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... ... @@ -185,27 +185,22 @@ 185 185 186 186 = Industry Overview = 187 187 188 -The total organised Indian F&B industry is expected to be ~~Rs. 4,00,000 Crores market as on 2019 and projected to grow by 2.5x to ~~Rs. 10,00,000 Crores by 2025 (CAGR of 16%) – leveraging India’s favourable demographic (1.4 Billion strong population, rising income levels and higher urbanisation). The F&B segment constitutes ~~30% of household spending and is expected to sustain the wallet share, going forward.{{footnote}}https://www.tcs.com/ growth-strategy{{/footnote}}188 +The total organised Indian F&B industry is expected to be ~~Rs. 4,00,000 Crores market as on 2019 and projected to grow by 2.5x to ~~Rs. 10,00,000 Crores by 2025 (CAGR of 16%) – leveraging India’s favourable demographic (1.4 Billion strong population, rising income levels and higher urbanisation). The F&B segment constitutes ~~30% of household spending and is expected to sustain the wallet share, going forward.{{footnote}}https://www.tataconsumer.com/docs/default-source/default-document-library/tcpl-iar-2020-cover-to-cover_for-website-upload_15-6-20_12-55-pm.pdf?sfvrsn=0{{/footnote}} 189 189 190 - [[https:~~/~~/www.tataconsumer.com/docs/default-source/default-document-library/tcpl-iar-2020-cover-to-cover_for-website-upload_15-6-20_12-55-pm.pdf?sfvrsn=0>>url:https://www.tataconsumer.com/docs/default-source/default-document-library/tcpl-iar-2020-cover-to-cover_for-website-upload_15-6-20_12-55-pm.pdf?sfvrsn=0]]190 +== Beverages == 191 191 192 +=== Tea === 192 192 193 -Beverages 194 - 195 -Tea 196 - 197 197 As per Euromonitor estimates, global hot tea category is a ~~USD 45 Billion industry. Black/Everyday black tea forms the largest category sub-segment globally – but is declining across different international markets. Non-black tea (Green, Fruit & Herbal, Decaf, Specialty, Cold Infusions etc.) is growing and in some markets like Canada, has become larger than black tea. However, a similar growth profile may not be seen across the different non-black segments. For instance, green tea has started witnessing softening of growth/decline in some markets 198 198 199 199 Health & wellness is one of the key focus areas of the industry. There is an increasing number of new launches with active health claims, such as Gut Health and Sports & Recovery (Tetley Super Teas also leverage on this trend). Consumer perception with respect to macronutrients in relation to health are evolving as media/science dictates what is good for body like no sugar, good carbs, low sodium (Tetley Cold Infusions was launched with an alternative offer of low sugar hydration). 200 200 201 - 202 202 Indian te a mar ke t is es tima te d to b e ~~Rs. 26,000 Crores, with unbranded being 30-35% of the overall market (by value). Tea is the favourite Indian beverage and the company continue to see growth across all tiers through upgradation from loose to economy branded tea and movement up the chain to premium and super premium teas. Black tea is the predominant sub-category, with high customer preference for the taste of boiled milk tea. Green tea is estimated to be ~~3% of the branded category and is growing at 12.5%. Health & wellness continues to be a strong trend and consumers are also looking at functional benefits from their cup of chai (such as Ayurveda Tea and Tulsi Tea). 203 203 204 204 There is a re-emergence of tea cafés in urban centres in the last few years, which is helping reinvent the tea culture, provide a comfortable venue compared to tea stalls and serve as an alternative to coffee chains. Tea cafés like Chaayos, Chaipoint and its own Tata Cha are becoming prominent. There is an increasing potential base of consumers, who see tea as fashionable and are getting familiar with different varieties of tea. 205 205 202 +=== Coffee === 206 206 207 -Coffee 208 - 209 209 Retail hot coffee is ~~2x the size of Tea at USD 88 Billion. USA is the largest coffee market – estimated at ~~USD 12 Billion – and has also been leading growth in the category. 210 210 211 211 Coffee has four sub-segments: Roast & Ground, Beans, Pods and Instant Coffee. Affordable ground and instant formats are more prevalent in early stage markets like Asia, Africa and the Middle East (where Tea is the primary beverage of choice) while Roast & Ground and Pods are more prevalent in countries with an evolved café culture. The company's largest play in coffee is in USA with the Eight O’ Clock coffee brand. ... ... @@ -214,61 +214,52 @@ 214 214 215 215 Consumers are looking at authentic and premium choices in coffee, and there have been several new launches targeting the trend (like the company launched Barista Blend and Flavors of America). Consumers are also more conscious about their choices and want to select healthier options. 216 216 217 - 218 218 The branded retail coffee market in India is estimated at ~~Rs. 2,750 Crores in 2019. Instant coffee is the largest sub segment and is ~~80-85% of the category and growing as consumers look at convenience. Tata Consumer Products is also witnessing the emergence of artisanal and gourmet premium coffees – estimated to be ~~5% of the organised market. In terms of at-home consumption, the company see different consumer behaviours in the South and Rest of India segments. In the Rest of India, coffee is an aspirational product and there is preference for instant coffee, especially during winters. On the other hand, in the South, the company see regular consumption of both instant and Roasted & Ground (filter coffee). 219 219 220 -Water 214 +=== Water === 221 221 222 222 Water is the second largest beverage sub-category after Tea in India (globally it is the largest sub-category in the Beverages market). The current size of the packaged water market in India is ~~Rs. 17,000 Crores, growing at a CAGR of 12%. Fruit-based beverages is a ~~Rs. 8,250 Crores category, growing at a CAGR of 10%. 223 223 224 224 Within the packaged drinking water category, the company were one of the first players to launch naturally sourced mineral water in India through its brand Himalayan, and continue to enjoy a leadership position. The company also entered the functional and fortified water space with Tata Gluco Plus and Tata Water Plus. 225 225 220 +==== Outlook ==== 226 226 227 - 228 - 229 -Industry Outlook 230 - 231 231 The COVID-19 pandemic has resulted in short-term disruptions in the industry, especially for out-of-home consumption. Even for essential products like Tea and Coffee, there will be supply challenges before things get normalised. In the short term, the company will also see consumers getting more value conscious and hence, the growth dynamics will change across the different tiers (economy/premium). 232 232 233 233 However, long-term drivers remain robust and expect continued expansion of the categories. There is an opportunity to grow, driven primarily by distribution expansion (including into white space geographies like Rajasthan, with the acquisition of Lal Ghoda and Kala Ghoda) as well as through new product innovation. 234 234 226 +== Foods == 235 235 236 -Foods 237 - 238 238 The organised Indian Staples industry is ~~Rs. 88,000 Crores in 2019. It is largely unorganised, with the share of branded players at less than 10%. 239 239 230 +=== Salt === 240 240 241 -Salt 242 - 243 243 Within the Staples category, the Indian Salt market is estimated to be ~~Rs. 7,000 Crores with unorganised players forming ~~12% of the category by volume (a stark difference to the rest of the category). The growth drivers for branded play remains the increasing awareness of better product quality, visible purity and iodine content. The company compete in the category with Tata Salt (vacuum evaporated salt sold nationally) and I-Shakti salt (lower priced solar evaporated salt normally sold in South). The company's supply partners, Tata Chemicals have the largest manufacturing facility for producing vacuum evaporated salt in India. Tata Consumer Products is seeing a growing trend of health & wellness with consumers making conscious choices by selecting better-for-you options (such as lower sodium content in Tata Salt Lite, Iron and iodine fortification in Tata Salt Plus). Specialty salts like rock salt and black salt have increased presence in modern format stores. 244 244 245 -Pulses 234 +=== Pulses === 246 246 247 247 India is the largest producer, consumer and importer of pulses. The total Pulses and Derivatives industry is estimated to be ~~Rs. 1,50,000 Crores in FY 2018-19 with only 1% of the segment being branded. The low penetration is primarily led by a host of factors including low perceived value addition by packaged players (leading to consumers unwilling to pay price premium) and low consumer concern regarding adulteration in unbranded. However, the trend has been changing in the last few years with consumers preference for better quality packaged products, launch of differentiated products (such as Tata Sampann Unpolished dals, Tata Sampann Low Oil Absorb Besan, an organic range of pulses) and growth in the number of organised players entering the category (and thereby, expanding the base). Tata Sampann is the first national branded player in this category. 248 248 249 -Spices 238 +=== Spices === 250 250 251 251 India is the world’s largest producer, consumer and exporter of spices and accounts for almost half of the global spice trade. The total Spices industry is worth ~~Rs. 60,000 Crores, with the branded Spices industry, estimated to be ~~Rs. 18,000 Crores in FY 2018-19, is highly fragmented with the presence of many regional players. The branded segment is growing at a CAGR of ~~15%. Straight/Pure Spices form ~~80% of the segment (with a high-competitive intensity from unorganised players), while blended spices are mainly branded with consumers choosing to be brand loyal. However, there is an increasing demand for branded products, with consumers looking at improved quality products in straight/pure spices (with better quality of raw materials used) and increasing adoption of blended spices in the kitchen (higher convenience and consistency of taste). 252 252 253 -Snacks/Ready-to-Cook 242 +=== Snacks/Ready-to-Cook === 254 254 255 255 Snacks/Ready-to-Cook is an Rs. 40,000 Crores segment with a high share of branded play (Ready-to-Cook is all-branded in comparison to Snacks). The growth is being driven by more players entering the segment and offering consumer different taste choices including healthier food and convenience (such as Tata Sampann Chilla Mix). 256 256 257 -Outlook 246 +==== Outlook ==== 258 258 259 259 The company expect the current trends to continue and the demand for the branded products in the staples category to grow at a strong pace. The disruption caused due to COVID-19 is likely to further accelerate the adoption of branded products across the Staples and Spices category as customers are now preferring more branded products than loose and local options. 260 260 250 += Financial Highlights = 261 261 262 -Financial Highlights 263 - 264 264 During the year 2019-2020, the Company has completed the acquisition of the Consumer Products Business (India Foods business) from Tata Chemicals Limited (“TCL”). Further details relating to this acquisition are given in a subsequent section of this Board report. The Company also acquired the branded business of Dhunseri Tea and Industries Limited which includes the leading local brands in Rajasthan, India – ‘Lal Ghora’ and ‘Kala Ghora’. 265 265 266 - 267 267 The Consolidated Revenues at Rs. 9,637 Crore reflect an increase of 33% mainly due to the inclusion of India Foods business. On a like to like basis, Revenue from operations from the beverages business at Rs. 7,573 Crore recorded a growth of 4% mainly due to improvement in branded business and in the Non-Branded business mainly due to commencement of instant coffee sales from Vietnam. Profit before exceptional items at Rs. 1,084 Crore includes the impact of acquisition of the Foods business and improved performance of the branded beverage business arising from gross margin improvements and good control of spends partially offset by higher spends behind brands. The non-Branded business has performed marginally behind previous year, mainly due to underperformance in Coffee plantations partially offset by improvement in pepper plantation and commencement of operations in Vietnam. 268 268 269 269 The Consolidated Profit after tax at Rs. 535 Crore recorded a growth after absorbing the impact of exceptional items. The Group Net Profit for the year remained flat while Group Net Profits net of minority interest at Rs. 460 Crore recorded a growth of 13% as compared to the previous year. Exceptional items for the year primarily relate to costs arising out of the acquisition of the food business and non-cash impairment loss on goodwill relating to the branded businesses in Australia and tea business in the US. The accounting impairment has been recognised due to a combination of factors like COVID - 19 related impact on specific out of home business segments, changes in discount rates due to market conditions and revision in business plan sensitivities. 270 270 258 += References = 271 271 272 -References 273 - 274 274 {{putFootnotes/}}