The Ayurveda Company (T.A.C.), a D2C personal care brand, is setting its sights on reaching 50,000 points of sale in the general trade (GT) market across tier 2 and tier 3 towns by Diwali 2024. This ambitious target aligns with the pan-India launch of TAC Bharat, as detailed in a recent media release.
The company is strategically expanding the reach of its new collection to areas that currently lack online retail services. This initiative aims to foster stronger connections with diverse consumer segments and gain valuable insights into their preferences and needs.
Param Bhargava, Founder at T.A.C said, “The name TAC Bharat embodies our commitment to growth and new opportunities in India’s rising towns, mirroring the dreams of its young people. The product designs are aligned with our distribution model, ensuring success in these markets. This channel will enable us to achieve profitability by FY 2025.”
“Our target is to reach 50K touchpoints by Diwali 2024, supported by media and BTL activations & building an entire network on the cash & carry model,” said Sanjiv Gupta, the chief advisor at T.A.C.
Additionally, T.A.C. has appointed Mukund Raut as the head of marketing, where he will play a crucial role in building the brand for the general trade market with strong demand generation inputs.
As per the company’s statement, Shekhar Singh, the vice president, will lead the offline team in spearheading the development of the entire front end. This encompasses the strategic hiring of over 100 super stockists and the onboarding of more than 800 distributors within the calendar year, capitalizing on their extensive sales expertise.
Additionally, the D2C firm is set to launch more products and expand its product line to solidify its position as a growing brand in the Ayurvedic lifestyle sector, backed by experts.
Starbucks, the US-based coffee chain, recently unveiled a new store at Mannat Haveli in Murthal (Sonipat) along the Chandigarh-Delhi highway, as announced by a company official on social media.
“Finally, we have launched a Starbucks store in the hottest FnB hub of North India, Murthal (Sonipat) at Mannat Haveli on the Chandigarh-Delhi highway. We will be open 24*7 to serve you, making this first Starbucks store on a highway to operate round the clock,” said Rahul Chaudhary, Business Development – North, Starbucks India in a LinkedIn post.
“So next time when you stop at Murthal to grab your parathas, do pair it up with a cup of your favourite Starbucks coffee while sitting inside the store enjoying the cosy interiors or enjoying your beverage outside under the night sky in our aesthetic outdoor seating area,” Chaudhary added.
As per reports, about 6% of Starbucks’ 390 locations in India, totaling around two dozen stores, are currently run exclusively by female staff.
In 2023, Starbucks expanded its presence in India by inaugurating 71 new stores, entering 15 additional cities. The Seattle-headquartered beverage company expressed its commitment to doubling its workforce, aiming for approximately 8,600 partners. This growth strategy includes penetrating tier 2 and 3 cities in India and expanding services to encompass drive-thrus, airports, and 24-hour store formats to meet the diverse needs of customers.
Starbucks outlets in India are managed by Tara Starbucks Ltd., a joint venture equally shared between Seattle’s Starbucks Coffee Co. and Tata Consumer Products Ltd. Since its inception in 2012, the brand has experienced successful growth, with a presence of over 390 stores spanning 54 cities in India. With an employee base of around 4,300, Tata Starbucks has emerged as a significant player in the Indian coffee market. Setting ambitious goals, Tata Starbucks envisions operating 1,000 stores in India by the year 2028.
Raymond, a diversified group, reported a nearly twofold increase in its consolidated net profit for the December quarter of Financial Year 2024, reaching INR 185.39 crore. This significant growth was driven by robust performances in the real estate and branded apparel segments.
According to a regulatory filing by the company, it recorded a net profit of INR 96.60 crore in the October-December period of Financial Year 2023.
The revenue from operations increased to INR 2,386.16 crore from INR 2,188.16 crore in the corresponding period of the previous year.
“The improved operating and financial performance during the quarter was led by strong revenue growth of 50% in real estate business and over 20% in the branded apparel business,” said an earning statement from Raymond.
This was “10th consecutive quarter of profitable growth,” it added.
In the December quarter, the total expenses of the firm controlled by the Singhania family amounted to INR 2,198.06 crore, marking an 11.16% increase.
The total income increased by 11.4% to reach INR 2,450.32 crore.
In the quarter, the textile segment generated revenue of INR 908.92 crore, while the shirting segment contributed INR 214.39 crore, experiencing double-digit growth across all brands.
Growth in the shirting segment reflects a strategic emphasis on casualisation and the introduction of newer designs. The segment reported an EBITDA margin of 13.9% led by revenue growth & operational efficiencies, it said.
The apparel segment reported a revenue of INR 437.25 crore while garmenting section recorded a revenue of INR 281.19 crore driven by sustained demand in the US & Europe markets.
In garments, “EBITDA margin for the quarter stood at 10.8% mainly due to operational efficiency,” it said.
Within the engineering segment, the revenue from Raymond’s tools and hardware business was INR 107.59 crore, while the auto components segment contributed INR 109.27 crore.
The revenue generated from real estate and property development in the December quarter amounted to INR 438.98 crore.
“The business showcased a strong sales performance with 50% growth to INR 439 crore from INR 292 crore in the same quarter the previous year showing customer confidence and acceptance of our high-quality product coupled with a fast-paced construction momentum in the ongoing projects,” it said.
Meanwhile, in a separate filing, Raymond said its board in a meeting held on Thursday approved the winding up of Raymond Lifestyle (Bangladesh), a wholly-owned subsidiary of the company.
Raymond Bangladesh was incorporated to carry out apparel trading business in Bangladesh. However, it has not yet commenced any business activities and accordingly, it was considered to wind up the company.
Shares of Raymond Ltd on Thursday settled at INR 1,776.40 apiece on BSE, up 0.06%.
Executives representing leading FMCG companies have praised the Interim Budget 2024, displaying confidence in the government’s commitment to fostering inclusive and sustainable growth for India.
As Finance Minister Nirmala Sitharaman presented the Budget in Parliament on February 1, the industry views it as laying the foundation for inclusive growth, leading to ‘Sabka Vishwas’ (everyone’s trust). The synergy of demography, democracy, and diversity, supported by ‘Sabka Prayas’ (everyone’s efforts), has the potential to fulfill the aspirations of every Indian.
Sharing his reaction on the Budget 2024, Krishnarao Buddha, Senior Category Head, Parle Products said, “During its final budget presentation before the upcoming elections, the government’s strategic approach appears to be focused on empowering rural India.”
The budget emphasizes support for the underprivileged – ‘Garib,’ ‘Mahilayen,’ ‘Yuva,’ and ‘Annadata’ (the poor, women, youth, and farmers).
“With these initiatives, we can expect a good response from the rural markets for FMCG in the mid to long term,” Buddha said.
Angshu Mallick, the Managing Director and CEO of Adani Wilmar, expressed appreciation for the government’s commitment to transforming India into a developed economy by 2047. He particularly commended the innovative implementation of Nano-DAP in agricultural areas, highlighting its capacity to empower farmers and promote environmentally sustainable practices. Additionally, he recognized the significance of the ‘Atmanirbhar Oilseeds Abhiyaan,’ considering it a crucial initiative aimed at attaining self-sufficiency in oilseed production.
Resonating the thoughts, Buddha said, “This interim budget signals a step towards an Atmanirbhar Bharat, reducing reliance on imports and boosting the rural FMCG sector. With no changes in direct or indirect taxes, it ensures continuity and simplicity for consumers. Overall, this budget is a positive step towards sustainable growth and empowerment.”
Further, highlighting the budget’s deep commitment to long-term economic growth, Aasif Malbari, CFO, Godrej Consumer Products Limited (GCPL) said, “Continuing the path of fiscal consolidation is a positive sign for overall economic growth, which has the potential to boost consumption patterns in the long run.”
Malbari also observed encouraging indicators for overall economic growth and praised the emphasis on improving connectivity and infrastructure, signaling positive prospects for India Inc, including the FMCG sector.
While appreciating the emphasis on post-harvest activities, Nano-DAP application, and the Atmanirbhar Oilseeds Abhiyaan, Manish Aggarwal, Director, Bikano, Bikanervala Foods said, “We believe that additional support for domestic manufacturing, particularly incentives for local production of raw materials and packaging through schemes like PLI for the food processing industry, could have further bolstered the FMCG sector.”
Demonstrating optimism regarding the interim budget’s potential to keep the fiscal deficit in check, Meghal Sheth, Chief Financial Officer of Mars Wrigley India, commended India’s robust economic growth. He expressed admiration for the diverse set of initiatives focused on promoting investments, advancing renewable energy, and championing sustainability. Sheth believes that the government’s ambitious push to enhance domestically produced goods will strengthen manufacturing capabilities, stimulate job creation, and foster comprehensive economic development.
Lauding the government’s commitment to realizing the vision of making India a Viksit Bharat by 2047, Saugata Gupta, MD & CEO of Marico, also expressed appreciation for the substantial increase in capital expenditure allocation, fiscal prudence, and the establishment of a corpus for low or nil-interest-rate loans to promote entrepreneurship and innovation.
Finance Minister Nirmala Sitharaman presented the Interim Budget in the Parliament on February 1, outlining key plans for India’s economic growth. While the budget touched upon various sectors, leaders from the food industry expressed mixed reactions to the proposals.
Reacting to the pre-election Budget, Rajat Agrawal, CEO of Barista, said, “Govt has played safe with this budget, not much has changed as expected. Industry was looking forward to some much-awaited announcements which have still been parked for later.”
Agrawal specifically highlighted the issue of Input Tax Credit (GST), calling it a long-awaited agenda for the Food and Beverage (F&B) segment. He emphasized the need for the Finance Ministry to address GST credit on capital spending to alleviate the increased cost of doing business and thin profit margins.
“The Finance ministry should have at least looked at GST credit on Capital spend if not operations to start with. Cost of doing business has gone up significantly and margins are thin on account of non-availability of input tax impacting the overall business performance and returns,” Agrawal stated.
He proposed measures such as “special performance-linked incentivisation for brands opening up the network in tier 1 & tier 2 cities” and “cheaper credit for activation of easy and subsidised credit for business.”
Nirmala Sitharaman, in her budget speech, committed to promoting private and public investments in post-harvest activities, including aggregation, modern storage, supply chains, processing, and branding. Abhishek Sinha, CEO of GoodDot, welcomed the focus on post-harvest activities and the Atma Nirbhar Oil Seeds Abhiyan, emphasizing their positive impact on manufacturing and agri-processing.
Sinha also appreciated the government’s commitment to ‘Net Zero’ by 2070 and urged the promotion of plant-based proteins for their multi-dimensional benefits.
“On a long-term horizon, it’s good to see GoI’s commitment to meet ‘Net Zero’ by 2070 through viability gap funding for wind energy, roof solarization, adoption of e-buses for public transport network and strengthening the e-vehicle ecosystem manufacturing and charging infrastructure,” Sinha commented.
Prabhu Gandhikumar, Founder of TABP Beverages and Snacks Pvt. Ltd, also lauded the government’s focus on encouraging post-harvest food processing. He said, “Combining this with significant investment in road and rail infrastructure will act as a multiplier effect for companies in the food processing sector.”
However, concerns were raised by Firoz H Naqvi, Founder & Director at Federation of Sweets & Namkeen Manufacturers (FSNM), regarding the absence of specific measures for the food processing sector. According to a report by IMARC Group, the Indian sweets market is experiencing rapid growth and is projected to reach INR 25,970.8 Crore by 2032, with a Compound Annual Growth Rate (CAGR) of 16.67% from 2024 to 2032.
Amidst this swift expansion, the sweets and namkeen industry had high hopes for clarity on the Goods and Services Tax (GST) issue and relief through the reduction of regulations.
“The Indian sweets and namkeen industry, in particular, has been eagerly awaiting clarity on GST issues, which unfortunately remain unaddressed. It is crucial for the industry to receive the necessary attention and consideration, including a reduction in regulations and the creation of a conducive business environment,” Naqvi stated.
Finance Minister Nirmala Sitharaman, while presenting the budget, also highlighted the government’s distribution of 30 Cr loans to women entrepreneurs under the Pradhan Mantri MUDRA Yojana (PMMY) in the last 10 years. Nearly 70% of these loans were extended to women entrepreneurs.
“The empowerment of women through entrepreneurship, ease of living, and dignity for them has gained momentum in these ten years,” Sitharaman said in her speech.
Nidhi Singh, Co-Founder of Samosa Singh, commended the budget’s commitment to fostering economic growth, supporting initiatives like PM Mudra Yojana. Singh stated, “The 2024-2025 budget reflects a commitment to fostering economic growth by supporting initiatives like PM Mudra Yojana, emphasizing the importance of empowering women and MSME. A step towards inclusive prosperity and sustainable development.”
Mondelez International reported an increase in sales for the fourth quarter; however, the impact of price hikes negatively affected volumes. The rise in prices led to reduced demand for Cadbury‘s chocolates and salty crackers, causing a decline of over 2% in the company’s shares after the market closed.
Although the Toblerone parent company experienced an improvement in its profit margin due to price increases throughout fiscal 2023, it is currently witnessing a decline in demand as financially constrained consumers reduce their spending.
In the North America segment, Mondelez observed a 5.5 percentage points (pp) decrease in volume during the fourth quarter, attributed to lower biscuit sales and inventory control. This is a shift from the 4.6 pp increase seen in the preceding quarter. Meanwhile, product prices in the region experienced a 7.4 pp rise.
The manufacturer of Ritz crackers mentioned that it anticipates customer disruption in Europe during the first quarter, potentially extending into the second quarter, due to persistent high inflation.
The company disclosed a general volume decrease of 0.4 percentage points in the quarter, aligning with other consumer staples companies like McCormick, all grappling with the impact of substantial price hikes.
“While other CPG brands that leaned on price hikes to drive growth had seen volumes decline in Q3, Mondelez managed to grow its volumes. But now Mondelez’s price hikes are catching up to it,” said Insider Intelligence analyst Zak Stambor.
The gross profit margin, standing at 37.3%, surpassed market expectations of 36.7%, although it was slightly lower than the 38.7% recorded in the previous quarter.
In the quarter ending on December 31, net revenue increased by 7.1% to approximately $9.31 billion, in line with the average estimate of analysts, as per LSEG data. This compares to $8.70 billion reported a year ago.
Mondelez, along with Starbucks, highlighted the negative impact on its business resulting from the Israel-Hamas conflict.
“There is some tensions in the Middle East, and that has some effect on Western brands, and we have some of those Western brands,” Mondelez executives said in a post-earnings call.
For 2024, the company anticipates organic net revenue growth ranging from 3% to 5% and foresees a high single-digit rise in adjusted profit per share on a constant currency basis.
As per a Reuters report, there has been a decline in the frequency of Indians dining out for pizzas and burgers, as indicated by the third-quarter results of local franchisees of Domino’s and McDonald’s on Wednesday. Analysts have pointed out that intense competition and inflation suppressing demand are likely to exert pressure on their earnings in the short term.
Jubilant Foodworks, the operator of Domino’s restaurants, reported an unexpected fall in profits, while Westlife Foodworld, which manages McDonald’s restaurants in south and west India, posted a larger-than-anticipated decline in profits.
Despite quick-service restaurant (QSR) operators in the country implementing various strategies such as introducing more affordable menu options, offering increased discounts, and reducing packaging costs, their efforts to boost demand and encourage more frequent dining out among Indians have proven unsuccessful amid high inflation.
These companies were among the major beneficiaries during the festive season last year, as Indians started to dine out more frequently following several pandemic-affected years.
The demand slowdown after 2023’s high base has not only dragged their earnings but has also resulted in negative same-store-sales growth (SSSG), deviating from the usual 5%.
Although the weakness in demand “may be approaching the bottom,” reaching the earlier levels of same-store-sales growth (SSSG) is unlikely for the industry, according to Karan Taurani, an analyst at Elara Capital.
Amnish Agarwal, an analyst at Prabhudas Lilladher, suggests that the margins of the two companies are not expected to experience a “significant recovery.” Taurani also adds that escalating competition from smaller players will continue to keep margins “strained.”
Jubilant reported a profit of 657.1 million rupees ($7.9 million), marking the fifth consecutive quarter of decline and significantly below analyst estimates of 902.6 million rupees. Additionally, its revenue growth decelerated for the seventh consecutive quarter.
Meanwhile, Westlife reported its first decline in revenue in three years. Its profit of 172.4 million rupees fell significantly short of analyst estimates, which projected 331.1 million rupees, according to LSEG data.
Consumer goods companies have indicated that, while the interim budget may not promptly initiate a consumption revival, an enhanced emphasis on rural housing and post-harvest activities could potentially stimulate demand for daily household products and groceries in villages over the long term.
The overall growth of the fast-moving consumer goods segment has been hampered by sluggish demand in rural markets for the past two years. Companies suggest that rather than relying on budget incentives, a normal monsoon and a successful harvest could accelerate the recovery of rural areas.
“The budget was not a booster dose to recover things immediately, but more of a vision on how the economy will shape up in the next five years,” said Angshu Mallick, chief executive of edible oil major Adani Wilmar.
“Rural income recovery in the short term will be dependent on agriculture production and this year’s monsoon,” he added.
In the last ten years, the sales of branded daily necessities in the country of 1.4 billion people have become increasingly dependent on rural India. With over 800 million residents, the purchasing patterns in rural areas are closely tied to agricultural output. For instance, the rural regions, constituting nearly 40% of the entire FMCG market, experienced a significant decline in demand for a year, attributed to inflation and unpredictable monsoons.
Finance Minister Nirmala Sitharaman stated that they are close to achieving the target of three crore under the rural housing scheme. Additionally, two crore more houses are planned for construction in the next five years under Pradhan Mantri Awas Yojna – Gramin. Consumer goods companies believe that rural income will improve in the mid-to-long term.
B Krishna Rao, senior category head at Parle Products, mentioned that the interim budget has addressed nearly all consumption classes in rural India, including agriculture, dairy farmers, and women. However, he emphasized that it will take some time for real income to increase as these measures require time for implementation.
“These will result in consumption increase in the next 2-5 years,” he said.
The budget also presented a broad framework for amplifying government spending across various schemes targeting farmers, women, self-help groups, and youth. Furthermore, there is a proposal to augment the allocation for programs like the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA). In the upcoming fiscal year 2024-25, the allocation under MGNREGA is set to increase by 43%, reaching INR 86,000 crore.
Aasif Malbari, the Chief Financial Officer at Godrej Consumer Products, expressed positivity about the interim budget’s commitment to fiscal consolidation. He sees it as a favorable indicator for overall economic growth, anticipating a potential boost to consumption patterns in the long term. Malbari also noted that the emphasis on improving connectivity and infrastructure is advantageous for the FMCG sector.
Sales of items such as refrigerators, washing machines, and televisions also rely on rural areas, accounting for approximately 30-40% of the overall market share.
Kamal Nandi, the business head of Godrej Appliances, stated that the interim budget has set the groundwork for enhancing rural income and discretionary spending in the medium to long term.
“At present, inflation is affecting discretionary spending where some actions would have helped,” he said.
While rural demand, which was previously growing at twice the rate of urban areas, experienced a decline last year, it is still growing at a slower pace compared to cities. For instance, during the quarter ending in December, the rural market expanded by 1%, whereas urban areas witnessed a 3% growth in terms of volume, reflecting the actual number of products people added to their shopping baskets.
Roosevelt Dsouza, Head of Customer Success for India at NielsenIQ, an FMCG industry researcher, expressed that initiatives providing free food for rural India and employment opportunities have the potential to raise disposable incomes, consequently leading to an increase in expenditures on discretionary products.
“The emphasis on improved living standards through initiatives in housing, education, tourism, and loan schemes underscores a dedicated focus on consumer and industrial upliftment. The substantial increase in capital expenditure is poised to enhance existing infrastructure, stimulating production and generating employment opportunities in both urban and rural India,” said Dsouza.
Dsouza mentioned that the FMCG industry, especially in the food sector, received positive backing with plans aimed at achieving self-sufficiency in oilseeds. According to him, this could influence edible oil prices and consumption patterns.
The National Association of Street Vendors of India (NASVI) is set to host the “Noida Utsav,” a hyper-local street food festival in Noida from February 2 to 4. This event will bring together a diverse array of street food from across the country, consolidating them under one roof. NASVI, known for organizing the National Street Food Festival in Delhi for the past 13 years, is spearheading this initiative.
“After organising the festival in the national capital since 2009, we have decided to bring it to other cities, starting with Noida, in order to widen our horizons and offer more opportunities to micro entrepreneurs. The Noida Utsav will not only include street food vendors from across the country but also handicraft artisans in order to offer visitors an experience of shopping and savoring street delicacies, under one roof,” said Sangeeta Singh, street food programme head, NASVI.
Visitors will have access to a variety of street foods, including aloo chaat, malai kebab, afghani kebab, tava chicken litti, malaiya makhan, and kesariya doodh, as well as a selection of handicraft products such as carpets, khadi garments, tarkashi woodwork, and terracotta artifacts, she added.
The organizers asserted that the event would be a food festival with zero waste.
“This is going to be the first ‘zero waste food festival’ in Uttar Pradesh where no street food vendor will use any single-use plastic. We will provide all vendors leaf-based, wooden, and bamboo cutlery, and recyclable plastic containers. Every piece of waste will be segregated, and the organic will go for composting, while the package material will be sent for recycling. Materials that cannot be recycled or composted will be sent for up-cycling,” said Sanjay Gupta, a waste management expert working with the organisers.
Arbind Singh, the national coordinator for NASVI, stated that the festival seeks to promote street food vendors both nationally and internationally, offering them improved livelihood opportunities.
“Through Noida Utsav, street food vendors as well as budding artisans and performers will get a chance to showcase their talents. There will be 50 vendors from across the country putting up stalls at the festival. Panel discussions will also be held to provide training to micro entrepreneurs and make them aware about better market understanding, mudra loans, and other schemes of the government,” said Singh.
Sugar stocks displayed a mixed performance on February 1 as Finance Minister Nirmala Sitharaman omitted any reference to concessions sought by the sugar industry in her address.
In December 2023, the government temporarily prohibited and later permitted the utilization of sugarcane juice and B-heavy molasses for ethanol production. However, the diversion of sugar was capped until the conclusion of the 2023-24 sugar season, which ends in September of the current year.
The government also recently introduced an incentive for ethanol produced from maize, indicating its reluctance to redirect significant amounts of sugarcane for ethanol production. The diversion of sugarcane sucrose for ethanol could result in an increase in sugar prices, an outcome undesirable for the government, especially in an election year.
During the pre-Budget survey, the Indian Sugar Mills Association (ISMA), a lobbying group representing sugar producers, expressed its desire for the government to permit an extra 10-12 lakh tonnes of sucrose diversion for ethanol production. They argued that even with the allowance for additional sugar to be used in ethanol production, the closing sugar balance would still be adequate for the initial months of the upcoming season.
Additionally, they emphasized that the sugarcane crop exhibited greater efficiency in terms of water, nutrient, and land use, as well as carbon sequestration, in comparison to maize. Consequently, they argued that sugarcane deserved greater support from the government.
The lobbying group also urged the government to increase the procurement cost of ethanol derived from sugarcane juice/syrup, B-Heavy Molasses, and C-Heavy Molasses.
Moreover, the industry sought an increase in the minimum support price (MSP) of sugar, proposing a raise to INR 38 per kg from the existing INR 31 per kg.
The government set the minimum support price (MSP) for sugar at INR 31 per kg in February 2019, and this rate had remained constant since. In contrast, the fair and remunerative price (FRP), which sugar mills are obligated to pay sugarcane farmers, increased from INR 2,550 per tonne in 2017-18 to INR 3,050 per tonne for the 2022-23 period.
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