Tata Consumer delivered a strong set of December-quarter numbers, aided by lower tea prices, GST cuts that boosted consumption demand and underlying volume growth of 13% in its India business. In an interview with Viveat Susan Pinto, Tata Consumer‘s MD & CEO Sunil D’Souza, throws light on the way forward for the company, its strategy for Starbucks and the company’s bet in nutrition. Excerpts:
1) With Q3 behind, how would you describe FY26 so far from a demand standpoint?
Demand is steadily improving. That I would say is heartening. After some channel disruption ahead of the GST rate cuts in September, volume trends have strengthened across categories, especially in daily-use staples such as tea and salt. In my view the full impact of the GST tailwinds for FMCG may show up in the March quarter of FY26 or the early part of FY27, when food and beverage spending may pick up following discretionary expenditure in categories such as auto and electronics. I see a virtuous cycle of growth kicking in for FMCG from now.
2) What is the target in terms of revenue and Ebitda margins you hope to achieve at the end of FY26?
We are close to Rs 15,000 crore in topline at the end of three quarters of FY26. We crossed the Rs 5,000-crore-mark in turnover for the first time in the December quarter. If you extrapolate from these data points, we are targeting a topline of close to Rs 20,000 crore at the end of FY26 and Ebitda margins of around 15%. We also see more volume-led growth coming into the business, led by stronger consumption trends, lower GST rates on food items, easing interest rates, and an overall improvement in sentiment.
3) Speculation has been growing of Tata Consumer’s interest in the nutrition business of Danone. Can you provide an update on this proposed acquisition?
Nutrition is an area of interest for us. One of the reasons for acquiring Organic India, for instance, was because of its presence in health supplements. It gives us an opportunity to play in that space more meaningfully. While I cannot comment on market speculation, but health and wellness or nutrition is something that excites us. It is among the categories that we want to be in. If we are unable to do so organically, then we remain open to inorganic means to get there. Of course, both the strategic and financial pieces have to fall in place for us to be interested in an inorganic opportunity. That is something we remain clear about every acquisition that we consider on the table.
4) What is the strategy with Starbucks now that it has touched 500 stores in 81 cities? Are you looking to tweak the business model in line with Indian retail realities?
We are in the midst of calibrating store expansion for Starbucks. While we had originally planned to add 100 stores per year, but due to the recent retail slowdown, that number has reduced. We will add around half that number, at about 45-50 stores this year. We may also not enter more cities from the current number of 81 cities where we are present. There is scope to add stores within the current number of cities where we are present. Having said that, we are in the joint venture (Tata Starbucks) for the long haul and see a huge runway for growth as far as coffee retail is concerned. Both partners remain aligned with regard to this objective. We have in the last few years tweaked menu and pricing, introduced innovations in flavours and product formats that will appeal to the Indian consumer. We remain committed to tapping the India opportunity in coffee retail and doing it profitably.
5) While the Tata Starbucks JV is Ebitda-positive, when do you hope to get PAT-positive?
We are not there yet. But that doesn’t mean our ambitions remain diminished. Far from it. We are encouraged with the improving consumer sentiment in the business. For the second quarter in a row in FY26, we have posted positive same-store sales growth (SSG). It was 1% in the September quarter after multiple quarters of a decline. SSG improved to 3% in the December quarter. And we see this number getting better amid a revival in discretionary spending.