Tata Starbucksrecorded the highest number of store openings ever during the year.
- It is now present in 26 cities and the number of stores increased from 221 in FY21 to 268 at the end of FY22.
- It has a leading position in the tea and salt segments, with the latter company’s premium versions also growing.
As footsteps in coffeehouses increased after the pandemic, India’s most popular coffee shop chain – Tata Starbucks – is all set for a year of growth.
In FY22, sales grew 77% thanks to record store openings and access to seven cities. In India, the global major has entered into a 50:50 joint venture with Tata Consumer Products.
From its presence in just 8 cities in FY19, it is now present in 26 cities. The number of stores increased from 221 in FY21 to 268 at the end of FY22. Tata Starbucks added the largest number of stores during the January-March period.
“Revenues grew 32% year-over-year during the January to March quarter, impacted in part by the third wave of COVID-19. Growth was back on a strong trajectory, led by a rapid re-opening after the third wave with 96% store reopening. The company was EBITDA positive for the quarter,” said a report from Motilal Oswal
It also entered seven new cities of Jaipur, Siliguri, Trivandrum, Guwahati, Nashik, Bhubaneswar and Goa. Sales at these stores grew 18% in FY22 on the back of relaxed Covid-19 standards.
Leadership in tea and salt segments
In addition to ready-to-drink coffee, Tatas also earns money from other forms of drinks. Tea, which has long been the mainstay – in fact it used to be called Tata Tea – is also contributing to the growth in the FMCG segment.
Tata Consumer Products’ market share in India Tea grew by 100 basis points to 22.2%. Sales of the salt segment have also increased.
“Tata Consumer Products has two solid bases—salt and tea—with market leadership and the potential to sustain high single-digit to low-double-digit sales growth,” according to a report from Edelweiss Research.
The tea business reported volume growth of 6%, although premium varieties grew 1.2 times total volumes in the fourth quarter of FY22.
Tea prices may fall, but salt remains high
Tea prices rose dramatically in FY21 due to a lower crop, but in India they have fallen significantly from their peak.
Also in FY22, there was a drought in Assam in May and November, leading to a shortage of crops. But now analysts say prices have fallen after a decent monsoon forecast.
“Tea prices are expected to remain in range or even fall to normal levels,” said a report by Motilal Oswal. If prices fall, demand will increase.
On the other hand, Tata Salt is a household name, as the brand is distributed over 2.55 million points of sale and reaches 214 million homes across the country.
“Salt reported 17% value and 8% volume growth. Its market share grew 400 basis points to 37% in FY22,” said a report from ICICI Securities.
The company continued to invest in differentiated varieties of salt and introduced Tata Salt Super Lite, Shuddh by Tata Salt and Tata Salt Immuno. Gross sales of this premium salt portfolio exceeded 1 billion and grew 26% year-over-year.
The company faced certain problems with its salt extraction due to rising freight, oil and energy costs coupled with erratic rainfall and drought in Gujarat, pushing up salt prices.
“The company has implemented a 4 price increase on a ₹21 basis between July 2021 and April 2022 and management has guided further price increases, depending on the scenario, while maintaining margins and increasing market share,” Motilal analysts said. Oswal. †
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