December 2023 | 1679 words | 6-minute read
How many companies can boast of a 17% annualised revenue growth over the last three years, with some new businesses growing to 53%? And an average of three new launches per month in one financial year? Since its incorporation in 2020, Tata Consumer Products has been steadily capturing the Indian fast-moving consumer goods (FMCG) market with an array of products to meet ever-changing customer needs.
Rapid portfolio expansion, backed by research and development (R&D), has been one of the key enablers for growth. Over the last year, the company has accelerated its pace of innovation, launching first-of-its-kind and differentiated products to enter new categories, undertaken significant portfolio extensions, tapped into new consumption occasions, and identified five key segments for growth — the core (tea, coffee, salt), pantry (pulses, spices, staples, ready-to-cook, dry fruits), liquids (water, ready-to-drink), mini-meals (breakfast cereals, ready-to-eat, snacks), and Horizon 3 (protein-based segment that includes plant-based meats and supplements).
“Since 2020, we have launched 70 new products in the market and in FY23 alone we launched 34,” says Vikas Gupta, Head – Global R&D, Tata Consumer Products. In FY20, innovations contributed to 0.9% of sales and increased to 3.4% in FY23. “Our target is to get to an innovation to sales ratio of 5%, which is best-in-class for the FMCG industry, in the next few years.”
The company is targeting 15-20% product launches that are disruptive in nature. So far, 24% of the company’s new innovations have been focused on health and wellness. These launches are a direct response to gaps in the current market.
“Over the past three years, we have put in place a strong foundation to becoming a leading FMCG company in India,” says Mr Gupta. “Our transformation journey includes strengthening and accelerating the core business, driving digital and innovation, creating a future-ready organisation, embedding sustainability, unlocking synergies, and exploring new opportunities. We’ve made significant progress on expanding our total addressable market reach, gaining a strong footing in our core businesses, and picking up our innovation momentum.”
Growing the R&D infrastructure
Over the last few years, the company has focussed on streamlining the business, while investing heavily in technology, leading to sharper, data-driven decision making. It devised a ‘fit for future’ R&D structure to enable timely delivery and nurture disruptive ideas, consumer centricity and an outside-in approach.
The company has heavily invested in R&D infrastructure, with ~20,000sq ft facilities across India, in Bengaluru, Mumbai and Sri City, to future-proof its innovation capabilities. There’s also an R&D facility in London, UK, for the international beverages business. The R&D expenditure in FY23 alone was Rs 36.35 crore. The company’s R&D teams also leverage academic and industrial partnerships for product development. In the last year, Tata Consumer Products has collaborated with the Council of Scientific Research labs like the Central Salt & Marine Chemicals Research Institute in Bhavnagar, Indian Institute of Toxicology Research in Lucknow, and Indian Council of Agricultural Research’s Indian Institute of Millets Research in Hyderabad for new technology opportunities and claims development.
A recent innovation is the proprietary microwave assisted thermal sterilisation (MATS) technology that helps the company create products that can be stored at room temperature (ambient supply chain), while preserving their texture. This technology has helped it reimagine the ready-to-eat (RTE) and ready-to-cook (RTC) segments. Another advancement is the patented granulation technology for double fortified salt. It was developed in-house to ensure the stability of iron granules added to tackle iron deficiency.
- Brand presence across 40 countries
- Built ‘fit for future’ R&D infrastructure; ~20,000sq ft world-class R&D facilities in India
- 34 new launches in FY23 —twice as many as in FY23
- Innovation to sales ratio increased from 0.9% in FY20 to 3.4% in FY23
- Growth businesses registered 53% year-on-year growth in FY23
Revitalising the product portfolio
Tata Consumer Products has leveraged digital and artificial intelligence (AI) to connect with consumers to understand their needs, map white spaces, and identify key trends and categories it wants to be in. This led to the launch of several innovations that focused on health and wellness like Tata Salt Iron Health, a category first in iodised salt with added iron. The thrust on innovation has increased the value-added salts portfolio from <1% of the total salt business in FY20 to 5%+ in FY23.
The company strengthened its branded coffee portfolio with offerings like the first-of-its-kind Tata Coffee Cold Coffee liquid concentrate range and Tata Coffee Grand Premium, with flavour-locked decoction crystals. The Tata Gluco+ range, with electrolytes and iron and no carbonation, is a healthy alternative in the energy drinks segment. And the introduction of Tata Gluco+ in a jelly format offers consumers a unique experience in the snacking and refreshment space.
As part of its strategy, the company has also identified four white spaces for expansion — plant-based meats, protein supplements, RTE and RTC. “Before entering white spaces, we develop a targeted understanding of our consumers, enhance our internal capabilities, innovate within established parameters, expand our total addressable market, and tap into new consumption occasions,” said Mr Gupta.
In FY23, Tata Consumer Products launched two brands in these white spaces — Tata Simply Better in the alternate meat category and Tata GoFit in plant-based supplements. The company is looking to have an early mover advantage here. As per company estimates, the Indian protein supplement market is expected to reach Rs 5,000 crore by 2027, while the plant-based meat/alternate protein market in India is expected to reach Rs 3,200 crore by 2025.
“We are sharply focused on consumer trends and, therefore, all our launches have been targeted to provide great taste along with health and wellness, convenience, and premiumisation, as well as options in lifestyle categories like alternate meat and plant protein,” says Mr Gupta.
Tata Sampann Yumside and Tata Raasa mark the company’s foray into the RTE and RTC gravies and pastes categories. The innovative and differentiated products are manufactured using MATS food processing technology that retains nutritional components, flavour, and texture. While Tata Sampann Yumside has entered the B2B segment with bulk packs in addition to its B2C presence, Tata Raasa is exploring international markets, leveraging the company’s existing footprint to make an impact.
Going mainstream with millets
In FY22-23, the company’s R&D team initiated two AI pilots in Indian and international markets to identify actionable insights. “We were able to map interesting insights on millets and cereals as a platform, across various trending product formats,” says Mr Gupta. “This has been incorporated in our plan for 2023 to leverage the International Year of Millets.”
Since its acquisition in 2021, Tata Consumer Products’ millets business, Tata Soulfull, has grown almost threefold and the company is banking on it becoming a mainstream category. It has expanded its snacking portfolio by launching Tata Soulfull Masala Oats+ with 25% millets and Tata Soulfull millets muesli with 25% millets.
Adopting a hyperlocal strategy
Acting on AI-driven insights, the company further expanded its hyperlocal brand-building strategy. In FY23, it launched products to cater to regional preferences. These include the Tata Sampann range of spices specially blended and curated for the South Indian palate; Shuddh iodised salt that is sold in select states to combat low consumption of iodised salt; Street Chais of India that bring home the flavours of chais from the streets of Hyderabad, Kolkata, Mumbai, and Delhi; and Tata Fruski Juice N Jelly range inspired by local Indian flavours.
Fuelling packaging innovation
Tata Consumer Products further augmented its ‘for better living’ strategy, which addresses customers’ shifting consumption preferences and interest in sustainability. Through ‘pack-o-vation’, the company is driving packaging excellence across new launches.
In FY23, sustainable packaging initiatives resulted in a reduction of over 900MT in material consumption. In India, 68% recyclable laminates were used in salt packaging in FY23. Internationally, Good Earth and Teapigs ranges have stayed a step ahead and were one of the first to offer 100% plant-based packaging. In the UK, Tetley participated in trials with Loop, the zero waste-to-landfill refill service, for reusable cannisters. All these initiatives are part of the company’s commitment to use 100% recyclable, compostable or reusable packaging materials across all geographies by 2030.
The company’s various ‘pack-o-vation’ efforts won them 12 packaging design awards in the last year alone. This includes recognitions for Sonnets by Tata Coffee, Tata Coffee Cold Coffee, Himalayan Preserves and Honey, Tata Soulfull combos, and Tata Sampann RTE packs.
Capitalising on digital adoption
Innovation was also infused into the business through the adoption of digital tools across the value chain. The innovation review management system was digitised, simplifying the governance process, enabling cross-functional teams to churn out quicker product launches.
“On the distribution front, we have crafted an agile, scalable, and sustainable model to support core business and foster new product development (NPD),” says Mr Gupta. “The market opportunity is assessed at a category level to ensure successful launches, with necessary stock and point-of-sale materials arranged for each NPD. Additionally, a robust framework for feedback has been established to course correct and drive efficiency.”
The pandemic changed buying patterns, with consumers shifting online, giving impetus to modern trade and e-commerce. Recognising the potential for new opportunities, the company extended its reach through e-commerce and direct-to-customer (D2C) channels for Tata Soulfull, Tata Tea 1868, Sonnets by Tata Coffee, Tata Simply Better and Tata Gofit in India, and Tetley, Good Earth and Teapigs internationally.
As part of its D2C strategy, Tata Consumer Products is planning a phased expansion of its flagship online store, Tatanutrikorner.com, in India. In FY23, modern trade contributed 14% and e-commerce channels contributed 9% towards India sales. New product introductions contributed 10%+ to overall e-commerce sales in India.
With its restructuring of R&D capabilities, investments in consumer science, acceleration in digitisation, and entry into new channels of distribution, Tata Consumer Products is on the path to transforming itself into a best-in-class FMCG company.