Tata Tea plans to raise prices across its brand portfolio in the coming months to offset rising input costs and improve profit margins, according to a top company official. The decision follows a 1% profit growth in the July-September quarter, despite an 11% increase in revenues, as tea prices surged by over 25% this year due to supply disruptions.
Sunil A. D’Souza, CEO and Managing Director of Tata Consumer Products, highlighted the company’s strategy to balance price hikes while remaining competitive in the market. He noted that the rise in tea prices was driven by a 20% drop in production and growing export demand, along with an early end to tea plucking this year, which will further impact supply.
D’Souza also emphasized that Tata Tea, which holds a 28% market share in India’s tea retail market, will implement gradual price increases over the next few months, aiming to equalize margins. The company is working to mitigate the risk of demand shocks by taking “calibrated price increases” over each quarter or fortnight.
The company is optimistic about a recovery in rural demand, buoyed by better monsoon conditions and expanded distribution efforts. Meanwhile, Tata Tea continues to face challenges from urban flooding and a sluggish rural economy, factors that have dampened overall volumes.
In a bid to streamline operations and enhance customer experience, Tata Consumer Products has announced a partnership with Salesforce to launch an integrated sales and service platform, “Mavic.” The company expects this move to drive revenue growth and reduce operational costs.
As the tea industry grapples with supply issues and rising input costs, Tata Tea’s strategic price hikes and focus on expanding rural demand signal the company’s commitment to sustaining growth in a competitive market.