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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.
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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/}}