Tata Consumer Revamps Go-To-Market Model for Sharper Growth

Tata Consumer is positioning itself for a sharper, distribution-led growth as it goes for a sweeping revamp of its go-to-market (GTM) model amid rural demand outpacing urban and e-commerce contributing a fifth of sales, president and head, India sales, Punit Gupta told FE. The company, best-known for brands such as Tata Tea and Tata Salt, currently reaches about 4.5 million outlets across India, according to NielsenIQ estimates. Of this, nearly 1.8 million outlets form its direct distribution network, with an urban-rural split of roughly 60:40. Gupta said the company was working to expand direct reach in rural markets. Over the past two years, Tata Consumer has nearly doubled its rural infrastructure by adding super-stockists and sub-distributors, enabling direct reach into towns with a population below 50,000 — and in some cases, as low as 20,000. A dedicated rural reporting structure, with rural territory sales managers, has also been carved out to sharpen execution. “We see significant headroom for expanding direct reach, especially in rural markets,” Gupta said. The push into rural areas comes as rural FMCG demand remains resilient versus urban demand which is recovering after multiple quarters of a slowdown. According to sector analysts, India has about 600,000 villages, with 90% of these having a population of 10,000. FMCG companies are targeting the most relevant villages to ensure the exercise delivers return on investment for them. In Tata Consumer’s case, for instance, the firm is said to be targeting 5,000 villages with a population between 10,000-50,000 to push direct reach, according to analysts. While urban distribution remains stronger than rural, Tata Consumer has still undertaken a comprehensive overhaul of its urban go-to-market (GTM) model in the last one year, particularly in metros and towns with a population of above one million. Gupta said that following the integration of acquisitions such as Capital Foods and Organic India into Tata Consumer, the company found that its unified distribution structure was sub-optimal for diverse portfolios spanning tea, salt, condiments and health products. The company has now split distributors into distinct verticals, separating salt from non-salt portfolios and core from growth categories. This has been done to drive sharper focus and better capital allocation, Gupta said. Tata Consumer’s growth categories includes its presence in branded staples and spices through Tata Sampann, ready-to-drink (RTD), ready-to-eat and ready-to-cook products under Tata Soulfull as well as products part of acquisitions such as Capital Foods and Organic India. Core categories are its tea and salt segments. The urban revamp has included the addition of around 160 new distributors and exclusive frontline teams on company payroll, including territory sales in-charges and area managers. “The idea is to bring growth categories closer to the distribution of our core portfolio while strengthening weak pockets in tea and salt,” Gupta said. E-commerce now contributes 18–20% of overall sales for Tata Consumer, with quick commerce accounting for nearly two-thirds of that, or about 12–14% of total revenue. The channel grew at around 60% year-on-year in the December quarter. Gupta expects the distinction between traditional e-commerce and quick commerce to blur over the next year, as legacy e-commerce platforms strengthen their rapid-delivery capabilities. “In a stable state, almost every (e-commerce) player will be a quick commerce player,” he said. Demand from tier-2 towns is also beginning to show up meaningfully on digital platforms, even as general trade remains the backbone of the FMCG business, he said.