For decades, the identity of Tata Consumer Products was anchored in two staples of the Indian kitchen – tea and salt. With the smiling faces of Chef Sanjeev Kapoor and Chef Ranveer Brar plastered on the products, you must have seen these packets in almost every retail store. As per a report by Nuvama, Tata Consumer Products is slowly getting out of this shell and positioning itself as a broader food and beverage platform that is built specifically to tend to the evolving consumer trends of health and wellness.
A significant part of this shift is being driven by the company’s so-called ‘growth businesses’, which now account for about 30% of the India business, up from 28% in FY2. These categories, spanning packaged foods, health-focused products and ready-to-drink beverages, are expanding rapidly, growing around 29% year-on-year in the December quarter, close to the company’s long-term aspiration of 30% growth, the report added.
Nuvama has maintained its ‘Buy’ rating on Tata Consumer Products, with a target price of Rs 1,500 per share, implying an upside potential of roughly 35% from the current levels.
Building a wellness portfolio
How is Tata doing this? Acquisitions. This game plan has been the centre of every strategy which involves a big FMCG company trying to expand its product line or get into a new category. Tata did it with the help of Organic India, the herbal supplements and organic products brand that Tata Consumer acquired to deepen its presence in the wellness space.
According to the report, the business generated about Rs 1.2 billion in revenue in the December quarter, with growth exceeding 30% year-on-year. Around 40% of Organic India’s sales come from the US, where the premium organic and herbal segment offers stronger pricing power and a less price-sensitive consumer base
Meanwhile, Tata Soulfull, best known for millet-based breakfast cereals and snacks, has carved out close to double-digit market share in key categories, including choco fills and muesli, the report added. The brand has been expanding its portfolio beyond cereals into rusks and snack formats to widen its addressable market.
Alongside these brands, the company is also scaling its broader food portfolio under Tata Sampann, which recorded about 45% growth in the December quarter, driven largely by volumes across staples such as pulses, poha and makhana as well as newer categories like dry fruits and cold-pressed oils, the report said.
The dry fruits and oils segments alone have reached annual revenue run rates of roughly Rs 2.5–3 billion each, with the company planning to gradually expand into higher-margin flavoured and roasted variants.
The café menu goes ‘guilt-free’
The wellness push is not limited to packaged foods. Even the company’s café business is adapting to changing consumer preferences. Through its joint venture, Tata Starbucks, the company has begun introducing no-sugar syrups and healthier beverage options, alongside protein-based food offerings aimed at improving day-part relevance and ticket size.
This move, too, was an attempt to align the coffee chain, which ideally comes under the fast food category, with the rising category of consumers who like to indulge in the ‘guilt-free’ experiences. According to Nuvama, Starbucks’ India network reached 504 stores across 81 cities after opening 12 outlets in the December quarter. Same-store sales growth has also turned positive again, growing about 3% year-on-year during the quarter.
Rebalancing the portfolio
Behind the scenes, Tata Consumer is also reorganising its distribution model to ensure these newer categories receive greater attention. Historically, its sales network was dominated by tea and salt, so much so that in some markets, such as Kolkata, around 91% of distributor revenue came from these two categories, leaving limited focus on emerging segments.
To correct this imbalance, the company has separated distribution for legacy products and growth categories in several markets. The goal is to unlock the full potential of newer brands such as Capital Foods, Organic India, Tata Sampann and Soulfull while sustaining their high growth trajectory.
The larger consumer bet
In effect, the company is attempting to future-proof its portfolio. As Indian consumers move towards healthier diets, Tata Consumer is trying to follow the route with perhaps a herbal tea, millet cereal and a protein snack in its bag.