Business News

After the pandemic surge, D2C brands are increasingly utilising offline channels: MD at Tata Consumer

Tata Consumer, which sells packaged groceries from salt and staples to water and tea, said direct-to-consumer (D2C) brands that thrived during the pandemic were now fading away, which reflects in these online-only brands shifting focus to local kirana stores, where established firms have a significant clout.

“The hype of D2C, which was there during the pandemic, is starting to taper off a bit and that is also one of the reasons why many of the players are now starting to come into the offline world,” Sunil D’Souza, managing director at Tata Consumer, told ET. “Distribution in general trade in India is not as simple as just putting a product out there and moving along. Companies have spent years building on their distribution systems and these are sources of competitive advantage for the large players.”

D2C brands refer to businesses that have most of their revenue or customer acquisition from direct-to-consumer online channels or those started with an online-first distribution before going omnichannel.

From predominantly selling tea, coffee and salt a few years ago, Tata Consumer expanded into pulses, spices, ready to cook, drink product categories and more recently, snacking products. The company also accelerated the pace of innovation last fiscal, launching 34 products compared with 19 in FY22.

However, several of these newage categories also saw increased proliferation of online-only brands, which innovated products to address niche whitespaces, leveraging consumer data and insights.

Nearly two years ago, Tata Consumer acquired a 100% stake in Kottaram Agro Foods, the maker of Soulfull brand of breakfast cereals and millet-based snacks. Even rivals Marico, ITC and HUL have been investing in D2C brands. For instance, Marico picked up a 54% stake in HW Wellness Solutions, which owns healthy breakfast and snacks brand True Elements. ITC invested in Sproutlife Foods (SFPL), which makes Yoga Bar, while Hindustan Unilever Limited (HUL) invested in Zywie Ventures, which sells plant-based supplement brand Oziva, and Nutritionalab, which owns nutritional products under Wellbeing.

The maker of Tata Sampann, Tata Salt and Tata Tea Gold remains unperturbed. “We remain focused on continuing to strengthen this competitive advantage, while at the same time building on our muscles into the D2C space so that we will also continue to take advantage of that shopping behaviour,” D’Souza said.



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