Tea demand looking up post decline in third quarter: Tata Consumer

The demand for the tea category has started looking up after a slowdown in the third quarter, Puneet Das, President-Packaged Beverages, India & South Asia, Tata Consumer Products told CNBC-TV18.

The third quarter of FY23 saw an inflation impact across categories in FMCG that hit rural demand, he added. In the third quarter, India beverages saw a 9 percent decline in revenue and negative 5 percent volume along with some loss in market share.

While announcing results, CEO Sunil D’Souza said revenue declined came on the back of pricing corrections and volume decline led by continued pressure on rural markets as well as a delayed winter up North.

“It's not so much about seasonality from a consumption point of view. It’s true that sentiments go up, stocking in the market goes up in winters, but don't see much of a dip in summers,” Das added.

Tea trends currently are looking much more positive, Das said. He was speaking on the sidelines of the company launching a tea collection 'Street Chais of India' under the Tata Tea brand. The company launched four flavours based on tea popular in four cities — Hyderabad, Mumbai, Kolkata and Delhi.

This launch is part of Tata Tea’s hyper-localisation strategy. It started in 2000 to capitalise on the fact that food and beverage choices are highly localised.

Das also spoke about the company’s coffee portfolio, where it currently has just a one percent share, but is an area Tata Consumer is investing behind.

Tata Consumer’s coffee portfolio, which currently comprises 6 different offerings, is growing over 30 percent, Das said. TCPLE currently sells Tata Coffee Grand, Tata Coffee Gold, Quick Filter, Sonnets and its D2C brand Eight O’Clock.

For the coffee portfolio too, premiumisation is the focus Das said.

“We’re launching a lot of innovations in coffee to take it towards premiumisation. It is the focus even as we grow the instant, mass coffee section. We have been really investing behind the business in the last two years in terms of product launches and distribution and this is helping us grow the coffee category,” he added.

With the summer season approaching, TCPL will now scale up its Cold Coffee to leverage the hot season as well.

While focusing on premiumisation, Das added that the company is also increasing its reach in rural areas through more accessible price points. “At this point in time, rural growth comes from smaller pack sizes as people downgrade. Our distribution is growing month-on-month and we are growing lower unit packs as much as premiumisation,” Das added.