IT WAS SATURDAY MORNING in San Francisco in February 2020. Sunil D’Souza, the then MD of Whirlpool India, was getting ready for his company’s global meet, when he received an unexpected call from a head-hunter. The role being offered to him was MD, Tata Consumer Products Ltd. (TCPL), the conglomerate’s FMCG business. D’Souza was not interested. “I don’t think the company is going anywhere,” he told the head-hunter! “That is exactly why Tata Group chairman N. Chandrasekaran wants to meet you,” was the reply.

In the days that followed, D’Souza found himself walking into Chandrasekaran’s office in Bombay House. “Chandra told me he had the biggest brand name in the country, but he was not big in the business of FMCG. He wanted to change that. I asked him why he was looking at talent outside of the Tatas, and his response was that he didn’t have a suitable person within the group to lead the business.” The conversation got D’Souza excited. He joined the company as MD & CEO during the peak of Covid in April 2020.

His first market visit, a couple of weeks before he joined, gave him a clear picture of the challenges. “I realised it was not a bandage that was required. The business needed a full-fledged surgery. I made a list of five things that needed to be done and Chandra gave me the go-ahead.”

The first was strengthening the distribution network. “We had to set up distribution from scratch. The way we were going to market earlier was not how a FMCG company should go. We set up distributors who had proper sales teams, and digitally enabled them. Since we didn’t have distribution muscle, we were discounting heavily. We pulled all that back and channeled the money for brand building.” The company was directly distributing its products in barely five lakh stores and had an overall numeric reach (distribution through wholesalers etc) of about 2 million stores. In the past three years, the numbers have increased to 1.5 million and 4 million, respectively.

Once distribution was in place, D’Souza revamped the product portfolio and identified categories in which the company wanted to play — while its core remained tea, salt and coffee, the new focus was on pantry, breakfast, mini meals, cereals and ready-to-drink beverages. “We had too many brands and categories which confused the consumer. The need of the hour was to clean the portfolio and put brand power behind it,” says D’Souza.

It worked. Despite commodity prices hitting the roof and inflation at record high, net sales went up from ₹9,637 crore in FY20 to ₹13,783 crore in FY23. In a category like tea, TCPL registered a CAGR growth of 6-7% during the period, while in salt its market share moved up from 30% to 38%. “Our profitability in tea has gone up and that has allowed us to fuel new businesses,” says D’Souza.

Soon after joining the company, D’Souza also spearheaded the acquisition of Kottaram Agro Foods, the owner of millet brand Soulfull. “Last year Soulfull grew 2x. All they needed was fuel in terms of distribution,” he says. From millet-based breakfast options, the brand forayed into millet-based meals and snacks and oats category.

Culture of Innovation

The benchmark of the FMCG industry (food and beverages) is that 5% of the revenue of a company should come from products launched in the last three years. TCPL’s revenue from innovations was a mere 0.8%. D’Souza embarked on a journey of fast-tracking innovations, strengthened R&D team and invested heavily in digital. A chief digital officer was brought in, and the company stepped up investments in data analytics, machine learning and artificial intelligence. Through tools such as social listening, it was able to get a better grasp of what the consumer actually needed.

“Technology gave us the hook we could use to get the consumer into our fold, which is the one differentiating factor,” explains D’Souza. He chose a strategy of reaching out to masses as well as top-of-the-pyramid consumers through the beverage business. “Our ready-to-drink glucose beverage packaged in a cup, for example, allows you to play a value game. The packaging cost is low, the capex to set up a cups line is also low, and you can make sure that your margins are maintained while the consumer is delivered value.” D’Souza and his team came up with products, including a drinking jelly (an idea he stumbled upon while on a visit to Indonesia) and Frusci, a fruit-based beverage priced at ₹15.

TCPL also launched its direct-to-consumer brand, Sonnets, for premium coffee. Instead of the usual masala and elaichi tea variants, it went back to the drawing board and launched Tata Tea Premium Street Chai, which celebrates unique tea drinking traditions across the country. Other variants included Tata Tea Gold Saffron and TeaVeda (Assam tea with Indian spices).

The ready-to-eat category, meanwhile, was all about premiumising. TCPL extended Soulfull, its premium health food brand, from a healthy breakfast to a snacking option with the launch of Soulfull choco sticks.

It also premiumised a highly commoditised category such as salt by launching a range of fortified products, including Tata Salt Immune, which contains zinc, and Tata Pink, with natural minerals. Revenue from salt business increased upwards of 27% in the past year.

By the time D’Souza joined TCPL, Tata Sampann, its staples offering, was a brand to reckon with. D’Souza sharpened the focus further. He decided not to play in categories such as edible oil, atta and rice, which were already crowded, and instead, focused on pulses and besan, where penetration was low.

He played on the Tata brand name, which over decades, has been synonymous with trust. The company’s most recent foray has been into dry fruits and seeds. “I will see how I can build value there,” says D’Souza.

Inorganic Growth

TCPL has also been on an acquisition spree. “We will grow organically as well as inorganically,” says D’Souza.

The company bought out PepsiCo’s stake in the Nourishco JV in 2020. Though inked between the then Tata Global Beverages and Pepsi over a decade ago, it had never taken off. “When we bought it out, the revenue was ₹180 crore. This year we closed at ₹600 crore. The target is ₹1,000 crore.” The firm was also in talks with Bisleri for a buyout, but it didn’t take off.

Global Business

Though 80% of the company’s revenue comes from India, it also has a sizable business in the U.K., the U.S. and Africa, which came under pressure last year due to economic uncertainties. “I buy tea in Kenya in dollars and sell it in pounds in the U.K. and report in INR. When the pound collapsed, the product became expensive. My top line dropped and margins came under pressure. In the U.S., coffee prices went through the roof and every time we took an increase, prices went up further,” says D’Souza.

But the storm has subsided since, he claims. The U.K. business delivered double-digit EBIT margins for the first time in three years in Q1 FY24. “Last year was spent making structural corrections in terms of basic cost structures. We took out a significant amount of costs in international business and made pricing corrections.” The challenge this year is softening of volumes due to high inflation. “But since margins and cost structures are under control, we can accelerate,” says D’Souza.

The company is also expanding its portfolio internationally. It recently launched Soulfull (rebranded as Joyfull in the UK) in 550 Tesco stores in the U.K., and is in the process of launching ready-to-eat Indian food in the U.S.

D’Souza’s ambition is to make TCPL India’s premier FMCG company. Though there is still a long way to go, he believes the Tata brand name gives him an imminent upper hand in attracting the best of talent as well as retailers and consumers. “When I say I am a Tata brand, it’s easier to get people to make a move.”

Follow us on Facebook, Twitter, YouTube & Instagram to never miss an update from Fortune India. To buy a copy, visit Amazon.