Some interesting news item on this Thursday of May 2019.
After they exited from Fast Moving Commercial Goods (FMCG) business, nearly 3 decades back, Tata Group has announced that they are once again entering the FMCG market. They plan to give once again competition to Hindustan Unilever Ltd (HUL). Initially they will start with personal & home care products.
Tata’s group company Tata Global Beverages, will be their flag bearer company in this segment. This company is planning to enter personal care, home care , dairy and nutri supplements, in addition to existing categories of beverages, spices, staple and packaged foods. This will make Tata Global a formidable rival to HUL and ITC, which have FMCG in multiple categories.
For moving into the business of FMCG, as a first step Tata Global will acquire the food (salt, spices, proteins, snacks, sweeteners) and non food (detergent) business of Tata chemicals to create an company with a turnover of Rs 9000 Cr. Tata Chemicals had recently entered into home care business with test launch of their detergent Tata DX in West Bengal market.
Once the business acquisition is over, then the name Tata Global Beverages will be changed to Tata Consumer Products (TCP). This company will be the vehicle for the Tata group’s longer term, wider FMCG play, this was stated by the management in recent press release.
TCP will have the advantage of vast distribution network of Tata chemicals. It is planning to reach 2.5 million retail outlets and 200 millions households. During last fiscal year , a billion packs of Tata Salt were sold in the country.
Friends, many of you may not remember that in 1983 Tata Oil Mill company (TOMCO) was acquired by then Hindustan Lever Ltd ( now HUL). Prior to this, TOMCO was the second largest soap maker in the country, with brands like Hamam, Moti, 501, OK. That time Tata group exited this business to focus on its commodity business like steel. Now once again group wants to expand its consumer facing business, increase revenue share from branded goods as against the commodity business. Two other group companies- Titan had already expanded its subject to include cosmetics, and they are already marketing fragrance called ‘Skinn’. Other Company Trent sells it own range of make up products in Westside Departmental Stores.
In the longer term, the company will be focussing on few areas, in Spices, pulses and derivatives they want to enhance portfolios and distribution expansions; in liquid beverages, they will continue to Tata Gluco Plus and Fruski platform and expand its healthy snacks portfolio. In the near future following areas are under the radar- dairy business, entry into high growth/high margin home and personal care products.
It will be big challenge for TCP to compete HUL products in Personal Care segment. The annual advertising budget of HUL in this segment is approx Rs 4,500 Cr. How Tata group will be matching that is yet to be seen. So now there will be 4 way battle between HUL/Tatas/ ITC/ Procter Gamble. At least for next 10 years , there will be marketing war after the entry of Tatas in FMCG segment.
So friends, it will be interesting to see the uprise/turmoil in FMCG market in the years to come.
Waiting for your comments/feed backs/views.
Anil Malik
Mumbai, India
16th May 2019
Nihil Desai
Yes,it will be interesting to watch marketing warfare besides more products options…
R. N. Mungale.
Tatas have always kept highest quality standards. Trust in fact business also they will do so. In which case it will be beneficial to consumers.