New Delhi: As competition heats up, particularly from small companies, Tata Group’s fast-moving consumer goods (FMCG) division will concentrate on expanding market share in salt and tea, two of its key categories. With Tata Salt, Tata Consumer Products is the market leader in branded salt, and Tata Tea, the market leader in branded tea. Hindustan Unilever is the market leader in the branded tea segment. However, as commodity inflation moderates, a growing number of smaller players are entering markets for essentials like salt and tea, helping to support their resurrection.
These businesses mainly target rural and semi-urban areas, where consumers are price-conscious and prone to switching brands. According to Sunil D’Souza, MD and CEO of Tata Consumer, in an interview, the business lost approximately 50 basis points in terms of volume share and 110 bps in value share in tea in the June quarter compared to last year. The value share decreased by about 30 basis points in the first quarter compared to the prior year. The company is relying on a distribution drive in semi-urban and rural areas and increased advertising spending behind its brands, mainly tea, to stop this decline. “Margins before market share” will be the strategy in the salt industry.
Tata Consumer had raised the price of Tata Salt by 33%, that is, from Rs 21 to Rs 28 a pack, over the last few quarters to tackle inflationary pressures. Market share erosion happened as a result of this, says D’Souza. “If you look at the salt business closely, we have actually gained 10 bbs of share in the Tata Salt brand. But where we have lost market share is that part of the portfolio which is sensitive to loose and local players. The focus will be to get back share in this part of the portfolio, now that margins are stable overall, after the price hike,” D’Souza said.
Additionally, the corporation will strengthen its position in the South regarding tea, coffee, salt, and spices. According to D’Souza, for example, Tata consumers’ Chakra Gold and Kanan Devan brands have succeeded in the South. Tata Coffee Grand was also relaunched with a fresh pack design. The corporation has also introduced Shuddh in the salt category for the Southern markets. Additionally, it sells a variety of spices under the Tata Sampann brand for the Southern region.
D’Souza added that the company has adopted a targeted distribution strategy by expanding bandwidth at the front end and dividing the routes of salespeople in places with a population of more than a million. While some of these salespeople concentrate on the firm’s commodity categories, such tea, coffee, and salt, the others concentrate on categories and items with value-added features (like Tata Soulfull).According to D’Souza, the total reach will reach four million outlets by September, which is twice as many as there were three years ago.
