Innovation is critical to our growth agenda. Over the last few years, we have significantly accelerated our pace of innovation. As a result of this, we have achieved an industry best-in-class 5% Innovation to Sales contribution.
MD and CEO
The year 2023-24 was filled with new milestones across our transformational growth journey, and we have strengthened our capabilities further. Throughout the year, there was significant progress across various fronts while we continued to deliver a strong financial performance.
We maintained strong momentum on innovation with
a number of new product launches across categories, further expanding our total addressable market. Our growth businesses, including Tata Sampann, Tata Soulfull, NourishCo and Tata Smartfoodz, continued to gain traction and have increased their contribution significantly in line with our portfolio transformation ambition. This contribution has only been further enhanced with the addition of our two new businesses announced earlier this year, Capital Foods and Organic India, both of which will form part of our growth businesses.
We reached significant milestones in our Sales & Distribution (S&D) expansion, focusing on extending depth and assortment in larger towns and deepening width of distribution in rural and semi-urban areas. Our growth momentum in alternate channels, including modern trade and E-commerce (including quick commerce), remained robust, supporting our growth and innovation agenda.
Our journey towards becoming a premier FMCG company is on track, with a sharp focus on driving profitable
growth and building future-ready capabilities, alongside advancements in our Sustainability roadmap. Our ‘simplification’ journey is also well underway, with the Tata Coffee merger completion, alongside the announcement
of the merger of our three other India subsidiaries – Nourishco, Tata SmartFoodz and Tata Soulfull. In parallel, we are progressing the simplification of the legal entities in our international business. These strategic initiatives will gradually unlock substantial efficiencies, enhancing our operational agility and competitive edge.
As mentioned earlier, we announced the acquisition of Capital Foods (owner of brands Ching’s Secret and Smith & Jones) and Organic India, in line with our strategic priority to expand our total addressable market into adjacent high growth, high margin categories. Ching’s Secret and Smith & Jones are strong brands, which will help strengthen our pantry platform and complement
our Sampann brand. Organic India provides us with an opportunity to develop a Health & Wellness platform with a leading ‘better for you’ organic brand with a strong brand and supply chain. We believe that we can generate significant shareholder value in these acquisitions through rapid acceleration of the topline through enhanced distribution and innovation while extracting significant synergies to change their financial profiles.
Aligned with these initiatives, we are prioritising our people and talent agenda, emphasising learning & development, nurturing a strong leadership pipeline, enhancing employee engagement, improving workforce productivity and advancing our diversity and inclusion initiatives.
Innovation is critical to our growth agenda. Over the
last few years, we have significantly accelerated our
pace of innovation. We have focused on building R&D capabilities and investing for the future with a sharp focus on key consumer trends and the strategic roadmap for
the organisation. As a result of this, we have achieved industry best-in-class 5% Innovation to Sales contribution. This contribution has seen 5X growth over the last three years over a growing revenue base.
We have significantly strengthened our health and wellness beverage portfolio with the introduction of Tata Tea Gold Vita Care, Tetley Digest and Tetley Immuno Chai, each formulated to address specific health needs, such
as vitamin enrichment, gut health support, and immune system fortification, respectively. Additionally, our offerings in the salt category include: Tata Salt Immuno and Tata Salt Iron Health, fortified with essential nutrients, like zinc and iron, catering to the health-conscious consumer.
We expanded our coffee portfolio with filter coffee decoction in a convenient format with unique blends in three region-specific flavours.
In our fast-growing foods business, Tata Sampann is continually expanding its play as a pantry staples brand, with its range of unpolished pulses, spices, poha, dry fruits, Premiumisation is big on our agenda. We are capitalising on the premiumisation trend by introducing offerings,
such as Himalayan Saffron and Preserves, which serve
to reinforce Himalayan’s identity as a distinguished provenance brand. We have expanded the dry fruits range to include walnuts and seeds under the Tata Sampann brand. We have a range of ready-to-cook (RTC) and ready-to-eat (RTE) offerings under our Tata Sampann Yumside brand which leverage both premiumisation and convenience. Value-added offerings are now at 9% of the overall salt business.
Additionally, we have introduced new offerings under our Direct-to-Consumer (D2C) brands, namely Tata Tea 1868 and Tata Coffee Sonnets, to cater to the evolving preferences of consumers seeking premium products. In the ready-to-drink (RTD) coffee segment, we launched Tata Coffee Gold Cold Brew to offer consumers a café style experience in the comfort of their homes.
We have rapidly scaled up our Sales & Distribution network during the year and are now focusing on enhancing semi- urban and rural distribution. We continue to strengthen our E-commerce and modern trade presence and have recorded significant gains in alternate channels.
Sustainability continues to be integral to our strategy. During the year, we announced sustainability
targets for FY 2025-26, reaffirming our long-term commitments across four key focus areas: ‘Better
Sourcing’, ‘Better Planet’, ‘Better Communities’, and ‘Better Nutrition’. These commitments are aligned
with Tata Group’s ‘Project Aalingana’, outlining the Group’s strategy for a sustainable and equitable
future.
There is greater impetus on adoption of newer, scalable digital technologies to streamline operations for our Sales
& Distribution network and enable agile business decisions. We recently launched a Salesforce platform-based best- in-class Distributor Management System (DMS), and
a dedicated mobile application—MAVIC—for our sales force. The new DMS provides real-time data, simplifies
the process of managing orders, inventory and payments; thereby, reducing turnaround time and enhancing the ease of doing business for our distributor community. MAVIC,
the new mobile application, will get rolled out over the course of the year and will help our frontline sales force with instant access to product information, customer data, performance tracking, among various other benefits. Being platform-based, it is also “future ready” with the ability to tweak existing features or add enhancements, like AI-based suggestive selling and promotions rapidly.
We expanded our total reach to 4 million outlets as of March ’24. This represents a 100% growth since 2020. As the next step in our sales & distribution build-out, we are looking to enhance effectiveness and efficiency, by way of driving depth of assortment in existing geographies and further improving our width of distribution in lower population strata towns and rurban areas and will now focus on rural areas as well.
This involves strategic measures, such as splitting routes
in all ten-lakh-plus and a substantial number of five-lakh- plus population cities and towns to enhance distribution penetration. We have seen measurably higher throughputs where we implemented our split salesmen route strategy. Additionally, after the appointment of over 1,000 distributors during the year, we now have direct distributors in all towns with populations exceeding 50,000, expanding our reach comprehensively. In the next phase, we have embarked on deepening our distribution in smaller towns by engaging sub-distributors and wholesalers and servicing them through a network of super stockists. With a concerted effort towards expanding width and depth, we are making steady progress in fortifying our presence across diverse geographies and pop-strata.
During the year under review, our revenue from operations increased 10% to INR 15,206 Crores against INR 13,783 Crores. At the operating level, EBITDA increased 24% to INR 2,323 Crores over INR 1,874 Crores in the in the previous fiscal. The EBITDA margin stood at 15.3% in the year under review, compared to 13.6% in the year ago.
For the fiscal, the India business delivered 12% revenue growth led by India foods business growing 18% and the India beverages business growing 7%.
The value-added salt portfolio continued its strong momentum and recorded 34% revenue growth.
The International business revenue grew 9%.
We were able to deliver growth while simultaneously becoming more efficient. The result was a further reduction of 8 days in our consolidated working capital to 27 days. Notably, the India business had a working capital of just 4 days in FY 2023-24. Furthermore, operating cash flows were 101% of EBITDA.
Our growth businesses – Tata Sampann, NourishCo, Tata Soulfull, and Tata Smartfoodz – continued their strong momentum and have increased their contribution to
our India business significantly, in line with our portfolio transformation ambition. Their contribution to the India branded business is 18% up 6% from 2020. Combined, these businesses grew 40% over the previous year.
Tata Sampann, our pantry business, entered new categories during the year and strengthened its existing portfolio. We leveraged Tata Sampann’s equity to enter a high-value, trust deficit category with Tata Sampann Saffron. We further expanded the range of our RTE/RTC offerings under the
Tata Sampann Yumside brand, with global cuisine-based RTEs, like pastas and noodles. NourishCo, our ready-to-drink beverage business, entered new categories with the launch of Himalayan Saffron and the pilot launch of its energy drink ‘Say Never’ and Tata Gluco+ sports drink in collaboration with the Argentina Football Association. Its core brands – Himalayan, Tata Copper+ and Tata Gluco+ – continue to record a strong performance. Tata Soulfull, our millets-based business, accelerated the pace of innovation with a number of new product launches: Granola, Ragi Bites Choco sticks, Oats with millets and Nutri Drink+, a cereal-based drink.
We believe our recent acquisitions – Capital Foods and Organic India – will be significant value creators for our company, with a significant opportunity to leverage our existing platforms. Capital Foods will enable Tata Consumer Products to expand its product portfolio into the fast-growing Non-Indian Cuisine segments, like “Desi-Chinese” and Italian and into new categories, like sauces, pastes, and noodles. “Desi-Chinese” is the largest single cuisine block in India with a significant runway for growth. Organic India is one of the strongest ‘better for you’ and ‘organic’ Indian brands, spanning Food & Beverages and Herbal Supplements. Consequently, these acquisitions are poised to deliver high growth over medium to long term for the Company.
Both acquisitions operate in rapidly growing categories and are highly complementary to our existing product portfolio. These categories also offer attractive margins, significantly accretive to our current portfolio, and present substantial growth opportunities, particularly given our extensive distribution network and execution ability.
While Capital Foods enjoys strong brand equity, there is significant potential to further expand its reach, not only in India, but also internationally, leveraging our existing retailer relationships in these markets. Organic India, although currently limited to approximately 24,000 outlets in India, presents an exciting opportunity to significantly expand its retail reach in India by not only leveraging Tata Consumer’s expansive outlet presence but also our strong relationship with large modern trade retailers and E-commerce. Additionally, while Organic India already has a strong presence in the USA, our relationships with large retailers across international markets would also help to enhance its presence in these markets.
Both acquisitions offer avenues for cost synergies, particularly in trade margin rationalisation, logistics, distribution and operational efficiencies, further enhancing their profitability and margin potential of our overall business. From a strategic standpoint, Capital Foods’ product range aligns with our pantry and snacking platforms, while Organic India’s focus on infusions and herbal supplements complements our premiumisation and Health & Wellness play. Overall, these acquisitions position us well for sustained growth, profitability and market expansion in the evolving FMCG landscape.
Using our established integration playbook, we have been able to complete the integration of Capital Foods in record time post closure of the deal. This is a testament to our industry-leading efficiency and execution capabilities.
We closed the Capital Foods transaction on the 1st of February 2024 and were able to invoice our distributors and retail outlets through the Tata Consumer’s system almost immediately. The focus is now on the back end, organisation structure and processes, which we will complete in 100 days as committed.
One of the biggest initiatives during the year in our international business was the transformation of Tetley in the UK. We launched the new Tetley tea with a superior blend, including Assam teas, plant-based tea bags, and fully recyclable packaging, delivering a step-change in future-proofing the business and driving the sustainability agenda. We invested in our facility which was upgraded to state-of-the-art, using 100% green energy with zero- waste-to-landfill. The results of this have been promising as we have seen our market shares grow over the year making us the 3rd largest tea company in the UK.
We have also made strong strides in the Fruit & Herbal tea category with our brands Teapigs and Good Earth. This is in line with our strategy to expand our portfolio beyond classic black tea. Teapigs is the fastest growing brand in speciality and Good Earth is now also available in Morrisons and ASDA. We ended the year with a market share of 9.3% in the Fruit & Herbal segment.
In Canada, Tetley continues to outpace industry growth and we have seen our highest ever market shares in black tea in Canada during the year. We also launched our Live Teas range with listings at some of the key retailers in the country.
During the year, we also launched our millet offering Joyfull in the USA and UK, which has seen good consumer response.
The South Africa business has continued its strong growth trajectory post consolidation of our stake. It has delivered robust growth, with volumes up 15% and revenues up 22% led by strong performance across rooibos tea, black tea and green tea. More importantly, EBIT has grown
37% YoY.
We recorded strong growth in the Middle East, including entering Saudi Arabia through a distribution partnership. Also, in Bangladesh, post termination of the old Joint Venture, we entered into a new distribution partnership at the end of the financial year.
At Tata Consumer Products, through consistent action
and transparent communication, we are prioritising Environmental, Social and Governance (ESG) performance, striving for continuous improvement in our sustainability practices. In line with our earlier announced ESG Strategy, developed around the 4 pillars #ForBetter Sourcing, #ForBetter Planet, #ForBetter Communities and #ForBetter Nutrition, we have set ambitious goals for FY 2025-26 across key areas. In terms of climate adaptation, we
aim to achieve carbon neutrality for Scope 1 and Scope
2 emissions globally, alongside sourcing 35 percent of
our power needs from renewable sources. Embracing
the principles of the circular economy, we are committed to achieving zero-waste-to-landfill across all our global operations and ensuring that 70% of our packaging materials are recyclable, compostable, or reusable. Moreover, our focus extends beyond environmental initiatives to encompass people and community-centric goals. We aspire to positively impact 1.75 million lives through community initiatives, while striving for 100% ISO 45000 certification across all operations. Additionally, we are dedicated to increasing women’s participation in our global workforce to above 35%.
These goals underscore our unwavering commitment to sustainability, aligning with our broader transformation journey towards becoming a premier FMCG company. By executing against our sustainability strategy, we not only contribute to a more sustainable future, but also strengthen our brands, enhance consumer trust and create enduring value for our stakeholders.
I think there are some long-term trends which are secular in nature and here to stay.
First, the uptick in health and wellness consciousness among consumers continues to gain momentum.
Consumers are increasingly prioritising wholesome, nutritious products that contribute to their overall well- being. At Tata Consumer Products, we recognise this trend as a growth catalyst for us and have aligned our product innovations with our ‘For Better Nutrition’ Sustainability pillar, ensuring that our offerings cater to the evolving preferences of health-conscious consumers, without compromising on taste or convenience. We have put in place a Nutrition policy to guide the expansion of our product portfolio. The recent acquisition of Organic India will also help us capitalise on this long-term secular trend, both in India and globally.
Second, the rise of digital platforms, fuelled by growing internet and smartphone penetration, has radically transformed the consumer’s media consumption and shopping behaviours. Media habits are changing with more consumers using digital media for brand discovery and comparing offerings across brands. Given the rise
in consumption of digital media, we have significantly strengthened our focus on this with several digital brands, like Tata Tea 1868, Tata Coffee Sonnets, GoFit, Simply Better, in our portfolio and brands, like Tata Sampann, adopting digital as a key platform in the marketing mix. Rapid rise of the quick-commerce channel, especially amongst urban consumers, is testimony to the shift in consumer shopping behaviours driven by new platforms as well as a need for convenience. As a leader in the E-commerce space, we quickly adapted to the needs
of this fast emerging and evolving channel with the creation of specific SKUs across categories. As a result, we have seen the share of quick commerce to our overall E-commerce channel, rise disproportionately. We have ramped up talent and capability in E-commerce and rank among the top quartile in the industry in the E-commerce segment’s percentage contribution to our business.
We are also strengthening our digital marketing efforts and expanding our D2C play, while also emphasising the importance of providing a unified omni-channel experience to ensure consistency across all touchpoints.
Fast paced lifestyles have led to a preference for products that are convenient and integrate well into consumers’ evolving needs and preferences. There is a rising trend
of consumers adopting cooking aids for quick meal preparation. In line with this, we are strengthening
our offerings in categories, such as sauces, ready-to- cook meals, spices, and other cooking aids, providing consumers with convenient solutions. The Capital Foods portfolio is well-positioned to leverage the convenience trend with their cooking aids product range which we will expand further.
Finally, the trend towards premiumisation, driven by a growing middle class with higher disposable income, presents a significant opportunity for FMCG companies. Consumers are now more willing to invest in premium experiences and value-added offerings. For us, this opens the doors to upgrade consumers to our premium product ranges, thereby enhancing consumer engagement and loyalty. While we are seeing continued high growth for us across our portfolio, the premium part of our portfolio is outpacing our overall growth.
Overall, these trends hold immense significance for the sector, and Tata Consumer is strategically positioned to leverage them to drive growth, innovation and consumer satisfaction in 2024 and beyond.
People are our strongest asset. I am inspired everyday by the resilience, agility and commitment of our teams. I know my team is fired up with the long-term ambition of building a best-in-class global FMCG arm for the Tata Group. My Executive Committee is leading from the front in embedding a ‘Growth mindset’ and role-modeling these behaviours across the organisation, while being deeply rooted in Tata Consumer’s core values. We believe in embracing a Growth mindset which opens doors to innovation, cross functional collaboration and continuous improvement. To be future- ready, we continue to invest in Learning & Development through a range of focused curriculums.
A strong organisation has robust talent pipelines, with people cultivating their skills as they progress. We have strengthened our entry level programmes and developed clear pathways to guide employees through their career journey within the organisation.
Keeping our future aspirations in mind, we have invested significant time from our senior leadership to conduct thorough assessments of potential candidates for leadership roles. This involves long and detailed discussions to identify top talent and then nurturing their readiness through targeted interventions, including on-the-job experiences, cross-functional projects, talent mobility initiatives across departments, executive coaching and leadership development programmes conducted in collaboration with leading subject matter experts, including the Tata Management Training Centre, Pune.
To help our people realise their potential, we offer a wide range of tailored learning experiences and resources at every stage of their professional journey. As part of our talent development initiatives, we encourage internal mobility and have filled a significant number of positions with internal talent. Over the last few years, we have strengthened our Reward & Recognition framework
to celebrate wins, create a culture of appreciation
and collaboration, and inspire people to aim higher. Acknowledging the value of diversity in driving growth, we are dedicated to promoting gender diversity within our organisation and have launched initiatives, such as the Women’s Inclusion Network and a mentoring platform for women. Employee wellbeing continues to be a key area
of focus for us. Supporting the wellbeing of our people
is integral to creating an engaged and high performing organisation. Our initiatives span physical, mental and financial wellbeing, and are delivered through a variety of employee-friendly formats.
In summary, we see nurturing and developing our people as critical to building a thriving and future-ready organisation.
With a strong foundation and focus on the future, Tata Consumer will continue to progress its transformation journey, deliver profitable growth and build capabilities for the future.
Sunil D’Souza
MD and CEO