Tata Consumer Products Ltd., the food and beverage arm of the $103 billion Indian conglomerate, is seeking an acquisition attempt to strengthen its position in the country’s competitive consumer goods sector, and is in talks to buy up to five brands .
A “significant portion” of the Mumbai-based company’s future growth will come from inorganic expansion, Tata Consumer Products’ Chief Executive Officer Sunil D’Souza said in an interview. The company, which sells Tetley tea and Eight O’Clock coffee, is “seriously dealing” with a number of companies where it sees decent valuations, he said, and refuses to identify potential targets.
“We’re reaching out to potential targets to chat to see if there’s any interest,” said D’Souza, who took charge of the company two years ago after a stint at PepsiCo Inc. and Unilever Plc. “There are places where valuations are high, but given the macro environment, given the liquidity, tightening etc., I’m keeping my fingers crossed that they will become much more affordable.”
Founded in 2020 during a continuous streamlining of Tata’s 153-year-old business empire, which operates across dozens of industries, Tata Consumer Products has expanded its portfolio by acquiring stakes in companies such as bottled water company NourishCo Beverages Ltd. as well as the Soulfull grain brand.
The conglomerate is likely to face stiff competition in the sector from existing global giants such as Unilever, as well as Mukesh Ambani’s Reliance Industries Ltd., which plans to acquire up to 60 brands of small grocery and household consumer goods within six months, it said. Reuters.
As India reopens after the pandemic-induced curbs, D’Souza is also accelerating the expansion of Starbucks Corp. branches across the country. It added 50 new cafes in the past fiscal year, expanding its presence to 268 stores in 26 cities. Tata, which has a joint venture with the American coffee giant, aims to have more than 1,000 Starbucks stores in India, D’Souza said, refusing to provide a timeline for that goal.
“We have a huge runway ahead of us in India,” he said. “Now the game is how fast can we scale?”
Tata’s expansion comes at a time of serious inflationary turmoil as the war in Ukraine, national export bans on agricultural commodities and stifled supply chains drive input costs for consumer goods companies.
Companies including Unilever’s India unit and domestic staple companies Britannia Industries Ltd. and Dabur India Ltd., have responded by raising prices in the highly price-conscious market of approximately 1.4 billion people and reducing portion sizes in the packs in their cheapest packs.
Shrinkage hits Indian snacks as companies struggle with costs
Tata has managed to weather that impact, as the prices of the three main products it sells — coffee, tea and salt — have remained relatively stable, D’Souza said, as the company has seen “nagging” increases in freight and packaging costs feel .
Economic and political turbulence in the neighboring island of Sri Lanka, a major black tea exporter, has kept tea prices stable. India is likely to have a good crop this year, which would normally have caused tea prices to fall, he explained. But the disruption in Sri Lanka has hampered exports and prevented a price drop.
“Anyone who is now exposed to wheat, sunflower oil, palm oil, I think they are now taking the brunt,” he said.
© 2022 Bloomberg LP
(This story was not edited by DailyExpertNews staff and was generated automatically from a syndicated feed.)