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Business News/ Companies / Tata Consumer Products expects tea volumes to grow in the mid-term
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Tata Consumer Products expects tea volumes to grow in the mid-term

Tata Consumer Products Ltd. expects India tea volumes to return to mid-single digit growth in the medium to long term.

In India, Tata Consumer sells packaged tea under brands such as Tata Tea, Agni, Kanan Devan, Tetley, among others.Premium
In India, Tata Consumer sells packaged tea under brands such as Tata Tea, Agni, Kanan Devan, Tetley, among others.

Mumbai: Tata Consumer Products Ltd. (TCPL) expects India tea volumes to grow between 2% and 4% in the short term, returning to mid-single digit growth in the medium to long term, the company's top management said during its post earnings call on Wednesday.

“This quarter was a bit soft (for tea) compared to what we were seeing as a trend because we had seen volumes coming to two-to-three percent growth," Sunil D’Souza, managing director & CEO of TCPL said during the company’s post earnings call Wednesday.

The maker of packaged salt and pulses announced its March quarter earnings on Tuesday. For the three months ended 31 March 2024, the company reported flat tea volumes year-on-year. For the full year, tea volumes were up 2%. Tea market share has been stable on a quarter-on-quarter basis, the company said.

Overall, revenue from operations for the quarter grew 9% at 3,927 crore. For the full fiscal year 2024, TCPL reported a 10% jump in revenues at 15,206 crore.

“We do expect to see at least a two-to-four percent volume growth in the short-term but in the medium-to-long term, we do expect tea to come back to a mid-single digit volume growth," D’Souza said.

The company’s tea business falls under the India beverages portfolio that also comprises coffee. TCPL is a significant player in the branded tea market. In India, the company sells packaged tea under brands such as Tata Tea, Agni, Kanan Devan, Tetley, among others. 

One in three households in India consume a Tata Tea brand. Tata Tea is the second largest tea brand in India.

Inflationary headwinds in tea prices impacted the packaged tea category in fiscal 2022. Due to this, TCPL faced down-trading by consumers. However, over the last few quarters, tea prices have begun to soften and volumes have started turning positive aided by proactive steps.

During the March quarter, for instance, average north India tea prices were 8% lower year-on-year, the company said in its Q4 earnings presentation; while south India tea prices were 15% lower compared to a year ago.

“TCPL has now turned in four consecutive quarters of positive volume growth," analysts at Nuvama Institutional Equities said in a research note on the company released in March.

In the past two years, companies struggled with high food inflation plus inflated commodity costs. This slowed down growth of mass-market products as companies either raised prices or reduced grammage to safeguard margins. However, companies expect to now resume focus on volumes going forward.

Meanwhile, during the quarter, coffee continued its strong performance with a revenue growth of 45% for the quarter.

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ABOUT THE AUTHOR
Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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Published: 24 Apr 2024, 04:25 PM IST
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