Traders and wholesalers have destocked because of demonetization, which may hit sales in the October - December quarter.
Tata Global Beverages Ltd (TGBL) may see some impact on sales in the ongoing October-December quarter due to destocking of products following the government's surprise demonetisation move.
TGBL is expecting a short-term impact on sales as traders and wholesalers have destocked because of the liquidity crunch in the market.
"I think in the short-term, there will be an effect because trade has destocked across the chain whether it's the trader or wholesaler because of cash crunch, and many of the trade partners work on cash. So, the cash ratio is coming down and amount of cash in the market is coming down, there has been destocking," TGBL Regional President-India Sushant Dash told PTI.
Asked about the impact, he said, "It is anyone's guess as how long it would take for this to come back to normal but in the short-terms, we will have an impact." On whether the cash crunch would impact the third quarter performance of the company, Dash said: "It's little early to say that."
According to him, tea is a regular habit and actual decrease in consumption will be minimal.
"Our assumption is that part of it would come back in December and things could get back to normal in terms of the stock level. If that happens, then there would not be too much of an impact in terms of third quarter but if that does not happen, there would be an impact on third quarter," he added.
To strengthen its portfolio in the mass market and tap consumer shift towards traditional ayurveda, TGBL has forayed into the segment with Teaveda, which is a blend of tea with a pre-mixed ayurvedic ingredients.
The company, which has already introduced the product, is expecting a growth of up to 12% in this segment.
"Health & wellness segment amongst foods and beverages is growing at 10-12%. So, Tata Tea Teaveda is expected to grow at similar rate," said Dash.
He further added: "We are innovating products which consumer wants. In this case, we believe that health and wellness is a growing trend and if you provide health and wellness in daily tea ... then consumer would be benefited." The company is targeting the mass market, which consumes black tea and has priced Rs 90 for 250 gram packs.
As per its growth strategy, TGBL is focusing on three routes - premiumisation, category expansion and targeting white spaces.
"Currently, our premium tea brands contribute to 24% by volume and 35% by value to TGBL India sales," the company said.
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