INDIA – Tata Consumer Products has signed a definitive agreement to acquire 100 per cent equity shares of Tata SmartFoodz Limited (TSFL), from Tata Industries for a cash consideration of Rs 395 crore (US$35.29 million).
TSFL, under the brand name Tata Q, started operations in 2019 and offers a range of differentiated products manufactured using MATS technology in India.
The brand is currently the second-largest player in the ‘Ready to Eat’ market and has a manufacturing facility in Sri City, Andhra Pradesh.
TCPL said the acquisition is consistent with its strategic intent to expand into value-added categories adding that TSFL will enable it to expand its product portfolio and enter the ‘Ready to Eat’ segment.
TCPL MD and CEO Sunil D’Souza said: “Tata SmartFoodz is a good strategic fit for us given the nature of its business and it will also allow us to expand our and a sizeable opportunity in the international markets”.
TCPL expects the RTE category to grow at a significant pace, benefitting from demographic tailwinds such as urbanisation and high disposable income nuclear families looking for convenience, nutrition and hygienic food on the go.
“The category is already large and growing strongly in the international markets that TCPL already operates in. Tata Consumer Products will leverage its existing domestic and international distribution and focus on operational excellence to maximise value,” said TCPL.
Moreover, TCPL is set to benefit from TSFL’s MATS technology , enabling it to create a strong pipeline of value-added products in other parts of the foods business.
Microwave-assisted thermal sterilisation (MATS) is a food processing technology that uses long-wavelength microwave energy together with heat to sterilise packaged food.
The technology also helps retain sensitive nutritional components in foods, along with flavour, texture and appearance.
“We believe Tata Consumer Products is well-positioned to help unlock the market potential of this technology and scale up this business to meet the growing consumer need for wholesome, trusted and convenient food offerings,” D’Souza added.
TCPL, earlier known as Tata Global Beverages Ltd, had in February this year agreed to acquire Bengaluru-based Kottaram Agro Foods to expand its product portfolio
Agro Foods engages produces healthy breakfast cereals and millet-based snacks under the trademark Soulfull.
Last month, the company had said it will transfer its tea cafe business ”Tata Cha” to group firm IHCL, which operates Taj group of hotels.
Expanding the Starbucks footprint in India
TCPL has also made public its plans to roll out new store formats majorly comprising of smaller stores and drive-through outlets as part of strategy to hasten its footprint in India.
“We are driving Tata Starbucks to be far more aggressive in store openings, new formats, and in entering new cities,” Sunil D’Souza, CEO of Tata Consumer Products, said in an interview on Monday.
“All we’ve got to figure out is how quickly we can scale,” said D’Souza. “We have got a window of opportunity because the competition is on the back foot.”
India is one of Starbucks’ fastest growing markets globally, registering a 128% revenue growth in the quarter ending September, during which it opened 14 new outlets.
Most Starbucks outlets in India are large-format and designed with rich wood-panelled décor but the company is now exploring smaller sized outlets as they can be opened faster.
It is also experimenting with concepts like drive-throughs after opening one in northern India last year, D’Souza said.
“Am I happy with 14? Absolutely not. The target’s much more” D’Souza said, adding the aim was to open some 40-50 outlets this year.
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