Tata Consumer Products Looks To Cut Costs With Reusable Plastic Cups

Tata Consumer Products Ltd. is exploring various ways to reduce expenses, with one potential approach being the implementation of its 'cup-based' format for energy drinks across its packaged food and beverages portfolio.

The move also comes at a time when the company has pledged to have 70% of all its packaging material recyclable, compostable or reusable by FY26. It thrives for 900 tonnes of potential reduction in packaging material annually.

At the forefront of this strategy is NourishCo — the company's liquid beverage arm. It is already serving its ready-to-serve drink, Tata Gluco+, in reusable plastic cups. Drawing on those experiences, the company is assessing the opportunities to replicate the packaging in other categories as it seeks to cut costs at a time when high inflation is eating into margins.

"We're a very cost-obsessed business," Vikram Grover, managing director of NourishCo Beverages Ltd., told NDTV Profit. "And therefore, the priority for us (is) to save the smallest of costs, and that's where our cups come into play."

Grover said that serving in cups could help stand out in a competitive world. In the case of energy drinks, for instance, the cheaper cup-based packaging allowed the Tatas to launch them at a disruptive price point of Rs 10.

"Energy drinks are becoming popular in India and to succeed, it's important to set the prices correctly," he said. "We believe the price disruption led to explosive growth in this category. The reduction in production costs further allows us to allocate resources more efficiently, potentially investing in innovation or portfolio expansion," said Grover.

This packaging, according to him, also allows the company to produce goods "close to the market" or at multiple locations. The ability to produce close to the market further minimises transportation costs, and reduces the carbon footprint associated with long-distance shipping, he said.

Moreover, there's no better way to quench thirst than to drink from a glass, Grover said, implying on-the-go convenience in consumption. "The format aligns with modern lifestyles that prioritise convenience," he said, underscoring that TCPL would extend this format across its snacks and beverages.

Such a solution can mitigate costs but aren't always effective at curbing environmental waste. That's because they either rely on consumers to regularly participate or because the recycling infrastructure is limited.

Globally, McDonald's Corp. commissioned a study on reusable packaging in Europe. That report, carried out by consulting firm Kearney Inc., said a reusable cup, made of bulkier plastic than a disposable, needs to be used 50–100 times to make it preferable to a single-use cup from a plastic-waste standpoint.

Grover said cost checks are a key priority to ensure NourishCo achieves its sales target of Rs 1,000 crore and break even in FY24, while maintaining a healthy margin and continuing to grow its revenue thereafter as the company scales.

This division houses brands such as Himalayan, Fruski, Tata Gluco+ and Tata Copper+. Water contributes 50% to NourishCo’s top line.

"By focusing on a differentiated portfolio, we have been able to manage the balance between expansion and profitability," he said.

Nearly 20% of NourisCo’s revenues come from new products launched.

TCPL is driving growth via portfolio enhancements, distribution expansion and foray into new segments. In a recent analysts call, the company's management said it is looking to enter new categories, but those will be largely premium ones. The company will not enter into categories such as edible oil, dairy, carbonated drinks, rice or even beauty and personal care.