Tatas want to spice up the menu

THE COVID-ERA habit of snacking and cooking at home hasn't lost its flavour.

Consumers want convenient and healthy food options from trusted names on their dining tables. This trend of in-house consumption has opened up newer avenues for makers of food and beverages.

Not surprising then that companies are either rushing to acquire new brands and capabilities or launching new products; in their effort to serve up a good meal, some are doing both. That's where Tata Consumer's latest acquisitions Capital Foods and Inorganic India valued at ₹7,000 crore, come into play.

Best known for its tea, coffee and salt businesses, the latest buys, for which the consumer arm of Tata group is paying a steep 5-6 times the estimated FY24 sales of these businesses, will help it trade up into large packaged food categories.

These include instant noodles, soups, sauces, pastes, condiments, premium teas and infusions.

The street might believe the acquisitions are expensively valued.

But the top team at Tata Consumeris convinced the bet is well-placed in what is not just a growing but an evolving food market. Moreover, a bigger portfolio would help especially since the tea, coffee and salt are commodity-led businesses that are vulnerable to downtrading by consumers and volatility in input prices.

The influx of small brands in recent quarters within fast-moving consumer goods (FMCG) segment, for instance, has been the most in tea, hurting even large and well-entrenched players such as Hindustan Unilever and Tata Consumer.