Tata group’s fast-moving consumer goods (FMCG) arm will focus on increasing market share in tea and salt, two of its core categories, as competitive intensity, notably, from small players, grows. Tata Consumer Products is the leader in branded salt with Tata Salt and the second-largest player in branded tea with Tata Tea. The leader in the branded tea category is Hindustan Unilever.However, staples like salt and tea are increasingly seeing the influx of smaller players as commodity inflation moderates, aiding their revival.
These companies are targeting largely rural and semi-urban pockets, which are price-sensitive and prone to switching brand loyalties.In a conversation with FE, Sunil D’Souza, MD & CEO, Tata Consumer, said the company had lost around 50 bps in terms of volume share and 110 bps in terms of value share in tea on a moving annual total basis in the June quarter versus last year. While in salt, the drop in value share was around 30 basis points in Q1 versus last year.To stem this loss, the company is counting on a distribution push in semi-urban and rural areas as well as higher advertising investments behind its brands, notably in tea. In salt, the strategy will be to put “margins before market share”.
Tata Consumer had raised the price of Tata Salt by 33%, that is, from Rs 21 to Rs 28 a pack, over the last few quarters to tackle inflationary pressures. Market share erosion happened as a result of this, says D’Souza.“If you look at the salt business closely, we have actually gained 10 bbs of share in the Tata Salt brand. But where we have lost market share is that part of the portfolio which is sensitive to loose and local players. The focus will be to get back share in this part of the portfolio, now that margins are stable overall, after the price hike,” D’Souza said.
The company will also increase its presence in the south, across tea, coffee, salt and spices. Tata Consumer’s Chakra Gold and Kanan Devan brands, for instance, have been making inroads in the south and Tata Coffee Grand was restaged with a new pack design, D’Souza said.The company has also launched Shuddh in the salt category for the south markets. And it has a range of spices for the southern region under the Tata Sampann brand.
D’Souza also said the company has taken a focused approach to distribution by increasing bandwidth at the front end and splitting routes of salesmen in one-million-plus towns. While some of these salesmen focus on the company’s commodity categories such as tea, coffee and salt, the others focus on value-added categories and products (such as Tata Soulfull).Total reach, said D’Souza, is on track to touch four million outlets by September, which is double the number that existed three years ago.