The Tata Group has always been a back-bencher in the FMCG industry, and Sunil D’Souza, MD & CEO, Tata Consumer Products (TCPL), is determined to turn that around. At the time of the merger of the erstwhile consumer business of Tata Chemicals and Tata Global Beverages into TCPL last year, the company’s distribution force barely reached out to half a million stores, but as the month of September comes to an end, the company would be covering over a million stores. “The best-in-class companies are three times ahead of us in terms of distribution, and I want to be at least in the middle of the pack,” says D’Souza.
The company, says D’Souza, in the past year has been constantly revising its targets and hopes to reach out to at least 1.5 million stores by the end of the FY22 fiscal and two million stores by September-October next year. Apart from reach, the company has also been making some serious investments in innovation and brand-building. “In terms of innovation investments, we were at 1.7% of our net sales last year, this year we have taken it to 3%-3.5%. We launched 14 products last year, this year our target is 50.” The company in the recent past had launched products such as Tata Salt Super light (which has 30% lower sodium content), Tata Tea Gold Care and Tata Tea Chakra Gold Care.
The FMCG arm of the Tata Group has stepped up its ad spending by 50%. “We were spending behind the benchmarks in the industry and we needed to spend a little more. Last quarter we upped our spending by 50% in India and you will see that trend going forward. We want to build highly salient, power brands,” says D’Souza, whose intent is to first become a strong food and beverage company and look at other FMCG categories too. The company wants to do this through a growth strategy that would be driven both organically and inorganically.
In January this year, the company acquired Kottaram Agro Foods, which owned the brand Soulfull. Through this acquisition, the company has entered into the breakfast cereals and mini-meals category. “We have looked at categories that are bigger than ₹5,000 crore and the reason for that is even if we get a 10% share, it will be a ₹500 crore business,” explains D’Souza.
Alongside the aggressive growth strategy, the FMCG company has also set for itself stringent cost-saving targets. At the time of the merger last year, the company had set for itself a total synergies target of ₹100-₹150 crore in 18-24 months, and D’Souza claims that it will be ahead of ₹150 crore on completion of 24 months. “We are not going to stop at ₹150 crore saving. There is still an opportunity to tighten our belts,” he says.
The company has been saving costs by capitalising on the synergies that have come its way due to the merger. In the last one year, it has nearly halved its C&FAs, which has given efficiency both in warehousing as well as logistics. Instead of having distributors of various sizes and scales, the company has now reduced its distributors by two-thirds. “Earlier there was a tea salesman and a salt salesman going together, but we needed distributors of scale who could take full truckloads of all our products. Now we have 1500-1600 distributors of scale, and by doing that we have increased the number of salesmen on the street. Now we have about 3500-3700 salesmen, who are selling tea, salt and the Sampann range of products,” explains D’Souza.
“Within the organisation, we had five regions in beverages and four regions in food, now we have eight consolidated regions. We have put out common allocations for media and we have saved substantially. We are able to strike better deals in terms of media spends and even packaging. We are clear that we need to deliver superior financial metrics to our shareholders,” he further adds.