Tata Consumer to Prioritize Volume Growth Over Price Hikes: CFO Ashish Goenka Reveals Strategy

Tata Consumer Products: Volume-Driven Growth Strategy

Tata Consumer Products, India's largest tea producer, is adopting a volume-first strategy to achieve double-digit targets, rather than implementing large-scale price hikes. According to chief financial officer (CFO) Ashish Goenka, the company is banking on demand buoyancy fueled by cooling inflation and recent tax breaks.

The company is leveraging a premiumisation and mix improvement strategy to extract pricing opportunities, while maintaining benign tea and coffee costs. This approach is similar to that of market leader Hindustan Unilever, which has outlined plans to drive volume-led revenue growth while implementing "surgical price" increases where necessary.

In the third quarter of 2024, Tata Consumer witnessed a 3 percent growth in both volume and value, following the normalization of tea prices to 2024 levels. The company is also adopting a geography-specific approach, known as "tactical pricing," to identify pockets where it can extract value without national price hikes.

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The company's rapidly expanding growth portfolio, which includes Capital Foods, Organic India, Soulfull, and the ready-to-drink business, saw a 29 percent growth in the last quarter, driven largely by volume. This growth is supported by good demand traction across urban and rural markets, as well as lower inflation and tax breaks.

Key metrics for the third quarter of 2024:

• Net profit: Rs 385 crore, a 38 percent increase from the year-ago period
• Revenue: Rs 5,112 crore, a 15 percent increase from the year-ago period and the first time the company has crossed the Rs 5,000-crore mark in a quarter.