Tata Group to focus on coffee as core business category for future

Puneet Das, President, Tata Beverages

Tata Group plans to intensify its focus on branded coffee as part of its strategy of “building core categories for the future.”

“Coffee is clearly an opportunity that is staring us in our face. We are now on the right trajectory in the coffee business and we have to maximise our offerings and up our coffee play,’‘ Puneet Das, President, Tata Beverages told TheHindu.

Tea and salts have so far been Tata’s core categories and the company said it was currently in the process of building more core categories for the future and coffee was clearly a prominent one.

“We were negligent players in coffee. But in the last three years we have increased our focus on coffee. Last year we grew 31%, last quarter saw coffee growing 21%, overall we are seeing double digit growth in this segment and will continue to grow in the 30% range in the future as well,” Mr. Das said.

According to him, the idea is to actively participate in the growth of the mass instant coffee sector, where 60% of sales still come from South India.

“We are investing in future growth. Opportunity is big and our mandate is to grow the category in size,’‘ he added.

Responding to a query on why Tata Group took several years before it got aggressive in the coffee market, he defended saying, “Previously the strategy and market focus was different. But between 2016 and 2020 we worked on finding the right products and testing them in the market.”

The merger of Tata Coffee Ltd. with Tata Consumer Products Ltd. (TCPL) in 2022 also emphasised focus on coffee. Tata group acquired Karnataka-based Consolidated Coffee Ltd. in 2000, yet it took several years for the company to take a plunge into the coffee market as it was mostly a South-centric beverage. In recent years, cafe culture has promoted coffee consumption across the country helping make coffee a pan-India beverage.

Branded coffee retail in India was a ₹3,200 crore business in FY23, growing 10.5% growth over the earlier year. Instant coffee accounts for 85% in terms of value while filter accounts for 60% in volume.

Mr. Das in his market commentary said that coffee was going through a bit of a headwind with commodity price fluctuations. “In the medium term it is expected to come down, but right now we see prices increase with inflationary pressures,” he noted.