Tata Consumer’s ready-to-drink: New owner, new possibilities
Having taken charge of the stagnating ready-to-drink joint venture partnership (JV) with Pepsi, Tata Consumer Products is now in the process of scaling-up of its value-added ready-to-drink liquid portfolio. Tata Consumer and PepsiCo were into a decade long JV, NourishCo, under which they sold a host of value-added water products such as Tata Gluco Plus, Tata Water Plus (infused with copper), and Himalayan Mineral Water.
Through the decade-long association between the Tatas and PepsiCo, the business barely grew. In May last year, the company took full charge of the ₹180-odd crore beverage business, by buying out the stake of its JV partner, PepsiCo India.
In an interview with Fortune India, MD and CEO, Sunil D’Souza, says that the goal is to now convert its beverage business around into a four-digit topline in a short span of time. “In the first quarter of FY22, we grew by 90% despite the second wave of Covid-19. This quarter, it will be a three-digit growth,” he says.
D'Souza argues that though its mineral water brand, Himalayan, had a pan-India presence, mass brands such as Tata Gluco Plus and Tata Water Plus were available only in Andhra, Telangana, Odisha, and parts of Tamil Nadu. “The business was falling between two stools,” he agrees. He says that since the business got good traction in the states it was operational in, it made sense to take full control of it and embark on an expansion strategy. “We realised that if we expanded the business, we could create value. We are now available in West Bengal, Jharkhand, and Bihar and have also started expanding to UP and Delhi. We will expand in the West too.”
Apart from Himalayan, which is a premium bottled water brand, the bulk of the portfolio is targeted at masses. Tata Gluco Plus, for instance, is priced at ₹10 for a 200 ml cup. The company in the last one-year has re-launched Tata Fruski, which is an iced-tea drink as a street brand in flavours such as jaljira and spicy mango. It has also launched a jelly variant of Tata Gluco Plus. “We are getting ready with a wide portfolio of products. So, both geographic and portfolio expansions are on track, and we are confident that we have a winner in our hands,” claims D’Souza.
Instead of setting up manufacturing facilities all over, the company has opted for an asset light model. It is working with contract manufacturers and co-packers closer to the point of demand. “It’s a freight heavy business, unless I manufacture close to the demand, the margins will be pathetic,” explains D’Souza.
Apart from the company’s hydration business being in the process of getting a facelift, Tata Consumer Products, post the merger of Tata Chemicals and Tata Global Beverages is also aggressively trying to position itself as a dominant food and beverage business with interests in staples, tea and coffee as well in breakfast and snacks.