Tata Consumer Products Ltd (TCPL), formerly known as Tata Global Beverages Ltd (TGBL), is streamlining its distribution in the country, as it seeks to expand its direct reach and footprint in the market.
The move comes more than a year after it announced the merger of Tata Chemicals’ consumer business with TGBL to form a consumer products entity that now sells a wide range of packaged goods under brands like Tetley Tea, Eight O’Clock Coffee, Tata Tea, Tata Salt, and Tata Sampann, which sells packaged pulses and spices.
As part of the move, the company last month sent termination notices to over 45 distributors of Tata’s packaged salt and tea businesses. Mint has reviewed a copy of the termination letter that has sought 7 September as the last date for distributors to supply TCPL’s products in the market.
TCPL will now work with its stockist and dealer network directly, as it integrates its food and beverages businesses, a company spokesperson said. “We are integrating the food and beverage businesses of TCPL in India, which will result in benefits such as stronger processes and scale efficiencies. When we reviewed our sales and distribution structures, we realized that it was critical for us to leverage technology and work with our stockist and dealer network directly, to increase our distribution footprint and in-store execution in the market," the TCPL spokesperson said.
Distributors have raised objections to the move. “They want to change their entire model of distribution. They have taken away a chain of distributors from it, that too with one or two months’ notice period," said Dhairyashil H. Patil, national president, All India Consumer Products Distributors Federation.
TCPL operates 2 million retail outlets in India, the company said in its earnings presentation for the three months ended June. The company has enhanced its frontline sales force, including sales officers and direct sales representatives as part of its sales and distribution redesign after the merger. In the last 12 months, direct reach has increased by two times, the company said in its presentation. The firm is optimizing its vendor base and the distributor and warehouse network as part of the revamp, it said.
“The reason why any company would look at reducing the number of distributors is if it is underperforming. If a certain number of distributors bring very little sales or are not making a profit, it does not make sense to service them. It only adds to the cost of the company. Usually, companies would redistribute the territory to another distributor to maintain sales," said Pinakiranjan Mishra, partner and national leader, consumer products and retail, EY.
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