Tata Group plans foray into ready-to-eat foods

Seeking new avenues of growth, Tata Group has begun product-testing for its foray into the ready-to-eat (RTE) foods segment.

The group, which already has a presence in foods and beverages segment through group companies like Tata Chemicals and Tata Global Beverages, has over the last few weeks introduced a range of RTE products in the Pune market.

Responding to DNA Money queries, a Tata Industries spokesperson said, "We continue to explore new avenues of growth through changing consumer needs and preferences. Towards this, we continue to learn and experiment through pilots and test marketing exercises. RTE falls in this bucket."

The test-market for RTE products by Tata Industries is being done in a few retail outlets in Pune including its 'Star Bazaar' stores. And being at a very initial stage, it is premature to quantify investment on an exercise which is currently in the nature of an experiment or test-market, the spokesperson said.

"In case, hypothetically, there is a substantial market opportunity in the future which we can address, we will look at all viability parameters before making an investment decision on a commercial scale," said the spokesperson.

The company is offering Indian and international recipes under the test-marketing.

"No brand name has been finalised. The test-market is being conducted with a working title for the time being," the spokesperson said.

The company is trying out various price points to gauge consumer reaction. "The scope of the experiment does not consider a comparison with alternatives," the spokesperson said.

Considering the potential for such products across the country, the Tata group currently has no immediate plans for a national launch.

"We have chosen to do small test markets in the nature of experiments. Such experiments are more from our business ideation perspective which we keep doing as a part of our exploration funnel. This exercise is a step in this direction," said the spokesperson, adding that there is no exports plan currently being contemplated.

On whether the Tata group will look at selling these products its hospitality brands especially the Ginger chain of hotels, the spokesperson said, "There is no such construct currently being contemplated."

The RTE market in India is expected to grow at a compounded annual growth rate (CAGR) of 22% between 2014 and 2019, according to a TechSci Research report. An analysis by Tata Strategic Management Group (TSMG) in 2006 had said the RTE segment, estimated at Rs 128 crore (in 2006), is expected to hit Rs 2,900 crore by 2015. Interestingly, another figure estimating the market size in 2013 at Rs 225 crore indicates that the market hasn't really picked up as expected over a decade ago.

The RTE category is currently dominated by players like ITC, Kohinoor, MTR, McCain, Patanjali, Desai Foods (Mother's Recipe) etc. While Britannia said it will launch RTE breakfast mixes in 2016, earlier this year PepsiCo India launched Quaker Nutri Food — the oatmeal versions of traditional breakfast options such as idli, dosa, upma and khichdi to suit Indian taste buds.

Sanjana Desai, head – business development, Desai Brothers – Foods Division (owners of Mother's Recipe), said concrete numbers for RTE market in India are not available as it is clubbed with the ready-to-cook products and masala segments.

"We do RTE products but it's mainly for exports (to about 45 countries) because the market in India is very small, I think around Rs 70 crore odd, with a lot of players who are exporting as well," said Desai adding that the company is focusing on exports for RTE products than selling in the domestic market.

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