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May 1, 2026
Yuthika Bhargava & Vikash Tripathi, Outlook Business
Mumbai, 1 May 2026
For generations of Indians, the word Tata hasn’t just been a brand, it has been a permanent resident in our homes. Think back to the kitchens of your childhood. It was the familiar packet of Tata salt, the Desh ka Namak, that seasoned every meal. It was the steaming cup of Tata tea that signalled the start of the day for elders at home.
In every Indian household, the name represents trust and legacy.
Yet, when N Chandrasekaran, chairman of Tata Sons, wanted to hire Whirlpool India’s head Sunil D’Souza to lead Tata Global Beverages (TGBL) in September 2019, he got a shock refusal.
Who in their right minds wouldn’t want to join a Tata company?
Well, D’Souza hadn’t heard much about TGBL. In fact, his colleague at Whirlpool India had called it a “sleepy company”.
At the time, TGBL’s revenues were a meagre ₹7,408cr compared to close to ₹50,000cr and ₹40,000cr logged by fast-moving consumer goods (FMCG) heavyweights ITC and Hindustan Unilever (HUL), respectively, in 2018–19.
Experts had noted TGBL had not much to show in terms of major product innovation for years. Primarily a tea and coffee company, it was locked in a low-growth cycle.
In 2018, various analysts had remarked that TGBL’s growth was muted as it wasn’t selling anything beyond tea and coffee.
At TGBL’s annual general meeting on July 5, 2018, Chandrasekaran said the company would exit loss-making subsidiaries and focus on profitable ones that can be scaled up. “Even though in volume terms, the company continued to be number one in the Indian market, the same was not true in value terms,” he said.
So, D’Souza’s immediate “no way” to the job offer was justified. TGBL wasn’t on his radar or anyone’s at the time.
But the headhunter convinced him to meet Chandrasekaran.
This meeting, says D’Souza, made all the difference for him. He recalls the Tata Sons’ chairman saying “I have the money. But I don’t have the team to run it.”
But the clincher for him was Chandrasekaran’s larger plan to foray into the FMCG space and the intent to disrupt the market.
In December 2019, Tatas announced D’Souza’s appointment as managing director and chief executive effective April 2020. One more important addition to this FMCG team was Tata Sons’ Ajit Krishnakumar as chief operating officer.
What followed was the duo’s visits to Mumbai, Bengaluru and Gurgaon. They walked to distributor offices and kirana stores and sat through market visits. “We drew out in great detail what we wanted this company to look like,” says Krishnakumar.
The mandate from Chandrasekaran was simple. He wanted a company commensurate with the Tata name, one that shared the same shelf space as the likes of HUL and ITC.
Humble Beginnings
The mission to become an insurgent company in the FMCG space kickstarted with the formation of Tata Consumer Products (TCPL) in February 2020 by merging TGBL’s tea and coffee units with Tata Chemicals’ salt and pulse businesses.
However, with established FMCG rivals like HUL, ITC and Nestlé India, D’Souza and Krishnakumar had their tasks cut out. The competition had a century of headstart in India.
Within the Tata group itself, TCPL ranked eighth by revenue in 2019–20, behind Tata Motors, TCS, Tata Steel, Tata Power, Titan, Tata Communications and even Tata Chemicals.
But “things couldn’t get any worse than this, right? We were already at the bottom of the heap in FMCG. You could only get better,” recalls D’Souza about his mindset at the time (see pg 24).
Building a brand name as a Tata company opens doors. But competing is another. Could this new company take on HUL, Nestlé and ITC?
TCPL started by trimming the portfolio, streamlining the consumer products businesses spread across five continents, from India and the US to the UK, Canada, South Africa and Australia.
In Australia, the company held a 7% share of the tea market but was also running an out-of-home coffee dispensing business that was losing millions of dollars. It was shut down in December 2020.
In the US, a food-service joint venture, including a tea factory and a distribution unit, was disposed of as well in March 2021.
“We had 45 legal entities. That’s not tenable,” D’Souza says. “We exited areas where we didn’t see value. The focus clearly shifted to not just the topline, but margins.”
Six years later, TCPL’s entity count stands at 25 and is well on the way to the target of 18 entities.
What stood out in the next six years is TCPL’s sole focus to dominate the food and beverages (F&B) category. The company’s mantra: think big, move fast.
By late 2020, once the initial scramble post the merger had settled, TCPL ran a strategic exercise called Project Falcon. The result was a playbook: categories to foray into, categories to stay out of, where to build and what to buy.
The year 2021 provided a starting point for TCPL. In March that year, the United Nations officially declared 2023 as the International Year of Millets, acting on a proposal from India. The country being the largest producer of millets, accounting for 20% of global production, wanted to raise awareness of millet’s role in improving nutrition and creating sustainable market opportunities.
The timing was fortuitous for TCPL. In 2021, its first acquisition, Soulfull, was a millet-based health-food brand. This ₹155.8cr deal gave Tatas a foothold in a category it couldn’t have credibly entered on its own.
Within three years of acquisition, Soulfull’s distribution had grown from 15,000 outlets to 300,000, carried on the back of the Tata’s existing network.
Three years later, in January 2024, when TCPL announced two deals with combined worth of ₹7,000cr in quick succession, its stocks fell.
The market wasn’t convinced initially. TCPL had just committed roughly 40% of its annual revenue to two brands it did not build. At the time, it was a new player with its core business running on single-digit margins.
Analysts at Ambit Capital estimated the acquisitions would cut 2025–26 earnings by roughly 10%.
The first, a ₹5,100cr deal, was to buy Capital Foods, the company behind Ching’s Secret.
The second was a wellness play, a ₹1,900cr cheque for Organic India, a Lucknow-based brand with a devoted following in the US.
D’Souza had faith in these big-cheque acquisitions. “We are not playing this game for the next one or two years. We do these acquisitions knowing that we put money there. It will bear out over a period of time.”
Ching’s Secret had spent decades building the desi Chinese category in urban Indian homes almost single-handedly—the Schezwan chutney, the noodles and sauces.
As for Organic India, it had a network of farmers across Madhya Pradesh and Uttarakhand, a manufacturing facility in Lucknow and decades of Ayurvedic credibility in the American wellness market. It was built over years of relationships that TCPL simply did not have and could not quickly acquire.
And the numbers weren’t disappointing. By the third quarter of 2025–26, Capital Foods and Organic India together were generating ₹354cr in quarterly revenue, up 15% year on year, at gross margins of roughly 48%, well above TCPL’s blended average of 43%.
Motilal Oswal expects integration costs to ease substantially by 2026–27, after which the margin story should become clearer.
Fight for Shelf Space
From the get go TCPL was clear about the categories it wanted to enter and to avoid as well.
It didn’t want any stake in the basic edible-oil segment. This shelf had far too many players led by the likes of Fortune and Saffola.
But cold-pressed oil was a different ballgame. Consumers here were buying into a health claim with no way to verify if the product was trustworthy. “The Tata name does the magic there,” says D’Souza.
In August 2023, TCPL launched a range of cold-pressed oils under its brand Tata Simply Better, a new brand that was launched in 2022 to enter the plant-based mock-meat category.
The logic: find the trust deficit, fill it with the four-letter Tata name, became the basis for every category TCPL considered entering.
The sweet spot for the insurgent company was categories that were fragmented, where consumers didn’t fully trust what they were buying and where a credible brand could change the equation.
Biscuits was another category that TCPL gave a skip.
Britannia and Parle owned 56% of the market, built over decades of backward-integrated manufacturing and distribution muscle.
This restraint, wrote Motilal Oswal, in a recent note, is “rare in Indian FMCG”. Categories like biscuits, snacks, colas and base edible oils are permanently off the table, crowded segments where the Tata brand adds no meaningful trust-led differentiation. “Such portfolio discipline is a positive indicator of capital allocation quality,” the note observes.
Built organically, cold-pressed oil is now running at an annual revenue of ₹350cr. Dry fruits, another category Tatas entered with the same trust deficit logic is at a ₹300cr run rate.
What differentiates TCPL from other FMCG players?
The categories that Tatas have built or bought into are still being defined. HUL and Nestlé, on the other hand, are dominant in mature markets where penetration is already high. HUL is buying established brands in categories it rules, plugging gaps in existing portfolios. TCPL is buying into categories it has never played in, at scale, while the core business is still being built.
Whether this is disciplined offence or over-extension is a question the next two years of integration will answer.
Even before acquisitions came into play, among the first things D’Souza and Krishnakumar did was to build accountability. There had been no one person who owned a category (tea, salt or pulses) from manufacture to sales.
They created category leaders who were responsible for the product’s profit and loss, bar the fixed costs. Functions that did not exist were created.
In 2020, Tata Salt was present in nearly 2mn retail outlets across India. TCPL’s own salespeople directly visited just 150,000 of them. The remaining 1.85mn stores were being supplied through a chain of middlemen, called super stockists or consignee agents.
These middlemen picked up Tata Salt in bulk from big distributors and moved it onward through their own networks. No one from TCPL knew what was selling fast, what wasn’t or what product a rival had placed on the shelf just two rows away.
“That shows the strength of the brand and also the lack of distribution reach,” says D’Souza. In FMCG, this gap between a brand’s total reach and its direct reach is called the wholesale multiplier. It measures how many outlets are stocking your product for every outlet you directly supply. A multiplier of five is considered normal. TCPL’s was 15, a number almost unheard of.
This meant TCPL had no direct relationship with over 90% of the shops and no mechanism to introduce anything new in those shops.
“There was this big layer [of middlemen] in each state. We removed that entire layer. That layer alone was about 1.2% in terms of cost. Then we appointed proper distributors, recruited the right people and rebuilt the distribution system,” says D’Souza. This was a saving of 36 paise on every 1kg pack of Tata Salt with an MRP of ₹30.
Rebuilding the entire distribution ecosystem took six to seven months. The distributor base was cut from 4,500 to around 1,500–1,600. These distributors were now carrying the full portfolio, reporting directly to TCPL. The sales force was expanded by 30%.
The results were quick. TCPL’s direct outlet reach stands at approximately 2.3mn today from roughly 500,000 in 2019–20. The total reach is 4.4mn outlets now.
“There are two key benefits to getting closer to the retailer. It supports margins and gives you better visibility into what’s happening at the point of sale,” says Arvind Singhal, chairman of The Knowledge Company, a management-consulting company.
Progress is real. But TCPL has miles to go. HUL reaches more than 9mn outlets, built over nine decades. ITC reaches 7mn. Nestlé 5.2mn. India has roughly 12–15mn kirana stores.
“The whole premise was to create a distribution funnel through which you can then push different products,” says D’Souza.
Bump in the Road
The first real test for TCPL was whether the idea of pushing new products through the distribution funnel would work.
Pradeep Gupta, a kirana store owner in Varanasi, has been a witness that it worked. Six years ago, two products were always on his shelf: Tata Salt and Tata Tea Premium. He didn’t need a salesperson to tell him to stock them.
Now, new products from Tata Sampann spices to Ching’s Secret sauces and Soulfull rusk are on the shelves of Gupta’s tiny store. TCPL’s distribution network made it happen. A distributor who had built his business around Tata Salt would now also handle Ching’s Secret. A salesperson who knew how to move a commodity would now pitch a branded sauce.
But not everyone was happy. The All India Consumer Products Distributors Federation (AICPDF) went up in arms against TCPL in 2025. Distributors were protesting excessive targets, stocks were piling up in warehouses and damaged goods sitting for months with no settlement.
The mismatch was structural. Salt moves through wholesale with 80% of it never seeing a retail salesperson. Most of the newer growth products like Ching’s Secret are sold almost entirely through direct retail.
Running both through the same distributor was asking a man who sold salt by the tonne to also build a market for Schezwan chutney.
The AICPDF president Dhairyashil H Patil explains what went wrong. “Salt is typically sold in large volumes. Products like Tata Sampann [a packaged pulses brand launched in 2017 under Tata Chemicals] and tea are the opposite, only about 8–10% goes through wholesale. After the merger with Capital Foods, there was a complete mismatch.”
Distributors built around salt did not find it viable to handle retail-heavy products. “Most Tata distributors derive 60–70% of their turnover from salt, so their focus remains there,” adds Patil.
TCPL eventually had to take back damaged goods sitting with distributors for six to eight months. D’Souza’s response was to separate the networks entirely.
TCPL’s growth businesses like Ching’s, Soulfull and Organic India had their own distributors and sales teams in just three months. “For any other company, it would have taken at least a year or more,” D’Souza says.
Also, the portfolio TCPL had inherited gave its own answer to what the distribution funnel could carry. Sampann, a “hobby for Tata Chemicals”, arrived at the merger doing ₹150–200cr in revenue. In 2025–26, Sampann is expected to touch ₹1,700–1,800cr, with pulses alone contributing ₹1,000 crore.
“The whole DNA of the company is to stay agile and make sure to move at full speed,” says D’Souza.
Fast and Furious
TCPL moved at full speed indeed when it came to trends. In May 2019, Beyond Meat, a company that made plant-based burgers from pea protein, listed on Nasdaq. Its stock more than doubled on the first day.
Within months, McDonald’s was testing a meatless McPlant and KFC was piloting plant-based chicken. Plant-based meat looked like the future of food.
TCPL bought into the trend. In 2022, it launched plant-based mock meat under the Tata Simply Better brand. However, the global buzz died sooner than expected. Two years later, TCPL exited the category.
The exit is not the point. What matters is that the product took 150 days from concept to shelf. TCPL had built something that would have been impossible two years before.
Mock meat required food science to replicate the texture of meat from plant protein, process technology, a team of chefs, food scientists and packaging engineers.
Capabilities were built from scratch. In the beginning, the R&D team was just 10–15 people. Today, it operates across three centres: Bengaluru as the research and packaging science hub, Mumbai for food innovation and product development, and Barabanki in Uttar Pradesh, anchoring the wellness work after the Organic India acquisition.
The team remains lean, around 60 people, roughly one-third the size of comparable FMCG rivals, estimates Vikas Gupta, R&D head at TCPL.
When D’Souza arrived in 2019, just 0.8% of TCPL’s revenue came from new product launches. The industry benchmark is 5%. TCPL was nowhere close. Today, that number stands at roughly 5%.
Onkar Kelji, research analyst at Indsec Securities, a brokerage firm, frames the economics of the chase: the early returns on innovation can be thin, he says, as companies push products aggressively and launch on e-commerce where margins are typically lower than general trade. “But if these products scale, they deliver better margins over time.”
Across the industry, the contribution of newly launched products has generally stayed under 5%. With acquisitions, that mix is expected to rise, notes Kelji.
In FMCG, innovation is not only about launching entirely new categories. It is also about rethinking what already exists. “We were singularly focused on vacuum-evaporated iodised salt,” says D’Souza.
The thinking that replaced it was simpler. “Give the consumer what they want. Plain salt. Salt with iron, with zinc. Low sodium for the health-conscious. Himalayan rock salt for the premium buyer. Sendha [during Navaratri]. One product became a portfolio,” adds D’Souza.
A patented granulation technology was developed for double-fortified salt, solving a long-standing industry problem of how to add iron to iodised salt and keep it stable.
TCPL also produced the Tata Coffee Cold Coffee liquid concentrate, a first-of-its-kind product in the Indian market that lets consumers make cold coffee at home without equipment.
The first 100 product launches after the merger took three-and-a-half years. The next 100 took 16 months. At one point, the company was turning out a new product every week, each one requiring its own supply chain, packaging, shelf-space negotiation and own sales story.
For a company that was criticised in 2018 for launching almost nothing new for years, this was a different metabolism entirely. “It’s easier when you are doing everything from scratch, says D’Souza, adding “As soon as we see a trend, we are on top of it and running with it.”
E-commerce is a good example of how TCPL, weeks into its merger, took on the very real challenge of lockdown and built a new digital vertical to boast of.
Lessons from Pandemic
In March 2020, most Indians had online grocery apps on their mobile phones. These were rarely used. But the Covid-19 pandemic and subsequent lockdown reshaped this landscape.
BigBasket’s servers strained with massive order volume surge. Dunzo crashed repeatedly. Amazon Fresh ran out of delivery slots. Millions of urban Indians were struggling to restock their kitchen shelves.
At the time, TCPL’s entire e-commerce operation was one person’s part-time responsibility. The southern regional sales head looked after e-commerce. TCPL had to race against time to build a digital channel. And D’Souza’s team built it fast.
E-commerce became a dedicated function with its own head. A modern trade team was created. Every new product launch went digital first. E-commerce gave TCPL something general trade never could: unfiltered data on what actually works.
While the company’s overall innovation-to-sales ratio was 3.4% by 2022–23, it was 10% on e-commerce. Products that proved themselves online were then pushed into general trade.
“The beauty of e-commerce is that it is only you and the consumer. It is the power of your product and your brand and your value proposition,” D’Souza said in an earnings call.
E-commerce’s revenue contribution at the time of merger was 2.5%. By late 2021, it was 7%, a growth of 130% in a single year. By 2024–25, it reached 14%, overtaking modern trade for the first time. By the third quarter of 2025–26, e-commerce and quick commerce together stood at 18.5%.
“I don’t think anyone else is in this ballpark,” says D’Souza. He is not wrong. HUL’s equivalent figure runs at 7–8%, Nestlé India’s at 8.5%. The company that almost missed the decade’s defining channel shift now leads it among its peers.
What makes the number more significant, according to Motilal Oswal, is TCPL’s margins on quick commerce are comparable to traditional channels, unlike most peers, who are seeing margin erosion on the platform.
The Tata group’s acquisition of BigBasket in May 2021 gave TCPL a window into how millions of Indians shop for groceries.
In an earlier earnings call D’Souza pointed out that BigBasket is a group company, not a TCPL asset. But within the group, he said, they were working closely to find synergies.
The channel shift also fits the company’s portfolio. Quick commerce skews toward the premium buyer: the person reaching for Himalayan rock salt at ₹100 rather than iodised salt at ₹30, Organic India’s tulsi tea rather than a commodity tea bag.
The premium end of TCPL’s portfolio, built over five years, is precisely what the fastest-growing channel wants. The mass business still dominates revenue.
Half-way Mark
In January 2021, D’Souza said, “If we get it right, the rewards would be endless. If we didn’t, we’d have to live with it for a long time.” Five years later, he rates himself “five out of 10”. Ask him what TCPL has that HUL and Nestlé don’t, and the answer is the four letters T-A-T-A.
Here is what five out of 10 looks like. TCPL’s revenue has grown over 80% between 2019–20 and 2024–25. In annual terms, that is a compound rate of roughly 13%, faster than HUL’s 9.8%, Nestlé India’s 10.5% and ITC’s 9.7% over the same period, albeit off a smaller base.
TCPL reported a consolidated annual turnover of ₹17,618cr in 2024–25. Its operating margin, what survives from every rupee of revenue after paying for everything, runs at 14–15%. HUL’s is 23–24%.
Closing this gap requires high-margin businesses like Ching’s, Organic India, Soulfull, cold-pressed oil to grow fast enough to become roughly a third of total revenue. Right now, they are 8–9%.
Tea costs, which TCPL cannot control, need to normalise. Integration costs from the 2024 acquisitions need to wind down.
Motilal Oswal projects margins reaching 17% in three years. The path to 20%-plus, where HUL and Nestlé operate, is considerably longer than that.
Return on capital, how much profit a company earns on every rupee invested, tells the same story from a different angle. TCPL’s sits at roughly 10%. HUL’s is 27%. D’Souza points out that the core business, stripped of the 2024 acquisition capital, delivers 30%-plus.
The acquisitions are dragging the consolidated number while they are still being absorbed. Most analysts expect the trajectory to improve. The question is whether it does so within the timeline management has guided.
D’Souza describes the portfolio in three segments: the international business: Tetley, steady and cash-generative. The India staples: tea and salt, large but low-margin, subject to commodity costs he cannot control. And the growth businesses: Ching’s, Organic India, Soulfull and cold-pressed oil, which are small today but carry the highest margins and expectations.
“All three pieces need to come together,” says D’Souza.
“Each piece in the portfolio has a very specific purpose,” explains Krishnakumar. International for steady margins. Sampann for growth. Capital Foods and Organic India for both. “The headline target ties it together: a double-digit-plus topline and a bottom line growing higher than that,” he adds.
Today, the portfolio spans tea, coffee, water, ready-to-drink beverages, salt, pulses, spices, ready-to-cook and ready-to-eat offerings, breakfast cereals, snacks and mini meals.
However, the product range is in the food and beverages (F&B) universe. The company does not yet cover much else. “Without personal care or home care, TCPL is not yet a comprehensive FMCG powerhouse,” says Devangshu Dutta, founder of Third Eyesight, a boutique management-consulting firm.
Krishnakumar’s response is: “On a revenue basis, F&B accounts for nearly 80% of the FMCG universe. Outside of F&B, it requires a very different set of skills, a very different DNA.”
TCPL is not making bets in personal-care or home-care segments in the near future.
The Long Game
“There’s no magic breakout moment,” says Krishnakumar. What he points to instead are accumulations: salt crossing million packets a day, the stock market re-rating and the innovation pipeline turning out a new product every week.
The competition, however, is not waiting. HUL’s quick commerce is logging 3% of revenue, growing at over 100%. ITC plans to spend ₹20,000cr over five years with the bulk for foods. Nestlé is deepening its product pipeline.
These rival FMCG companies are now moving faster than they have in years. For TCPL, the race has gotten harder.
At the same time, these giant competitiors have their own challenges. HUL draws only 25% of its revenue from foods. Nestlé is concentrated in dairy and confectionery.
ITC, which is still moving away from tobacco, draws 40% of its revenue from packaged foods and personal care combined.
While these Goliaths have their attention split, TCPL’s focused approach is perhaps the one thing they cannot replicate. “In any category that we have a stake in, we would be among the top three brands,” says a confident D’Souza.
Six years in, the pieces are in place. “Our strategic road map and the strong foundation we have laid for the business have yielded good results…Our overarching ambition is to evolve into a full-fledged FMCG company,” Chandrasekaran said in TCPL annual report 2024–25.
Whether TCPL becomes big and matches his vision is a question the next six years will answer.
Within the Tata group, TCPL’s revenue ranking may not have moved much: eighth in 2019–20, seventh today. Both profits and market capitalisation have grown more than three times. It’s now worth over ₹1 lakh crore, nearly seven times Tata Chemicals, and more than double that of Tata Communications.
The market is not pricing what TCPL is. It is pricing what it might become. “Because if you’re not in the top three, there is no point,” says D’Souza. The man who chose to walk into the “sleepy company” is not done yet.
(Published in Outlook Business)
admin
January 9, 2025
Sagar Malviya, Economic Times
9 January 2025
Starbucks, Barista, Chaayos and Third Wave Coffee are among café chains facing the brunt of a slowdown in discretionary consumer spending. The impact is more severe for these retailers as they opened hundreds of new stores last fiscal year even as losses widened. To be sure, smaller chains such as Tim Hortons and Blue Tokai have bucked the trend.
Experts attribute the expansion rush to the urge among these retailers – both chains and standalone stores – to outpace competition. In certain instance, it led the same retailer to add stores in the same location, impacting its own growth instead of growing the pie.
At Rs 250 to Rs 350 for a cup of coffee, most chains target affluent, discerning coffee enthusiasts with artisanal brewing and experiential consumption, restricting the consumer base.
Devangshu Dutta, founder of retail consulting firm Third Eyesight, said the number of outlets have been expanding since 2022.
This was true for not just the new brands but also existing ones, Dutta said. “Cafe density in larger cities has gone up dramatically in the last couple of years.”
Growth rate fell to just 5% in FY24 from nearly 70% at Barista and Chaayos while Starbucks’ sales growth declined to 12% in FY24 from 70% in FY23. Third Wave saw sales growth slump to 67% from 355% during the period. Cafe Coffee Day posted a 9% increase in FY24, though sharply slowing from 59% a year ago.
Tim Hortons, however, more than doubled its sales last fiscal, its first full year of operations. Blue Tokai also bucked the slowdown trend with a 70% growth in FY24, compared to 73% in FY23.
Blue Tokai cofounder Matt Chitharanjan believes growth in India’s out-of-home coffee market is more than just a caffeine surge—reflecting the country’s shifting economic fabric. “Coffee consumption is strongly linked to income growth and India has reached a tipping point where it will support growth in the segment and should only accelerate going forward,” Chitharanjan told ET. “We have not seen any slowdown in coffee consumption and our positioning is also more product centric instead of just a cafe, which helped in double-digit same store sales growth.”
Tim Hortons, a Canadian coffee chain, which opened its first outlet in India in 2022, plans to have over 100 stores in the next three years. British coffee and sandwich chain Pret A Manger too launched its first shop in Mumbai as part of a franchise agreement with Reliance Brands. It plans to open up to 100 stores over the next five years. Third Wave and Blue Tokai are running more than 250 stores combined while Starbucks had over 330 stores as of March-end.
Tata Starbucks—the equal JV between Tata Consumer Products and US-based Starbucks Corp—said store footfalls have become a concern and the company has tweaked portfolio and pricing to attract traffic. Last year, the chain introduced classic hot and iced coffee starting at Rs 150 for a small cup, about 20-30% cheaper than regular coffee offered at Starbucks and other cafe chains.
“The stress is being seen across the quick service restaurant segment. It’s an overall consumer spending issue, especially in urban areas. And my hypothesis is probably food inflation is higher than what we think,” Sunil D’Souza, MD at Tata Consumer Products said during the December quarter earnings call.
Globally as well as in India, coffee growers have been hit with uncertain weather conditions while geopolitical factors are also affecting supply chains, which in turn, lifted prices to a record high. “The biggest challenge is erratic weather and climate change which has sent coffee prices to a 50-year high, but we will have to see how it impacts our pricing and profit after the current harvest,” said Chitharanjan at Blue Tokai.
(Published in Economic Times)
admin
August 19, 2024
Ratna Bhushan, Economic Times
New Delhi, 19 August 2024
Close to a dozen small to mid-sized global cafes and restaurant brands have either entered India in the past two quarters or are in talks with local players at a time when large global chains are seeing sharp decline in same store sales and growth.
Mid-sized global chains are making investments even in a modest range of Rs. 20-30 crore to tap select cities and intend to keep store counts under about 30 to stay profitable on each store. This is in contrast to earlier times when cafes and chains entered India with mega deals and investment plans, executives said.
Belgian bakery Le Pain Quotidien, French patisserie chain Laduree, UK’s JD Wetherspoon and Frank HotDogs are among those to have inked collaborations with Indian partners, while newer homegrown ones such as Harley’s, Paper & Pie, abCoffee and First Coffee are expanding with first-time investors and mid-rung store rollouts.
“A combination of factors is driving this change of newer, smaller launches,” said Devangshu Dutta, chief executive of retail consultancy Third Eyesight. “There are niches the newer chains are addressing as consumers’ choices evolve and get more specific. Also, there’s a broadening of a wealth base in India leading to mid-sized business houses having capability to invest and willingness to try out newer segments,” he said.
With the big-bang launches in food services drying up, there’s been a mushrooming of small deals that is expected to surge.
Bake & Brew, which has inked a master franchise agreement with Belgian bakery chain Le Pain Quotidien to re-enter India, is investing Rs 35 crore in the first year. “We’ll start in metros and may expand to smaller towns later. We also see potential in travel retail, airports and larger train stations,” Annick Van Overstraeten, chief executive of Le Pain Quotidien, told ET. Bake & Brew is backed by the Nalanda group with core business interests in automotive metal parts.
Earlier this month, the French patisserie chain Laduree said it was launching its cafe at Ritz-Carlton, Pune, in collaboration with CK Israni Group which has business interests in home decor and construction. Its Managing Director Chandni Nath Israni said in a statement that the CK Israni group planned to expand Laduree’s presence across other Indian cities.
Experimenting in newer cuisines is also driving the change. “Our decision to expand in India stems from a deep appreciation for variety and a passion for bold flavours. We see great potential in the Indian market,” said Benjamin Attal, founder of US chain Franks Hot Dog.
Smaller and newer homegrown chains, in contrast, are expanding, backed by mid-ticket investors and business houses, many of whom are foraying into food services for the first time.
Last week Brigade Group, a realtor, announced a partnership with specialty coffee chain abCoffee to set up six outlets within Brigade properties.
“We partnered with abCoffee to enhance the F&B offerings at our office parks. abCoffee is able to retrofit into operational buildings without requiring additional water or gas points,” Arvind Rao, vice president – commercial business, Brigade Group, said.
Specialty coffee startup First Coffee plans to open 35 stores by 2024-end “focused on delivery and minimalist store aesthetic,” according to a company statement, to sell flavoured coffees, cold brews and bubble teas.
(Published in Economic Times)
admin
September 2, 2022
Written by Christina Moniz
Retail chains are on an expansion spree, riding on growing demand from a young consumer cohort
Just about a month back, Wagh Bakri Tea Group, the third largest packaged tea company in India with a turnover of over `1,500 crore, opened its 15th tea lounge in Noida’s upscale DLF Mall of India.
A little over two years ago, Chaayos’ physical footprint was 75 outlets across the country. Currently, its store count is 200.
Just about a month back, Wagh Bakri Tea Group, the third largest packaged tea company in India with a turnover of over `1,500 crore, opened its 15th tea lounge in Noida’s upscale DLF Mall of India.
A little over two years ago, Chaayos’ physical footprint was 75 outlets across the country. Currently, its store count is 200.
Get the drift?
Today the humble cuppa is much bigger than an excuse for roadside tittle-tattle. The rash of tea lounges and bars have taken what used to be, at its best, a social lubricant, and turned it into a `700-crore market.
Homegrown tea café chains have been quick to cash in on the out-of-home demand from a young consumer cohort, offering snacks, groovy ambience and even free wi-fi connectivity. Chains such as Chaayos, Chai Point and Wagh Bakri’s Tea Lounge are ramping up their offerings to cater to a segment for whom coffee shops were the default hang-out zone. Up until now.
But how sustainable are they, given that 80% of the tea drinking market is unorganised? Pramod Damodaran, CEO, Wagh Bakri Tea Lounge, says brands in this segment are catering to the “need state of the consumer”, whether it is meetings,family outings, a quick rest after shopping at the mall or a quiet moment in airports, offices or hospitals. “We elevate the tea drinking experience and make it premium, almost akin to how tea drinkers in the past would enjoy their tea at fancy hotels, but we offer the experience at affordable prices,” he says. While coffee chains offer muffins and croissants with their beverages, Wagh Bakri pairs its teas with pakoras, samosas and vada pav, which resonate more with the average Indian consumer.
Growing the market
Nitin Saluja, founder, Chaayos, draws parallels with global coffee brand, Starbucks. “Before Starbucks launched in the US, there were very few good quality coffee retail outlets. In the Indian context, before chai cafes were launched, consumers could barely enjoy a good cup of tea in a hygienic retail space outside their homes,” he says.
The pandemic, too, played its part in getting consumers to choose hygienic options. That is why home delivery, which was 20% of Chaayos’ revenue prior to the pandemic, now hovers around 30-35%.
The success of chai chains is a reflection of evolving consumer preferences. Saluja says despite the presence of huge international and homegrown brands in the coffee retail segment, the category earns an annual revenue of around 1,500 crore. “In comparison, there are only 3-4 homegrown chai café players, but their combined annual revenue is around700 crore. Only chai retail chains in India can replicate the success of coffee chains in the West,” he says.
Damodaran says his chain is not competing with coffee chains but rather catering to the growing need for cafes. It is for this reason that the brand also offers coffee across its outlets. Wagh Bakri has 15 tea lounges and 10 tea kiosks (Tea World) across Maharashtra, Gujarat and Delhi NCR but plans to ramp up its footprint in the North, West and South over the next three years.
“The industry can ensure long-term health only by capturing the value offered by out-of-home consumption in modern branded formats, packaged branded sales in modern retail and direct-to-consumer models,” sums up Devangshu Dutta, CEO, Third Eyesight.
Source: financialexpress
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October 7, 2019
Indian tea brands want a piece of this steaming hot business.
Written By Devika Singh
The company now plans to expand to the North Indian cities of Gurugram, Chandigarh, Amritsar and Lucknow, among others.
Homegrown tea makers are foraying into quick-service restaurants (QSRs) to tap into the ‘eating out’ culture in India and grow the business. But competition is aplenty — global brands have a formidable presence in India’s QSR scene, even as start-up brands such as Chai Point and Chaayos are gaining traction. According to a report by CARE Ratings, the total market size of QSRs in India is approximately Rs 25,900 crore. The overall restaurant and food service industry is expected to grow at a CAGR of 10.4% between 2018 and 2020.
Indian tea brands want a piece of this steaming hot business. Society Tea, a brand predominantly present in Maharashtra, recently opened its first tea café in Mumbai. Goodricke Group has tied up with the Tea Board of India to launch tea lounges in Mumbai and Kolkata on the latter’s premises. Gujarat-based Wagh Bakri, which was among the first movers, plans to expand its tea lounge presence to 50 large and small format outlets, from the current 13, over the next four years.
What’s brewing?
When Wagh Bakri opened its first tea lounge in Ahmedabad in 2007, the company saw it only as another experiential marketing tool. “Initially, it was a place where people could explore different kinds of tea. But, over the years, we saw a demand for these lounges,” says Parag Desai, executive director, Wagh Bakri Tea Group. The company claims to receive a footfall of 300-400 people per day on an average in stores present in high-street locations.
“We have deliberately stepped out of food courts to keep our offering premium,” Desai adds. A Wagh Bakri tea lounge could entail an investment of Rs 50-75 lakh. The company now plans to expand to the North Indian cities of Gurugram, Chandigarh, Amritsar and Lucknow, among others.
Society Tea, meanwhile, plans to open 10 more stores — mid-size stores around corporate offices — in Maharashtra. Pricing will be its key differentiator. “We are not pricing the product at Rs 300 like other players, but offering a full glass of chai at Rs 50,” says Karan Shah, director, Society Tea.
Goodricke Group has five operational tea lounges in the country, with plans to open one more, its second, in Darjeeling by the year end. The aim is to first foster brand awareness via its presence in locations of high tourist interest.
Blending in
Is a QSR foray really their cup of tea?
According to Devangshu Dutta, chief executive, Third Eyesight, each player could be backed by a different motivation to enter this space. Some may want to use it purely as a marketing tool, while some others may look at it as an alternative source of revenue.
QSRs can be an effective marketing tool especially for brands that have limited access to customers through retail. “Such stores help increase visibility and offer insights about their customers, their spending patterns, etc,” says Pinakiranjan Mishra, partner and leader, consumer products and retail, EY India.
However, expanding footprint in the market and eyeing revenue from the QSR chain could entail substantial investments for tea brands. “If tea companies look at QSRs as an additional business stream, then besides tea, there are food items and cold beverages to be served, which cannot be sourced just from the gardens,” says Dutta.
Furthermore, it will be an uphill task in the presence of biggies Starbucks, Café Coffee Day and Costa Coffee, that are established names in the market, in addition to other upstarts like Chaayos, which has over 50 cafés across Delhi-NCR, Mumbai and Chandigarh, and Chai Point which has 100 cafés in eight cities.
To get an edge, Harsha Razdan, partner and head – life sciences and consumer markets, KPMG India, says that new entrants would have to go beyond metros “and should ensure competitive pricing as the market is price sensitive”.
Source: financialexpress
