Tata Consumer Products Ltd is buying Tata SmartFoodz Limited (TSFL) from its group firm Tata Industries for a cash price of Rs 395 crore. It has signed a conclusive agreement to obtain 100 per cent equity shares of TSFL, a transaction which will help the Tata group FMCG arm enter into the “Ready to Eat” category.
This move is in line with TCPL’s strategic resolution to expand into value-added categories, and the purchase will enable TCPL to increase its product portfolio and enter the RTE segment.
TSFL, under the brand name Tata Q, offers a range of differentiated products manufactured using MATS technology in India. It commenced operations in 2019 and became the second-largest player in the RTE market. TSFL also has a manufacturing facility in Sri City, Andhra Pradesh. TCPL expects the RTE category to grow at a significant pace, benefitting from demographic tailwinds such as urbanization and high disposable income nuclear families looking for convenience, nutrition, and hygienic food on the go.
“The category is already large and growing strongly in the international markets that TCPL already operates in. Tata Consumer Products will leverage its existing domestic and international distribution and focus on operational excellence to maximize value, ” said TCPL.
Moreover, TSFL is using MATS technology, which will also enable TCPL to create a strong pipeline of value-added products in other parts of the food business. Microwave-assisted thermal sterilization (MATS) is a food processing technology that uses long-wavelength microwave energy together with heat to sterilize packaged food. It retains sensitive nutritional components, along with flavour, texture, and appearance.
TCPL MD and CEO Sunil D’Souza said: “Tata SmartFoodz is a good strategic fit for us given the nature of its business and it will also allow us to expand our portfolio into the Ready to Eat segment.
RTE is a fast-growing segment in India and there is a sizeable opportunity in the international markets”. He said the acquisition will give TCPL access to unique technology, and the product portfolio synergizes well with its existing distribution infrastructure both in India and internationally.
“We believe Tata Consumer Products is well-positioned to help unlock the market potential of this technology and scale up this business to meet the growing consumer need for wholesome, trusted and convenient food offerings,” D’Souza added.
Tata SmartFoodz CEO Balark Banerjee said, “Being part of Tata Consumer Products will enable us to strengthen our market presence and scale up the business. It will allow us to leverage Tata Consumer’s strength in modern trade and e-commerce channels in India and also its global presence to target key international markets for RTE exports”.
TCPL, earlier known as Tata Global Beverages Ltd., had announced plans to acquire Bengaluru-based Kottaram Agro Foods, engaged in the business of healthy breakfast cereals and millet-based snacks under the trademark Soulfull, for Rs. 155.8 crores to expand its product portfolio.
Last month, the company said it would transfer its tea cafe business, “Tata Cha,” to group firm IHCL, which operates the Taj group of hotels. TCPL is already operating Tata Starbucks, a 50:50 joint venture with Starbucks Corporation, and operates around 224 stores in 18 cities. TCPL was formed by merging the consumer products business of Tata Chemicals with Tata Global Beverages and has ambitions to be a leader in the FMCG segment.