Since the US does not produce tea or coffee, the company expects a fairly level playing field in terms of competition.
Delhi, New Delhi: Given that the Western country imports all of its coffee, fast-moving consumer goods company Tata Consumer Products, which sells tea, coffee, and salt, stated on Wednesday that any potential tariffs imposed by the US will offer the company a competitive advantage. It might, however, put pressure on its Indian-imported salt and supplement brands.
Management stated that the impact would be contingent upon the final tariff rates on the company’s post-earnings call on Wednesday evening. The business expects a very even playing field in terms of competition because the US does not produce tea or coffee.
In addition to Eight O’Clock coffee, the company distributes brands like Tetley, Good Earth tea, Teapigs, Tata Tea, and Organic India in the US. It also sells Tata Salt, Tata Sampann, and other products.
Assuming that 10% is the normative tariff, we will be on a level playing field with everyone else in a competitive scenario because coffee is our main export and is not produced in the US. In actuality, we may have a slight advantage going forward because you are manufacturing abroad. There will be a slight variation in tea production between Canada and the UK because the US doesn’t grow it, but it won’t be that big, according to Sunil D’Souza, managing director and CEO of Tata Consumer Products. In 2006, Eight O’Clock Coffee was purchased by Tata Coffee.
Regarding tariffs, the US has been inconsistent. Despite recent announcements of duties on Indian imports, the United States said on April 10 that it would suspend further taxes on India for ninety days, until July 9. Later this week, US and Indian officials are scheduled to begin discussing the potential bilateral trade pact.
International markets account for roughly 29% of Tata Consumer Products’ total revenue. It doesn’t offer a breakdown of the company in foreign markets. With the Tetley brand, for example, it is the third-largest tea player in the United Kingdom. Its business in India accounts for the remaining 71%.
It’s true that most coffee drank in the United States is imported. One of the biggest importers of coffee worldwide is the United States. The main coffee exporters to the United States are Brazil and Colombia. India exports a comparatively modest amount of coffee to the United States.
Remarkably, the company’s annual report states that more than 40% of its FY24 income came from the US under its recently acquired Organic India brand.
Regarding Organic India, D’Souza stated that the majority of the company’s infusions and supplements are produced in India. Therefore, I don’t believe it changes in any way from a competitive standpoint. People will be importing foods from outside of India, such as salt and Tata tea, so there may be some pressure on the market overall as inflation rises. We don’t expect to be far off from a competitive scenario, but your guess is as good as mine,” he continued.
The company’s March quarter consolidated net profit increased by 59% year over year to ₹345 crore on Wednesday, from ₹216.63 crore during the same period the previous year.
During the quarter, the company’s operating revenue was ₹4,608 crore, which was 17% higher than the ₹3,927 crore reported in the March 2024 quarter.
With acquisitions excluded, the India-branded company recorded underlying volume growth (UVG) of 5.9% for the quarter. Revenue from the company’s beverages division in India increased by 9%.
For the entire year, the company’s revenue increased by 16% to ₹17,618 crore.
