Sunil D’Souza, MD & CEO, Tata Consumer Products | The Financial Express

Sunil D’Souza, MD & CEO, Tata Consumer Products

‘Our premium brands have done well, stress is at lower end of portfolio’

Sunil D’Souza, MD & CEO, Tata Consumer Products
With Durga Puja kicking off festivities in the north, we are coming out with different packs with good promotional offers for Tata Gold, targeted around consumers celebrating the festival.

By Shubhra Tandon and Kritika Arora

The mood around the festive season is upbeat with expectations of good consumer sentiment and demand, but deficit monsoons in parts of north India poses concern for rural demand recovery, which was expected in the second half of the year. Sunil D’Souza, managing director and CEO, Tata Consumer Products told Shubhra Tandon and Kritika Arora that state of monsoon in September will be crucial for determining rural stress. Excerpts:

The India beverage and food volumes remained subdued during the first quarter on a y-o-y basis. What are the reasons for the same and your outlook on these segments?

On the beverages, there is specific stress in specific geographies in the country which are largely rural. So, I would say the Hindi belt is the one where we have seen a bit of stress. In terms of our volume mix, our mass premium to premium brands have done well, but the stress is at the lower end of the portfolio which is primarily addressing semi-urban, rural consumers. But the good part is that on a moving annual total basis we have still gained share and we are still in a strong position. On the outlook, we have had volume growth of 5-7% in the India beverages piece and the price and the mix variance which comes about, a high single digit to low double-digit is the number which is sustainable going forward. Similarly, salt we have had a 5-7% growth and price and mix on top of that. So, both these businesses should have a high single digit to low double digit trajectory going forward.

There were expectations that rural demand should improve in the second half of the year. Do those projections stay or are we looking at a prolonged recovery?

I was expecting two things to come in. One is the overall sentiment getting lifted with the whole pandemic piece behind us and the festive season round the corner, which is also the first festive period after two years when there is no pandemic worry overhang. Second, we were assuming that given all the government inputs that have gone in, including MSPs and all the targeted interventions that government was doing coupled with good monsoon, the (rural) stress would come off. However, with UP and Bihar reporting deficit rainfall…while there is still another month to go before we make the final call, but that is the only thing which is probably niggling in my mind.

Commodity prices have start to cool down now, what is your assessment of the inflation trajectory and any plans of cutting prices of products now?

We have situation different from most other FMCG companies because of our product portfolio. With 40% of my revenue from India tea, we are seeing a deflation over more than a year now, because prices of tea had peaked in September 2020 after restrictions on plucking due to lockdown, and since then tea prices have been coming down, and we have been reducing prices. For example in the state of UP, in our Agni brand we have just moved the prices from roughly `65-70 down to `50 for a 250 gram pack. But the other part, which is salt forming 25-30% of my portfolio, there we have seen high inflationary environment due to brine shortage and rise in coal prices, leading to a roughly over 30% hike in salt portfolio. So, if the coal prices go down, with oil prices cooling, there is no reason why we should not look at giving relief to consumers. But that said, other costs like packaging, freight etc is elevated. As long as that does not move up, I do not expect any more price increases. But, we have to see a sustained level before we can see it easing off which is not the case yet. So, I would be hesitant to give either a timing or a range for price corrections.

What are the plans and outlook for the upcoming festive season in terms of new category launches or discounts for the customers?

I do expect this festive season to be probably better than the last two years given that the sword of pandemic is gone off everyone’s head, people are going out, eating out, spending money. In terms of targeted consumer offers, we collaborate closely with all the retail partners and we make sure we offer equal to if not better than all the other competitive offerings in the market. We will have specific advertisements to make sure our consumers get excited with the products. We are doing bunch of launches just in time the festive to excite not only consumers, but even my salesforce. And in terms of pricing, value etc, we will participate in most of the big ‘promises’ retailers would have around the festive season. With Durga Puja kicking off festivities in the north, we are coming out with different packs with good promotional offers for Tata Gold, targeted around consumers celebrating the festival.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 27-08-2022 at 09:48 IST