Tata to hike tea prices across brand portfolio over next few months

Tata Tea will implement price hikes across its brand portfolio over the next few months, as it aims to expand its profit margins, which have been hit due to a jump in input prices, a top official said on Wednesday.

Parent company Tata Consumer Products expects a rise in overall volumes, which were impacted due to reasons including flooding in urban areas, sluggish rural economy and also general slowdown in growth, its chief executive and managing director Sunil A D'Souza said.

The company, which posted a 1 per cent jump in profits in the July-September quarter despite an 11 per cent jump in revenues, feels that the tea prices have shot up by over 25 per cent this year because of supply disruptions.

It has started taking "calibrated price increases" while ensuring that there is no demand shock and also ensuring that it stays competitive, D'Zouza told reporters on the sidelines of an event.

"... You would see some price implementations every quarter, if not a fortnight, and over a two-to-three-month period, we should be equalising margins," he added.

As per reports, Tata Tea holds a nearly 28 per cent market share in the tea retail market in the country and competes with HUL in the category.

Elaborating on the increase in tea prices, D'Souza said the overall tea production is down 20 per cent, and moreover, exports have grown.

Additionally, the tea board has decided to stop plucking of tea leaves in end of November, as against the middle of December normally, which will impact supply more.

On Starbucks' sales being 18 per cent down, he attributed the dip to impact of floods in urban areas and also general economic conditions, but added that a newly introduced line of products will be of help.

Commenting on its expectations on volume growth, he said the company is aiming for an uptick in rural demand both on better monsoon and also deepening its distribution reach.

The company also announced a tie-up with customer relationship management company Salesforce to launch an integrated sales and service platform christened 'Mavic' which is aimed at both upping revenue and also decreasing costs, D'Souza said.

He, however, did not give a guidance on the benefits which the company is aiming for through the tie-up.

Salesforce's India head Arundhati Bhattacharya said the company attained a 35 per cent growth in FY24 from Indian operations, and hopes that the country continues to be one of the fastest growing markets for it.