innovations in the tea and coffee segment. We are also strengthening key processes across the organization to scale up capability and build a future ready organization.”
Tata Consumer Products is a focused consumer products company uniting the Tata Group’s principal food and beverage interests under one umbrella. The company’s portfolio of products includes tea, coffee, water, salt, pulses, spices, and ready-to-cook offerings. Tata Consumer Products is claimed to be the 2nd largest branded tea company in the world. Its key beverage brands include Tata Tea, Tetley, Eight O’Clock Coffee, Tata Coffee Grand, and Himalayan Natural Mineral Water. Its food portfolio includes brands such as Tata Salt and Tata Sampann. In India, Tata Consumer Products has a reach of over 200 million households, giving it an unparalleled ability to leverage the Tata brand in consumer products. The company has an annual turnover of Rs 10,000 crore and employs 2,200+ people in its branded business workforce.