Tata Consumer eyes US coffee advantage amid proposed tariffs

Mint

23-04-2025

New Delhi: Fast-moving consumer goods company Tata Consumer Products, which sells tea, coffee, and salt, said on Wednesday that any proposed tariffs imposed by the US will give the company a competitive advantage, given that the Western nation primarily imports all coffee. However, it may put pressure on its salt and supplements brands imported from India.
During the company's post-earnings call Wednesday evening, management said the impact would depend on the final tariff rates. Given that the US does not produce coffee or tea, the company anticipates a relatively even playing field from a competitive standpoint.
In the US, the company sells brands such as Tetley, Good Earth tea, Teapigs, Tata Tea, and Organic India, in addition to Eight O'Clock coffee; it also sells Tata Salt, Tata Sampann, etc.
'If I take 10% as the normative tariff—our big business in the US is coffee; coffee is not produced in the US, it's all imported, and therefore from a competitive scenario we will be on an even keel with everyone else. In fact, because you are manufacturing offshore, we might have a little bit of a handicap in our favour as we go forward. On tea—the US doesn't grow tea, and therefore, on tea, there will be a little bit of difference if someone is manufacturing in Canada versus the UK, but not significant enough,' Sunil D'Souza, managing director & CEO of Tata Consumer Products, said. Tata Coffee acquired Eight O'Clock Coffee in 2006.
The US has been flip-flopping on tariffs. Despite recent tariffs announced on goods imported from India—on 10 April, the US announced the suspension of additional tariffs on India for 90 days until 9 July. Meanwhile, Indian and US officials are set to commence deliberations on the proposed bilateral trade agreement later this week.
Tata Consumer Products derives about 29% of its revenue from international markets. It does not provide a breakup of the business in overseas markets. For instance, it is the third largest tea player in the UK through its brand Tetley. The remaining 71% comes from its India business.
To be sure, the vast majority of coffee consumed in the US is imported. The US is one of the world's largest coffee importers. Brazil and Colombia are the primary exporters of coffee to the US. India's share of coffee exports to the US is relatively small.
Interestingly, according to the company's annual report, its recently acquired Organic India brand generated over 40% of its FY24 revenue from the US.
Meanwhile, on Organic India, D'Souza said the brand's supplements and infusions are primarily India-made products. 'So, from a competitive perspective, I don't think it changes at all. Balance India foods (salt, Tata tea, etc.), people will be supplying out of India, and therefore, overall category-wise, there might be a bit of pressure as inflation builds up. Your guess is as good as mine, but from a competitive scenario, we don't expect to be way off,' he added.
On Wednesday, the company reported a 59% year-on-year jump in its March quarter consolidated net profit to ₹ 345 crore, up from ₹ 216.63 crore in the same period last year.
The company's revenue from operations stood at ₹ 4,608 crore during the quarter, up 17% year-on-year as against ₹ 3,927 crore posted in the March 2024 quarter.
For the quarter, the India-branded business reported underlying volume growth (UVG) of 5.9% (excluding acquisitions). The company's India beverages business saw a 9% increase in revenue.
The company's revenue grew 16% for the full yearto ₹ 17,618 crore.
First Published: 23 Apr 2025, 09:00 PM IST