Tata Consumer Reports Coffee Prices Decline Amid Ongoing Volatility

Mint

23-07-2025

Packaged food and beverage maker Tata Consumer Products Ltd (TCPL) on Wednesday said that coffee prices are currently on a downward trajectory, though ongoing volatility necessitates close monitoring following a period of significant surge.
In the March quarter, TCPL had noted that prices of Arabica coffee were 97% higher year-on-year, while Robusta coffee prices were up 56%.
Prices of Arabica and Robusta— types of coffee beans—have moderated significantly, yet remain volatile, according to the company's investor presentation released Wednesday.
'The issue with falling coffee prices is your trailing inventory, that is the whole catch, because you're sitting with inventory and selling it at a lower price. It will stabilize at a point in time. We are probably close to the bottom on the margins front. We are fairly well hedged in coffee, we've taken a small charge this quarter on the mark to market. We'll have to see one more quarter, and of course it largely depends on where the coffee prices finally settle. If they are roundabout where they are currently, we'll see probably one more quarter of pain, and then we should get back to the historical margins that we had in business,' Sunil D'Souza, Managing Director and chief executive officer of Tata Consumer Products said during the company's post-earnings call on Wednesday evening.
Despite the global price drop impacting profitability, TCPL's India coffee business reported revenue growth of 67% on the back of a 33% increase in volumes. The company sells coffee under brands such as Tata Coffee Grand, Eight O'Clock Coffee, Sonnets by Tata Coffee and Tata Coffee Gold, competing with players like Nestle India and Hindustan Unilever in the packaged coffee market.
The maker of Tata Salt and Tata Tea reported a 15% jump in quarterly net profit, reaching ₹ 332 crore, up from ₹ 289.25 crore in the corresponding period last year.
Consolidated revenue for the three months ended 30 June grew 10% year-on-year to ₹ 4,779 crore.
The India branded business recorded a 6.8% volume growth, with the core India business, encompassing both tea and salt, reporting double-digit growth.
'During the quarter, we recorded double-digit growth in the core India business across both tea and salt, backed by volume growth. Tata Sampann continued its strong trajectory, with new launches & innovations performing well. However, unfavourable weather impacted volume growth in the ready-to-drink business. While transitory issues impacted growth in Capital Foods and Organic India, our focus now turns to delivering on our aspirations in these businesses through ramping up advertising, innovation and distribution expansion,' D'Souza said.
On the tea front, where the company sells brands like Tata Tea and Tetley, TCPL stated that prices remain favourable, though the outlook is cautiously optimistic.
According to the company's investor presentation, North India tea prices are moderately lower compared to the same period last year due to robust crop supply in the region, while South India tea prices continued to soften.
Consolidated Ebitda (earnings before interest, taxes, depreciation and amortization) for the June quarter declined by 8%, primarily attributed to higher tea costs in India and coffee price corrections in the non-branded segment. TCPL also has a large overseas business. It also sells staples and breakfast cereals.
'If you look at the crop itself, I think we are already ahead in North India compared to last year... Now, we do expect this year to be normal, even the IMD forecast a normal rainfall season, and if that happens, there's no reason for us not to go back to the tea cropping levels of 2023, and therefore the pricing to start unwinding,' he said.
Meanwhile, the company's cafe chain business under Starbucks reported positive same-store sales growth during the quarter, with overall revenue for the segment growing 6%.
Same-store sales growth was positive, except during May when regional geopolitical tensions flared up and impacted store operating hours in specific geographies. Starbucks operates 485 stores in India.
'We tempered store opening for the quarter adding only six new stores. We are focusing on footprint growth across metros as well as smaller cities,' he said.