Tata Consumer Products is redrawing its entire sales and distribution system - Here is why

Tata Consumer Products Ltd is redrawing its entire sales and distribution system to be more direct, active and digitised and aims to double its direct reach in the next 12 months responding to the challenges of the coronavirus pandemic, a top company official said.

The Tata group FMCG firm is shifting its focus on innovation also and is targeting to double the contribution from new products. Besides, it is rebuilding its core business, creating capacity and is realising synergies from the integration of its food and beverage businesses in India.

Under its growth plans, Tata Consumer Products Ltd (TCPL), which recently bought out its JV partner PepsiCo in NourishCo Beverages, is also exploring both organic and inorganic opportunities in the segment.

"Our growth plans for FY21 will focus on executing our strategic plans, which includes building on our core businesses, jump shifting digital and innovation, realising synergies from the integration of our food & beverage businesses in India, stepping up our capability building agenda, exploring new opportunities organic and inorganic,? TCPL Managing Director & CEO Sunil D'Souza told PTI.

TCPL is making its entire distribution system to be more direct, active and digitised to double the direct reach in 12 months, he added.

"We expect to expand our direct reach by 2x in the next 12 months and target to double our total numeric reach in the next 36 months," said D'Souza.

After merging consumer products business of Tata Chemicals with Tata Global Beverages, the company was renamed TCPL and now owns brands like TATA Salt, TATA Tea, Tetley, Eight O' clock and Himalayan Water.

"The company would leverage its access to the Tata Chemical R&D centre for innovation agenda with a target of doubling the contribution from new products," said D'Souza.

It would be upping its digital quotient, which includes leveraging digital technology from the front-end starting with the salesmen and stockists level.

TCPL is linking the entire supply chain, including warehousing, manufacturing and procurement, for "faster decision making, better cost-effectiveness and a more seamless way of working, as also scaling up e-commerce capability across platforms for all our businesses in India and international, he said.
Over expansion of sales network, D'Souza said it would work on its supply chain, which is scalable and can be leveraged for any new category or business, which TCPL wants to bolt on in the future.

"As part of the integration of the food and beverage businesses, we have initiated a sales and distribution re-design. This will result in a flatter, more agile structure leveraging digital technology, which will help us further expand our direct reach, leverage revenue and cost synergy and help us serve the end consumer better," D'Souza added.

Besides, the company will also put in place a customised approach based on the characteristics of different channels such as wholesale, hot tea shops, premium grocery etc and have a dedicated team to serve them.

"There will be dedicated teams servicing alternative channels such as modern trade, e-commerce, institutions, food service and vending," he said.

Moreover, TCPL would also relook at the rural distribution model to strengthen it significantly, which is growing faster than the urban after vastly recovering from coronavirus-related disruptions.

"We believe that expanding numeric and weighted distribution across channels will help us strengthen our market shares in our core categories of tea and salt, as well as provide a significant growth platform for our new emerging portfolio of pulses, spices and coffee," he said.

"We have a proven track record of creating category-defining brands in commodity spaces, like Tata Tea, Tata Salt and Tetley. We see similar opportunities in the staples and packaged food space too.

Once we create the common platforms for execution, there are significant opportunities for us to move up the value chain into more value-added and premium products in the food and beverage space," he said.

While talking on the traditional retail format versus e-commerce, he said TCPL needs a mix of different go to market channels? to build a strong sales network and serve consumers effectively.

"It is important for us to strengthen and scale presence across all these channels. That's one of the reasons why we are putting in place a customised approach in our sales and distribution re-design with dedicated teams for different go to market channels. It is vital to stay close to the consumer so that we can quickly read consumer trends and changes in buying behaviour," he added.

TCPL had a revenue of Rs 5,690.24 crore in FY2019-20.