Tata Tea plans to raise prices across its brands in the next few months to boost profit margins, which have been affected by higher input costs, a top official announced on Wednesday, October 23.
Higher input costs led to price surge – Tata Consumer CEO
According to ET Retail, Tata Consumer Products expects an increase in overall volumes, which had been affected by urban flooding, a sluggish rural economy, and a general slowdown in growth, said CEO and Managing Director Sunil A D’Souza.
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Meanwhile, the company reported a 1% profit increase in the July-September quarter, despite an 11% revenue jump. They believe tea prices have risen by over 25% this year due to supply disruptions.
It has begun taking “calibrated price increases” to avoid demand shock and stay competitive, D’Souza told. “… You would see some price implementations every quarter, if not a fortnight, and over a two-to-three-month period, we should be equalising margins,” he stated.
Tata Tea holds 28% of India’s tea retail market
Reports indicate that Tata Tea holds about 28% of the tea retail market in the country, competing with HUL. D’Souza explained that tea prices are up because overall production is down by 20%, and exports have increased.
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Furthermore, the tea board decided to stop plucking leaves at the end of November instead of mid-December, which will further impact supply. Regarding Starbucks’ 18% sales drop, D’Souza attributed it to urban flooding and the overall economy but mentioned that new product lines should help.
In addition, D’Souza said the company expects volume growth from improved rural demand, due to better monsoons and expanded distribution. They also announced a partnership with Salesforce to launch ‘Mavic,’ an integrated sales and service platform aimed at boosting revenue and cutting costs.
Still, he did not specify the benefits expected from the tie-up. Salesforce’s India head, Arundhati Bhattacharya, said the company grew 35% in FY24 from Indian operations and hopes India remains one of its fastest-growing markets.
