With food inflation remaining at higher levels, more price hikes could be on the anvil for Tata Consumer’s foods business. Deepika Bhan, President - Packaged Foods at Tata Consumer Products hinted towards this in an exclusive conversation with CNBC-TV18. Inflation, she said, continues to be a mixed bag, abating in a few categories while accelerating in others, so there will continue to be some amount of price-led growth.

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“There’s no way to sign off on the year to say growth will be volume-led not price, that’s a difficult equation. There will have to be price-led growth, but we’ve got to measure and spread it across the portfolio. We haven’t shied away from some very bold price increases and some categories where we have, we’d like to be more cautious and look at where there’s upside,” Bhan told CNBC-TV18.

“From a category standpoint, we protect prices for some variants, add to some variants, but do we now do it on variants on which we haven’t exercised earlier is what will be key,” Bhan added.

The most amount of price hikes in Tata Consumer’s food portfolio came in the Salt category. Sunil D’Souza, the MD & CEO of Tata Consumer, said during the company’s Q1 earnings call that the company implemented a 33 percent price increase in about 15 months in the Salt business.

The strategy now, Bhan says, will involve a mix of efforts to protect the core business while implementing price increases where necessary, all the while being more aggressive in growing the premium parts of the portfolio. “Premiumising is one way of increasing prices, and in times like this, you become more conscious of growing the premium part of the business,” she added.

Inflation largely impacts Tata Consumer’s Sampann portfolio, which includes its spices and pulses products. In August, for instance, pulses and products saw inflation of 13 percent, while prices of spices grew 23.19 percent in India.

However, Bhan said that she remains optimistic about growth, given that the company has seen over 24 percent growth in revenue and a 6-8 percent volume growth in the past few quarters.

“Even if you look at long-term CAGR, it looks good. Even if you look at categories where we’ve taken aggressive price hikes like Salt, we have seen a 600bps share gain over a 2-3-year time period. So to that extent, I think we've been able to navigate, and there's a great opportunity for growth,” she said.

Bhan’s cautious optimism also comes at a time when various factors are at play in determining how consumer demand is likely to pan out in the current macroeconomic scenario. While inflation is a mixed bag, rural demand also needs to be monitored, considering the monsoon deficit in certain states and its impact on overall rural demand.

“And given that the penetration of packaged food is still low means strong tailwinds for the category to grow, and some headwinds that are abating. That leaves us with 50-50, there’s a good chance that we will grow well, but have to see how these factors play out,” she added.

In terms of growth drivers for the foods business going ahead, Bhan said that while its core business (Salt in the case of foods) will continue to remain most critical, the company will be aggressive on its growth businesses, which include its Sampann, Soulfull businesses, along with some of the newer businesses it has entered, such as GoFit.

“We are very aggressive about growing growth businesses. Sampann, Soulfull, are strong growth engines & even bigger for us as their scale increases. At the same time, we are also very focused on growing smaller newer bets. These may not be large enough today, but we have to play them today for them to be large tomorrow,” Bhan said.

One example, Bhan said its protein and health supplements segment under Tata GoFit, a space it entered in September 2022 with the launch of a plant-based protein powder for women. However, it hasn’t launched more products under this segment yet. Bhan said, the focus right now continues to be to understand the segment better. While protein will be the initial focus, it will eventually look at broadening the portfolio but didn’t offer a specific timeline.

“They are not material in terms of top line, but they are very material in terms of learning. I continue to be very excited about that space. We have to be very careful on what are your top bets in an inflationary year when you have businesses like Sampann to grow,” she added.

Apart from health supplements, Tata Consumer is also very bullish on health and wellness, Bhan said. This, however, is a larger play across categories from Sampann to Soulfull.

“We’re very bullish on health and wellness. I think the test of whether you are bullish on a trend is whether you're willing to do it on your core business it's always easy to have surrounds and they'll be tiny. But if you look at what we did on Tata Salt when we launched Immuno, which is a zinc-fortified salt, we took a core business and we played wellness on it,” Bhan said.

Its recent launch of dry fruits and snacking products like makhana too, are in that direction, she added. “I definitely see it as an important space. My judgment would be that there will be larger needs wider needs that emerge. This will be one of them,” she informed.

In addition to these businesses, Bhan identifies its ready-to-cook portfolio under Tata Sampann Yumside to also be among the next growth businesses. Yumside currently has a portfolio of about 9-10 products with a larger focus on its pasta and noodles products.

“We’re in this category with our core SKUs with pasta and noodles with a strong competitive advantage of technology. We focused a lot on growing these lines with the recently launched Mac & Cheese pasta which is doing well. We definitely see that as a business which will grow and would classify that as the next set of growth businesses, because that category is currently small, but will pick up as proclivity to convenience picks up,” she added.

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(Edited by : Shweta Mungre)