Branded teas seeing single-digit recovery; not yet out of woods: Puneet Das of Tata Group

Tea sector slowly improving after headwinds due to inflationary pressures in Dec. '22. Tata Consumer Products reported 3% vol. & 2% rev. growth in Q1 FY24. Premium segment & price-sensitive Agni brand growing. Street chai leading on e-commerce. Headroom for growth.

Branded tea sector, that witnessed headwinds due to inflationary pressures and subsequent decline in rural consumption until December last year, is now slowly improving, however, the segment is still not out of woods, said Puneet Das, President-Packaged Beverages (India and South Asia), Tata Consumer Products.

Rural consumption and growth were under stress until last year due to inflationary pressures. December 2022 onwards volume growth has been comparatively positive but with a single-digit growth, he observed.

“Tea, actually till last December, went through a bit of a headwind due to higher inflation and rural consumption was also impacted. From December, sequential growth started coming back slowly to the tea portfolio. We are seeing headwinds easing and rural consumption slowly coming back, still the segment is not out of the woods yet,’‘ Mr. Das told The Hindu.

According to him, Tata Consumer Products in the first quarter of FY24 reported a 3% growth in tea sales volume and 2% growth in revenue. As commodity inflation started coming down, food inflation started climbing up and vegetables prices too started rising and therefore the sector is yet to come out of the woods, although the current single digit growth is likely to continue.

Mr. Das said as part of the recovery, the company has been witnessing growth in its premium segment and its price sensitive brand, Agni, that operated at economy popular level was also growing.

“Our focus on premiumisation in tea helped us grow the category while the bottom of the pyramid will always remain an opportunity for us. Branded tea is a fragmented category, but 10 times bigger than branded coffee,’‘ he added.

He also said the company’s street chai was leading on ecommerce channels in the country, although the bulk of sales was still coming through general trade.