Tatas ready for face-off with HUL in FMCG biz
Nearly three decades after it exited the space, the Tata Group plans to once again come face-to-face with Hindustan Unilever (HUL) as competitors in the personal and home care categories.
Group company Tata Global Beverages is transforming itself to become a broad-based consumer products enterprise. It is looking to enter personal care, home care, dairy and nutri-supplements in addition to its existing categories of beverages, spices, staples and packaged foods. This will make Tata Global a formidable rival to HUL and ITC, which have multi-category FMCG products.
As a first step to its bigger plan, Tata Global will be acquiring the food (salt, spices, proteins, snacks, sweeteners) and non-food (detergents) business of Tata Chemicals to create an enterprise with a turnover of Rs 9,099 crore. TOI reported about the impending deal in its May 14 edition. Tata Chem had recently forayed into home care with the pilot launch of Tata DX detergent in West Bengal.
To reflect the wider and changing profile of Tata Global, the company will be renamed as Tata Consumer Products (TCP) once the acquisition is completed. TCP will be the vehicle for the group’s longer term and broader FMCG play, the management said. Tata Global said that it is considering an entry into high-growth, high-margin categories such as home care, personal care and dairy organically or inorganically.
TCP is expected to piggyback on the vast distribution reach of Tata Chem. It plans to double its reach to 2.5 million retail outlets and 200 million households in the country. A billion Tata Salt packs were sold in fiscal 2019 — similar to the size of the Indian population.
In 1993, the erstwhile Tata Oil Mill Company (TOMCO) was acquired by HUL (then Hindustan Lever). Prior to that, it was the second-largest soap maker in the country, with brands like Hamam, Moti, 501 and OK. The conglomerate had exited the space to focus on its commodity businesses like steel. Now, the group wants to expand its consumer-facing business, increase revenue share from branded play as against the commodity business. Tata Group company Titan already has a fragrance called ‘Skinn’. Some years ago, Titan had expanded its object clause to include cosmetics. Another group company Trent sells its own range of make-up products at its Westside departmental stores.
In personal care, however, it’s not going to be easy to challenge HUL, whose annual advertising spend amounts to Rs 4,500 crore. HUL is a leader in soaps, detergents and a number of personal products like skin care, shampoo and talcum powder and it reaches 6.3 million retail outlets in the country.
HUL’s dominance, however, has not stopped new players from entering the market. ITC, for instance, has grown its non-cigarette FMCG business to Rs 11,000 crore, largely on the back of its packaged foods business. Patanjali, too, dived in with its naturals range, creating a dent — at least in the toothpaste market. Wipro, on the other hand, has soap brands like Santoor, which claim to be as big as HUL’s Lux.