Tata Starbucks, a 50:50 JV between Tata group firm TCPL and Starbucks Corporation, has added 39 new stores in FY2020, taking the total count to 185 stores in 11 cities.
The current economic scenario in India as well as global markets is challenging but it is also a learning opportunity to closely monitor consumer trends and buying behaviour across markets to effectively adapt business models and product offerings, according to Tata Consumer Products Ltd (TCPL) Chairman N Chandrasekaran.
Addressing shareholders at the first annual general meeting of the company which has been formed after the merger of Tata Global Beverages and consumer products business of Tata Chemicals, Chandrasekaran said the situation arising out of the coronavirus situation has progressively improved though some of the challenges will persist in the short term.
“We will need to focus on realising the revenue and cost synergies from the integration. While the current economic scenario in India as well as international markets is challenging, I believe it is also a learning opportunity, and we will emerge stronger from this, he said in his online address.
Stressing that the “long term growth drivers for the business will remain robust”, Chandrasekaran who is also the Chairman of Tata Sons, said the last few months have been a time of unprecedented change, witnessing significant changes and health and wellness remain a key consumer trend across markets.
“It will be critical to closely monitor consumer trends and buying behaviour across markets, so that we can effectively adapt our business models and product offerings. I think long term growth drivers for the business will remain robust,” he said.
Commenting on the situation arising out of COVID-19, he said, “While some of these challenges will persist in the short term, the situation has progressively improved.” Replying to a shareholder’s query, he said TCPL would continue to expand its distribution network – both online and offline – to have a wider presence and availability of its products.
“Our immediate focus will be to strengthen distribution and make the products available both online and physically and also ensure that we are available nationwide, he said. Admitting that many of the products are not fully available in the market, Chandrasekaran said TCPL would work to deepen its reach nationwide.
“One of the problems that we have in direct consumer products is many of our products are not fully available. So, we will go to nationwide reach, we will definitely deepen and strengthen the distribution to make sure that all our products are available and we will spend on marketing and come out with programmes to ensure that it is pretty visible,” he added.
According to him, in some business such as water the company has very low market share and would expand its distribution to increase the market share. Water, we will definitely make it available more broadly and distribution needs to be addressed, he said, adding that would be necessary to make profit in this business.”
TCPL in May had announced acquiring PepsiCo’s stake in their joint venture NourishCo Beverages to widen its portfolio in the growing food and beverages space. It has acquired rights over Gluco Plus/Gluco+ brand also.
“PepsiCo had invested around Rs 107 crore and from our point of view, we have paid them Rs 1 crore brand fee,” he said.
While talking about their JV Tata Starbucks, he said it would be slow on expansion because of pandemic though it is very positive and confident about this business. “Specifically in FY2021, we will probably be slow because of the pandemic. But we will pick it up we are very confident and very positive about this business,” he said but added the company has an aggressive plan, which was developed for opening more stores and penetrate Starbucks into multiple cities.
Tata Starbucks, a 50:50 JV between Tata group firm TCPL and Starbucks Corporation, has added 39 new stores in FY2020, taking the total count to 185 stores in 11 cities. 50 per cent of the stores are open now,” he said. Over expansion of its tea cafes Tata Cha, Chandrasekaran said it is presently operating at Bangaluru only and would look for its expansion post-COVID only.
He also said that the company is also having several tie-ups to ensure the online availability of its current consumer products portfolio widely available anytime. When asked about TCPL’s plans to expand into the FMCG market, he said, “The company has been only focused on beverages, predominantly tea and coffee for a very, very long time. We were taking a conscious call to create a broader company. So we are focused on beverages and foods now.
Chandrasekaran further said,”We will launch products in other categories in a very calibrated manner in the years to come.” TCPL owns popular brands like Tata Salt, Tata Tea, Tetley, Eight O’ clock and Himalayan Water.