Tata Consumer Products Rs 965
Tea and Coffee companies have been around for decades but have not been wealth creators as these are by and large low growth commodity businesses which go up and down in cycles. For example, Tata Coffee’s PAT increased only by 7% over ten years upto FY 2023. Mcleod Russel has done worse. It has been making losses since FY20 after being in black for several preceding years.
So, what is the equivalent of escape velocity for companies stuck in such an orbit to get away from it? Well, they can take a leaf out of ITC’s playbook which built a large FMCG vertical by using the cash flows of its low growth cigarette business.
