Tata Consumer Products, which is the country’s second-largest branded tea maker after Hindustan Unilever (HUL), expects its domestic tea volumes to grow in mid-single-digits over the long term as demand stabilises. In the short term, tea volume growth will likely grow between 2% and 4%, MD & CEO Sunil D’Souza said on an earnings’ call on Wednesday.
For the March 2024 quarter (Q4FY24), the company’s India beverages, which includes tea, reported flat volume growth and 3% revenue growth versus last year. For FY24, India beverage volumes climbed 2% and revenue rose 7% versus the year-ago period.
Tea, in particular, saw 2-3% volume growth in Q4, which D’Souza admitted was a “bit soft” when compared with the trend seen in previous quarters. For perspective, branded tea has seen consumers down-trade to cheaper products over the last few quarters amid inflationary pressures. While tea prices are beginning to soften, volumes are likely to pick up slowly, sector analysts said.
According to market research NielsenIQ, Tata Consumer has lost market share in both volume and value terms over the past year. Tata Consumer’s moving annual total (MAT) market share for tea fell by 30 basis points in volume and 50 basis points in value over the past year, according to an investor presentation on the company’s website, which cited NielsenIQ data. MAT is the total value of a variable such as a product’s sales figures over the course of 12 months.
D’Souza said that the firm’s market share in tea remained stable during the period and that there was no market share loss. “We strongly feel that we have not lost market share (in tea) and we would wait for competitive numbers to get a clearer picture on the subject,” D’Souza said in response to investor queries.
In the overseas market in Q4, the US Regular Black Tea market declined by 2.7% in value, while the UK market registered a healthy 15% growth. The Canadian market also expanded, with Canada Regular Black Tea up by 3.4% and Canada Speciality Tea up by 5.3%, D’Souza said.