Tata's acquisition spree to invigorate consumer goods market in India, observes GlobalData

Fast-moving consumer goods company Tata Consumer Products, part of the Tata Group, is in acquisition talks with five consumer brands. This move is in line with the company's aim to reinforce its position in the Indian consumer goods domain. Tata Consumer Products, which is currently present in categories such as hot tea, hot coffee, salt, and mineral water, plans to foray into the personal and home care space. The acquisitions, if successful, will further intensify the competition with giants such as Unilever and ITC in the Indian consumer goods sector, finds GlobalData , a leading data, and analytics company.

Catalyzed by the COVID-19 pandemic, the Indian household products industry which includes general-purpose cleaners and textile washing products will grow strongly by 2026. According to GlobalData, the household products industry will expand at a CAGR of 4.6% from 2021 to 2026, to reach $10.4bn by 2026. Similarly, the cosmetics and toiletries industry will grow at a CAGR of 5.9% over 2021−2026 and reach $21.8bn by 2026.

In GlobalData's Q1 2022 consumer survey, *60% of the Indian respondents stated their spending on household cleaning products in the last three months was quite/very high, and *49% of the respondents said the same about skincare products*.

Since its incorporation in 2020, Tata Consumer has acquired stakes in various companies to expand its product portfolio. However, all the past acquisitions were in the food and beverage space. The new planned acquisitions will allow the company to have a presence in categories including home cleaners, detergents, and body cream and wash. It will try to leverage the strong brand equity it has in the food industry to solidify its position in the personal care and home care sectors. This is in line with the company's aggressive push in the retail market, whether it be an acquisition of BigBasket or the recently launched TataNeu app.

Biswarup Bose, consumer analyst at GlobalData, comments, "The Indian household retail market is attracting the attention of large conglomerates. For instance, Reliance Industries (RIL) has also stated that it tends to acquire 60 small and medium-sized brands to foray/expand in the household retail sector. Despite the high inflation due to the increasing energy and food prices, the retail sector remains attractive for companies, given the large and untapped potential of the market. The entry of large business groups, with deep financial pockets, will help to improve the efficiency of the supply chains, a bane of the Indian consumer goods market."

Bose concludes, "Heightened safety focus due to the pandemic will drive consumers to invest more on household cleaning products, a factor which bodes well for Tata Consumers' planned entry into this space. Moreover, Tata's strong brand image will ease its efforts to establish itself in the personal care space."

*Data were taken from GlobalData's Q1 2022 Consumer Survey – India with 613 respondents, published in March 2022