Tata Consumer, renowned for brands like Tata Tea, Tetley, and Eight O’Clock Coffee, has embarked on a new venture into the vending business, announced Managing Director and CEO Sunil D’Souza during an earnings call this week. The company has successfully crossed the 1,000-machine mark in FY24, primarily targeting the institutional channel for deployment, he added.
This move by Tata Consumer marks a strategic foray into the vending business, coming four years after the company withdrew its bid to acquire Cafe Coffee Day’s vending business due to valuation concerns. At the time, Cafe Coffee Day boasted the largest fleet of vending machines in the country, exceeding 50,000 machines and valued at Rs 2,000 crore. Tata Consumer had aimed for a valuation half of that amount, as part of its strategy to bolster its presence in out-of-home and institutional channels.
Experts anticipate Tata Consumer’s vending business to gain momentum in FY25, particularly with rival Nestle India announcing the launch of its Nespresso brand of coffee and vending machines in the country. While Nespresso vending machines will initially target in-home consumption, analysts tracking the firm suggest that they could eventually expand into commercial establishments, mirroring trends observed in Western markets.
Suresh Narayanan, Chairman and MD of Nestle India, commented on the burgeoning coffee consumption trend in India, driven by factors like a growing young population, exposure to global trends, and evolving consumer preferences towards in-home consumption.
The beverage vending market in India is estimated to be valued between Rs 3,000 to 4,000 crore, with major players like Coca-Cola and PepsiCo dominating the landscape, primarily in retail establishments, offices, and allied institutions.
Cafe Coffee Day, amid earlier withdrawals of vending machines due to debt concerns and legal challenges from lenders, has witnessed a resurgence in its vending business. The company’s December 2023 quarter results indicate a 12% year-on-year growth in vending machine count, reaching 52,609 machines from 46,884 machines the previous year.
Tata Consumer’s foray into the vending business signals its intent to tap into evolving consumer preferences and capitalize on the growing demand for on-the-go beverage solutions across various segments.
