Tata Consumer’s distribution overhaul powers growth in more businesses, says CEO

MUMBAI: Tata Consumer Products Ltd, which sells products ranging from Tetley tea to Himalayan Natural Mineral Water and millet-based products, is seeing its distribution revamp drive growth across more businesses, while boosting core portfolio volumes, managing director and chief executive officer Sunil D’Souza said.
“I think we've unlocked our growth by doing the split and segmented distribution right,” D’Souza told Mint in an interview.

Tata Consumer Products completed the overhaul of its distribution strategy earlier in February. In markets where salt accounted for a high share of sales, the company separated distributors handling salt from those handling other products. In markets where both tea and salt had a strong presence, distributors were split between the core and growth portfolios.

The changes helped the company achieve underlying volume growth of 11% in the September quarter from a year earlier, despite price hikes in products such as tea and salt, D’Souza said. Revenue from the salt segment grew 15% year-on-year, while volumes rose 9%. Shares of Tata Consumer rose as much as 6.6% on the National Stock Exchange early on Tuesday, even as the Nifty FMCG index declined 0.08%.

“What that has done, it has not only given a fillip to the growth portfolio by focusing distribution on that, but unlocked growth territory for our salt distributors,” he said.

The company’s growth businesses, which include ready-to-drink beverages, Tata Sampann, Capital Foods and Organic India, crossed the ₹4,000 crore revenue mark in FY26, growing 24%.

These businesses are emerging as a growth engine for Tata Consumer. They grew 40% in the second quarter and accounted for 38% of the company’s India business. The Tata Sampann portfolio, which includes spices, oils and ready-to-cook products, reported year-on-year growth of 57%, driven by volume growth. The company’s dry fruits and cold-pressed oils businesses together reported annual recurring revenue of about ₹1,000 crore.

Price hikes, margins and demand

Tata Consumer on Monday reported consolidated group net profit of ₹470.14 crore for the September quarter of FY27, up 15.6% from a year earlier. Consolidated revenue rose 14% year-on-year to ₹5,661.13 crore, the company said in an exchange filing.
The company has also raised prices of tea and salt. D’Souza said the increases would not affect its market share, as the broader rise in input costs was also putting pressure on smaller competitors. Higher costs of plastic packaging, fuel and freight have contributed to inflation, he said.

“That inflation affects me as much as it affects all the smaller retailers. So it's not that I'm leaving money on the table for the smaller retailers to take,” he said, adding that smaller players would also raise prices in response to these external cost pressures.

Consumers are also shifting towards premium salt varieties, including Himalayan and low-sodium options. Tata Consumer’s value-added salt segment grew 17%, D’Souza said.

Consolidated earnings before interest, taxes, depreciation and amortization (Ebitda) margin expanded by 40 basis points to 14% in the September quarter. “Price hikes in salt/tea, cost savings and lower coffee prices could support Ebitda margin expansion in FY27,” analysts at ICICI Securities said in a report dated 27 October.

However, the broader fast-moving consumer goods (FMCG) sector continues to face demand challenges. D’Souza flagged concerns about the outlook as inflation rises and consumer demand weakens.

“When I look at the external indicators, whether it is inflation moving to 5-6%, food inflation moving to 6-7%, I think Nielsen shows both urban and rural demand now starting to hit negative territories. That's a bit of a worrying prospect for the future,” he said.

AI deployment

Tata Consumer is deploying artificial intelligence across its operations, prioritizing revenue growth before cost savings.

“We're first deploying it for top line efficiencies and then we'll come to cost,” D’Souza said. “Whoever gets the top line drive earlier, is going to get an edge in the market. That's the logic that we follow.”

The company has deployed AI tools across about 1,600 sales representatives. The systems provide store-level priority prompts, contact retailers directly when sales representatives miss visits, and help replace physical calls that generate low productivity.

In production, AI systems assess 130-160 different types of plucked tea leaves at plantation factories. The assessments provide small growers with objective inputs on quality and pricing, reducing the need for manual price negotiations and the scope for bias.

“We expect medium-term growth to be led by growth portfolio, premiumisation, distribution transformation, quick-commerce (QC), product launches/innovations, AI-led productivity gains, and rising penetration,” ICICI Securities analysts said.UMBAI: The benefits of reorganising Tata Consumer Products’ distribution model is powering the growth of more products according to managing director and chief executive officer Sunil D’Souza.

“I think we've unlocked our growth by doing the split and segmented distribution right,” said D Souza to Mint.

Tata Consumer Products compalted the revamp of its distribution strategy earlier in February. Markets with a high salt contribution were divided into salt and non-salt distributors. Where both tea and salt were strong, the distributors were divided into core and growth portfolio distributors.

“What that has done, it has not only given a fillip to the growth portfolio by focusing distribution on that, but unlocked growth territory for our salt distributors” he said.
D'Souza said this has helped the company achieve underlying volume growth at 11% despite price hikes in products like tea and salt. The salt segment revenue grew 15%, and volumes 9% YOY in the quarter.

‘Growth businesses’ including ready-to-drink beverages, Tata Sampann, Capital Foods and Organic India crossed the ₹4,000 crore revenue milestone in FY26, with a growth of 24%.

This has emerged into a growth engine for TCPL. ‘Growth businesses’ grew 40% in the second quarter and scaled to 38% of the India business. The Tata Sampann portfolio, which includes spices, oils and ready-to-cook products, reported 57% year-over-year growth, driven by volume. The company’s dry fruits and cold-pressed oils reported a combined annual recurring revenue of ~ ₹1,000 crore.

Strong quarter, price hikes on tea, salt

Tata Consumer Products Ltd on Monday reported consolidated net profit of ₹470.14 crore for the September quarter (Q2 FY27), up 15.6% year-on-year and consolidated revenue stood at ₹5,661.13 crore, up 14% on-year, the company said in an exchange filing.

TCPL also hiked prices for tea and salt recently. D’Souza said that these price hikes would not affect market shares. General inflation has hiked prices of major raw materials like plastic packaging, fuel and freight. “That inflation affects me as much as it affects all the smaller retailers. So it's not that I'm leaving money on the table for the smaller retailers to take,” he said. He added that these smaller players will also be hiking prices due to these external factors. Additionally, Indians are moving into more premium salt varieties like Himalayan, low sodium variants etc. and value-added salts have grown by 17% for TCPL.

Consolidated Ebitda (Earnings before interest, taxes, depreciation, and amortization) margins for the quarter grew 40 basis points to 14% for the company. “Price hikes in salt/tea, cost savings and lower coffee prices could support Ebitda margin expansion in FY27,” analysts at ICICI Securities said in a 27 October report.

While broader FMCG urban general trade demand faces headwinds from 5–6% inflation, D’Souza believes TCPL remains shielded as consumers prioritize essential daily staples (salt, tea) over discretionary personal care. “When I look at the external indicators, whether it is inflation moving to 5- 6%, food inflation moving to 6-7%, I think Nielsen shows both urban and rural demand now starting to hit negative territories. That's a bit of a worrying prospect for the future,” he said.

TCPL is deploying across its operations to boost topline growth. “We're first deploying it for top line efficiencies and then we'll come to cost,” he said. “Whoever gets the top line drive earlier, is going to get an edge in the market. That's the logic that we follow,” he said.

It has deployed AI services to about 1,600 sales representatives where AI systems provide store-level priority prompts, call retailers directly when rep visits are missed, and replace low-productivity physical calls. In the production process, the AI system evaluates 130 to 160 different types of plucked tea leaves at plantation factories, providing objective quality and pricing assessments for small growers without manual price negotiations or bias.

“We expect medium-term growth to be led by growth portfolio, premiumisation, distribution transformation, quick-commerce (QC), product launches/innovations, AI-led productivity gains, and rising penetration,” analysts at ICICI said.

Shares of the company rose as much as 6.63% on the national stock exchange early on Tuesday while the NIFTY FMCG index is down 0.08%.