Tata Consumer Products Ltd (NSE: TATACONSUM) Q3 2025 Earnings Call dated Jan. 30, 2025
Corporate Participants:
Nidhi Verma — Head, Investor Relations and Corporate Communications
Sunil D’Souza — Managing Director and Chief Executive Officer
Ashish Goenka — Group Chief Financial Officer
Analysts:
Aniruddha Joshi — Analyst
Arnab Mitra — Analyst
Abneesh Roy — Analyst
Aditya Soman — Analyst
Mihir Shah — Analyst
Percy Panthaki — Analyst
Sheela Rathi — Analyst
Bhavdeep Vora — Analyst
Jitendra Arora — Analyst
Lokesh Gusain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q3 FY ’25 Earnings Conference Call of Tata Consumer Products Limited, hosted by ICICI Securities.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Aniruda Zoshi from ICICI Securities. Thank you, and over to you.
Aniruddha Joshi — Analyst
Yeah. Thanks Yashvashri. On behalf of ICICI Securities, we welcome you all to Q3 FY ’25 results conference call of Tata Consumer Products. Now I hand over the call to Ms. Nidhi Verma, Head of Investor Relations and Corporate Communications to take the call forward. Thanks, and over to you.
Nidhi Verma — Head, Investor Relations and Corporate Communications
Thank you, Aniruddha. And thanks for hosting us. Welcome everyone to the Q3 FY ’25 call for Tara Consumer. We’ve just announced our results as you would have seen. As usual, we will take you through some of the key updates. I have with me Mr Kunal, Managing Director and CEO; Mr Ashish, CFO; and Mr Ajit Kreshna Kumar, Executive Director and COO. And over the next 20 minutes, he’ll walk you through some key highlights and then we’ll open the floor for Q&A.
With that, I’ll hand it over to Sunil.
Sunil D’Souza — Managing Director and Chief Executive Officer
Yeah. Thanks. So if you would — in summary, we had a — I would say, a good quarter on the top-line. Consolidated was 17% on the top-line. If I net off the acquisitions, we were still 9% growth. India beverages grew 16%, which is of which 9% was organic with tea volumes, I’ll repeat volumes grew 7%. India Foods revenue grew 31%, 11% of which was organic. International business recorded 8% revenue growth, 4% in constant-currency, but swung big-time on profitability, which was 35% year-on-year.
India tea, we have pressure on the tea prices, but tea is a cyclical commodity and we know sooner or later either price catches up or cost goes down. And therefore, we remain focused on building long-term competitiveness. We have done a robust volume growth during the year. One thing I’d like to emphasize, it is not extra discounting, it is competitively priced, but we have driven execution, albeit there is a stress on the margin parameters. Calibrated price increases have been taken, making sure that we are competitive, but we are not falling behind.
Salt delivered a strong quarter. Traditionally, when we have taken-up prices, volumes have been negative. This time around, we managed to grow even on the volume front and market-share has continued to go from strength-to-strength, another quarter of 110 bps MAD share gain. Sampan continued strong performance with 23% growth, YTD is now 28% is the ballpark of the 30, which we talk about, Sampan. Ready-to-drink business, we had issues with competitiveness last quarter, which we have corrected and it delivered double-digit volume growth. The exit volume growth for the month of December was 39%.
Our capital goods and organic continue to build momentum and we expect Q4 to have very good acceleration from here on. Consolidated EBITDA was flat, primarily as a result of the team margin pressure. Assuming India Tea margins were at the Q3 FY ’24 level, our overall EBITDA margin for the quarter would have expanded at least 75 to 100 bps. Also, we made progress on building our sustainability credentials with improvements in the DJSI and sustainalytics scores.
Very quickly, 16% revenue growth in beverages, 31% foods, international aid constant-currency core. Non-branded had another strong quarter of 9% revenue growth, all-in 17%, organic growth of 9%. For the nine months, again, revenue growth of 8% in India beverages, 2% is organic. Remember, for the first two quarters, tea was under a little bit of pressure on the top-line front. India Foods was 11% organic, total 30% growth, international aid, non-branded 20, all-in 15% top-line, of which eight is organic.
INR4,44 crores of top-line, EBITDA came in flat versus last year, profit before-tax before exceptional was a negative 20%, a group net close to INR287 crores. And now after the rights issue, we are now starting to spin in cash again. So we have INR880 crores on the books. So for the nine months, 15% top-line, INR13,000 crores of revenue, 11% growth in EBITDA. But remember, for the first-quarter or maybe and even the first-half of Q2, we were sitting with older season and therefore there was not as much pressure as-is building up now. Also, I’d like to — in percentage terms, I think Q3 would be the peak of the pressure. Given that we’ve taken significant or decent amount of hikes as well, I think we would start to see the margin pressure ease off going-forward.
So again, strategic priorities, very quickly, we had defined six set of strategic priorities, minor tweaks to that. So earlier, while we had strengthened Accelerate core, we’ve added Strengthen Accelerate core and growth businesses. The ones which we had — which we already have in our bag for some time like Sampan,, etc., are featuring in that bucket. The new opportunities is capital pools and organic and keeping a lookout for inorganic as well. The one big item which we have brought in is execution because now we’ve got a fairly decent-sized portfolio in the business. We now need to button down our execution, including execution on cost takeouts. Balance remains the same.
Our A&P to sales, as I’ve said, we should be probably in the 7.5%. We were marginally down at 6.7%. Market-share sold continues to grow at 110 bps, minor movement in tea. We have — we have guided for 30% of our businesses being growth businesses growing at 30%. We grew at 89% and now they will contribute to 27% of our portfolio. Organic albeit, the growth businesses were 14% and I’ll come to the details.
One of the big reasons why we have grown decently compared to our peer group at least from announcements that we’ve seen so-far is we’ve continued to focus on building front-end execution. We’ve got roughly 10% higher distributors, 30% higher DSRs as well as expanded rural distribution through and subdistributors. Our direct reach is now north of 1.8 million. Our front-end DMS and SFA is fully implemented, including across the network. We are fully on the auto replenishment system and therefore the tail-end SKUs are also picking-up wind. And in-line with what we had committed of building out the food services and pharma, we have finished the pilots through the test case and are now going to expand rapidly. Modern trade continued to deliver for us 14% top-line growth, e-commerce 59%, e-commerce now accounting for 15% of our top-line, almost equal — actually slightly higher than modern trade.
Continued innovation, there was one brand on which we did not have a premium leg, which was Premium on which we built a care variant. It’s got off to a good start in the north. Powder, which negates the bitterness that you see and the inconsistency which you see with tea bags also off to a good response. Ready-to-drink coffee is again started-off very well. We brought in jelly with a renewed focus with new flavors.
On foods, dry fruits is now a INR100 crore ARR. Our cold-pressed oils is INR70 crore ARR. We are continuing to double down behind it. Apart from that, breakthrough innovation of quick cook Channa, which is just put it in a bowl, put water, put it into the microwave and you’ve got ready-to-eat, no soaking, no overnights, no pressure cookers. Capital pools also continued to expand the portfolio with fried rice masala as well as haka noodles.
I talked about retaining a rating in MSCI’s ESG index, DJSI score continued to improve. We are now 65 versus 56% and further improvement in sustain analytics. On the macro piece, I don’t think I need to talk about the tea prices, which are about 25% to 30% higher than last year. Albeit the Kenyan prices have sort of flattened out. Coffee, your guess is as good as mine as to where-is this graph going. It is now, I probably I mean 40, 50-year high in terms of prices. Yeah, so we just got to keep reacting to this pricing.
In terms of business, packaged beverages, India volume up 7%, net revenue up 10%, marginal movement on-market share. Coffee grew 28%. And like I said, we’ve taken calibrated price increases across the tea portfolio probably compensated for about 40% of the tea price increase. The 60% is still out there of next. We had a 1% volume growth in salt. Overall foods organic revenue growth of 11%, 31% when I include the acquisitions, market-share continued to grow from to time. Sampan had a strong quarter at 23%, YTD 28%. Value-added salts continued to outpace everything growing at 31% and I talked about dry fruits and cold press oil.
Ready-to-drink portfolio, I’d point you to the left-side graph where we had said that we will bring the trajectory back. Volume grew 39% for the month of December. Yes, value was slightly down because we had — we have reindexed our pricing to be competitive in the market, 14% volume growth for the quarter, close to INR160 crores of revenue. Most importantly, Tata Copper, which is not at the focus of the entire competitive actions continue to do well with a 21% top-line growth.
Capital goods and Organic India trajectory in the right direction, albeit this quarter was, I would say, more of stabilization from where we had. You will probably see the next jump coming in Q4 as we roll-out the foodservice, pharma and the innovation portfolio as we go-forward. Combined gross margin of 47% in the ballpark of where we had said it will be, yeah. Non-branded business, a strong revenue growth of 8%. Our soluble business grew 2%, primarily driven by the very, very-high inflation that we’re seeing on the coffee space. EBIT margin was very, very strong, expanding 180 bps year-on-year.
Starbucks improving quarter-on-quarter, same-store sales growth better than where it was last quarter. Now we are in 473 stores, having opened 16 more stores for the quarter in four more cities. Now we are present in 74 cities. UK, we continue to deliver strong performance, strong number two, share. Remember, UK, the growth is happening in fruit and Herbal and specialty and we are focused on that. Apart from the T pigs, now we are also finding tailwind behind, which is now entered into Tesco. Our fruit and herbal market-share now 10%. We are the number two T player in the UK.
USA, after a couple of quarters of pressure now back to performance, 5% growth on revenue for coffee, 4% on tea and market-share at least for the last two months have started to trend up. Canada, after a bit of hiccup last quarter as we implemented our Andromeda packs, which is our most sustainable packs from the UK. Now back revenue growth of plus 5%. Specialty tea grew up 21% and market-share overall. Remember, Black tea we are close to 50%. Overall market-share for tea is about 27%. We are the number-one player in Canada.
Ashish over to you.
Ashish Goenka — Group Chief Financial Officer
Thanks. Good afternoon. Good evening, everyone. I’ll focus primarily on the consolidated financials. As will mentioned, at a consolidated level, our top-line grew 17% on an underlying basis that represents a 9% growth. Growth was fairly broad-based across our businesses and across geography. India reported growth 23%, organic growth of 10%, led by very impressive performances in tea and salt. International continued its good run with a 4% top-line growth and non-branded we saw buoyancy continued because of the inflated coffee prices. So overall, a good 17% growth for the quarter.
EBITDA margins were flat versus last year, primarily on account of the impact in India of tea cost business continues to improve and expand margins. Our India business was particularly impacted by the high tea cost and we saw margin contraction. But international and non-branded business continue to deliver very impressive margin expansion. International is more structural but a non-branded getting the benefit of high commodity prices as of now.
On a nine-month basis, consolidated revenue growth of 15%, again, growth across businesses and geography and we are seeing also EBITDA growth of 11%, Elbit, quarter two was partially and quarter three were significantly impacted by high tea prices in India. The rest of the portfolio continues to expand margins. So therefore on a consolidated financial level, again, nothing much to call-out, EBITDA remains subdued versus last year-on account of IP costs in India.
EBIT, again, impacted by a flow-through from EBITDA plus the amortization impact on account of capital is an organic India, which is close to INR60 crores on a quarterly basis. On PBT, we were impacted by higher interest cost versus last year, but that’s beginning to improve now as we build-on cash, as said, we have moved to close to INR900 crores of cash. And as we continue to build that, we will see significantly higher flow-through from EBIT to PBT. And so therefore, at an overall level PAT came in at INR282 crores, which is down 6% largely because of the impact of tea. As I said of the interest cost and amortization cost.
So with that, I think let me hand over back to Sunil for the closing.
Sunil D’Souza — Managing Director and Chief Executive Officer
Yeah, thanks, Ashish. So essentially, we’ll continue to prioritize a longer-term competitive market position in the India tea business because we know that if the incoming crop is normal, we will have prices move downwards and that will put margins back on-track or if they don’t, industry will take pricing up and therefore margins will come back to normal. But that said, more importantly, the India business delivered robust double-digit growth backed by strong volume, which is a multi-quarter high. EBITDA margin overall impacted, as I talked about, normalized for — if I take-out both the price increases as well as the cost increases on tea, our EBITDA margins would have expanded at least 75 to 100 bps.
Foods, international and non-branded strong quarter. Trade pricing interventions in the RTD business has revived volume growth. It’s just a question of matter now before the revenue also starts to turn positive. Having stabilized Capital Foods and Organic India, now focus shift to accelerating growth with innovation and expansion of the food services and pharma channels. Incidentally, in the pharma channels, about 85% to 90% of the products that we are selling are organic India and therefore significant amount of uplift will come here. Tata Starbucks, albeit a little bit under pressure because of demand improved quarter-on-quarter, witnessed good growth and new initiatives that we’ve launched, launched driving affordability and traffic are showing promise.
So back to Nidhi.
Nidhi Verma — Head, Investor Relations and Corporate Communications
Thanks, and moderator, you can open up the floor to Q&A now.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We’ll take our first question from the line of Arnab Mitra from Goldman Sachs. Please go-ahead.
Arnab Mitra
Hi, team. Thanks for taking my question. My first question actually was on tea margins. If you could just help us understand over the next two, 3/4 till the next crop comes in, what do you expect the tea margins to do in terms of year-on-year impact? And do you think the industry will take sequential pricing or do you wait for the next crop where if it doesn’t — as you rightly said, if it doesn’t come off, their pricing would happen then?
Sunil D’Souza
Okay. So let me answer your second part of your question first. I can’t second-guess the industry. All I can promise you that I will remain competitive, I will drive volume and value my growth, yeah. That’s number-one. Number two, like I said, the brunt of the price increases was felt in this quarter. As we go-forward, because of the past pricing that we have taken. Yeah, see cost — input cost is not going to change, but some of the pricing which you’ve taken towards the later half of the last quarter is going to — and some of which you will take now will start to flow-through, then therefore it will get eased out, but it will remain under pressure. We do expect this pressure to continue till probably end of Q1, early Q2 till the new flush comes in, assuming that it will be normal. But yeah, as of normative margins which the industry has operated at, we are roughly off by at least 60% of that. So I do expect either price increases in case the tea costs don’t change or tea cost goes down and therefore, I mean, we get a little bit of more breathing space. But Ashish, would you want to add anything?
Ashish Goenka
No, nothing further to add as Sunil said, we will see, I think, some pressure over the next two quarters, albeit the maximum delta was this quarter. So it should start easing over the next two quarters. But since there are no fresh teas available, I think that input costs have pretty much logged-in for the next two quarters. So a large part of it would depend on how the market prices move and B, how the tea season opens up next year.
Arnab Mitra
Sure, thanks. That’s very helpful. My second question was on the RTD business. You’ve seen a good improvement here with the changes or actions you’ve taken. Wanted to understand is the competitive environment here stable? Are you seeing further intensity from some of the new entrants? And do you think what you’ve done is sufficient to get you back to revenue growth, let’s say, a few quarters down the line as you see it.
Sunil D’Souza
So here’s a couple of things on the RTD business, right? The reason why they are in the cups business at INR10 is because the unit economics work. I’m not sure at least I don’t and I can’t understand how unit economics will work-in any other package with a large capex and large freight, right? And therefore, I remain convinced that we’ve got to stick to our strategy and continue to execute. Now beyond INR10, I mean, if you expect consumers — competitors to really go below that and say more aggressive, it’s possible, I’m not sure that will happen. So we are — geared for the long-haul to fight the battle at INR10 and move the business into profitability and we will do that.
Arnab Mitra
Got it. Understood. And my last question was just on the international and the non-branded business, while year-on-year margins are up a lot, it’s slightly tapered off sequentially. Do you expect at least the non-branded business to now start moderating or do we expect in the near-term margins to remain healthy in both of these?
Sunil D’Souza
So if you can tell me where coffee prices are going to go, I can promise you where I have to tell you the margins. The whole problem is every time we think that we hit a peak and therefore we’re going to contract, then it takes another big leap, right? So the only pressure point on the non-branded business is at some point, there is going to be an impact on the demand and that is going to flow-through and that should be the trigger for pricing. You’re right, coffee prices 50 — sorry, yeah, 5,400 and $3.5, right, and Arabica. These are 50-year highs. Not sure I mean where it is going from here, we remain very, very cautious on the inventory front, not wanting to be too long on the commodity.
Arnab Mitra
Sure. Thanks. That’s it from my side. All the best.
Sunil D’Souza
Thank you.
Operator
Thank you. We’ll take our next question from the line of Abneesh Roy from Nuvama. Please go-ahead.
Abneesh Roy
Yeah, my first question is a follow-up on tea. So normally we see Sunil, that whenever sharp raw-material inflation happens in any commodity of 25%, 30%, say, which is very sharp. FMCG sector takes price hike in two tranches. So now why would you rule out one more price hike because we are talking about Q4 being soft, it may improve versus Q3. Q1 also being soft and Q2 almost also getting impacted. So it’s almost 3/4. So is it fair to rule out one more round of price hike given it’s largely a two-player market. There are multiple local players, but what is preventing one more round of hike given two, 3/4 of pain interest?
Sunil D’Souza
Abneesh, you’re absolutely right. So two, three things I would say, right, a 25%, 30% price hike, the one thing different from the past is this has happened gradually, I think from August to October, November. So the local players have had time to adapt to the new prices and therefore not being started of working capital overnight. So that’s number-one. And therefore, you’ve not seen the spikes of market-share that you saw during the COVID times. A. B is nothing prevents industry providing every player is rational and wanting to take-up price. Let me just say in-markets where we think we can lead with price, we have already led with price and we’ll continue to lead. It’s not necessary to — I’m willing to take it five times, right? But I am not willing to be go too much ahead and leave a gap which competitors can exploit.
Abneesh Roy
Okay. So one follow-up here. So would you say that market-share gain versus local players is something a bit difficult in the near-term given what you mentioned staggered in fact, I’m not mentioning against the number — the other large player because I think both can do well. My question is more on the local players. Is there an opportunity in next two quarters to see a real market-share? See, let’s ignore the Nielsen market-share. Is there an opportunity to gain market-share in the real terms?
Sunil D’Souza
Yes. No, no, I absolutely think so, because Abneesh, I don’t think industry has grown 7% volume, right? And my price index to locals has not changed dramatically. As prices have gone up, I think slowly, slowly the oxygen is getting thinner. So I would definitely say market-share will go up.
Abneesh Roy
Sure, that’s helpful. My second question is on and salt. So salt low-single digit volume growth and Q3 growth is lower than the H1 growth. Now both are big premium players definitely versus rival and urban slowdown is that clearly the urban business. So given the urban slowdown, how do you see volume growth in salt where you are a premium player and someone where clearly you are urban player.
Sunil D’Souza
So Abneesh, number-one, urban slowdown, I think I am probably seeing a different picture than everyone else. If you do not count modern trade and e-commerce and only count general trade, my urban growth is low-single digits. Our rural growth is close to double-digits. If I add-back modern trade, which is primarily urban and e-commerce, including quick commerce, which is primarily urban, then my urban growth also is close to double-digits, yeah. I am not getting tea growth of 7% if urban doesn’t grow as much.
Now the point about salt, very clearly historically, as I said, when earlier we have taken price increases for at least 1/4, we’ve had negative volumes as trade has downstop. This time around, I think I would like to credit my team with execution, planning, thinking, whatever. We have grown on volume as well. And remember, we’ve taken a 7% price increase after two years. I mean, it doesn’t sound too much over two years, but remember we’ve taken one-shot it was a bit of a shock. So I would say on salt, I’m pretty happy with where we have come out.
Sampan, I think it’s a question of commodities, some of the commodity spike for which we had to take pricing up and it normally takes a bit of time for trade to react because we take it as quickly because we don’t sit with huge inventories and play arbitrage and therefore, we translate immediately. So something I wouldn’t worry too much about. As I said, for the first-half, we’ve delivered 28, which is in the ballpark.
Abneesh Roy
Sure. Last quick question on Organic India and capital. So first is what has not worked till now because we have seen in other companies in other categories, distribution change happens and it becomes counterproductive. In your case, you have pointed a lot of things which have worked and Q3 is stable versus two sequentially. But if you could tell us what has not worked, both in terms of margins and distribution and given urban slowdown and on the other side, pharma expansion, pharma outlet expansion, FY ’26, how does it look? Could you give us some clarity? I’m not asking about numbers because given current scenario. But if you could discuss on a holistic basis, where are we in these two businesses?
Sunil D’Souza
Yeah. So okay. What — so we’ve had a lot of learnings through the last, I would say, two quarters, right? Number-one, as we took over the businesses, there was a bit of softness simply because the team which was selling knew that they were going to sell the businesses and they were going to move away, right? So from that perspective I think execution slipped a bit in the market. So we had to A, bring it up to that level and then improve from there on. So that’s number-one.
Number two, categories like frozen, we have never handled frozen and we have never done exports. And we’ve never done exports in frozen with a place where we had to drive the agenda for the international retailer like a Patel brothers or a Mustafa or a, right. So that took us a bit of time. So we probably lost a quarter on that piece. Number two was in categories like ginger garlic paste where commodity price moves rapidly, making sure that we built a playbook with 10 recipes to adapt to the conditions. That was the number two.
Number three, the fact that there was a active channel which cater to all the street vendors for sauces, etc., we needed to figure that piece out. We are factored in food services to be a faster growth. I think by the time we set it up, recruited and set it up, it took in a little bit of more time than what we expected. That was on the capital Foods front.
On organic India, a significant amount of growth was built on the pharma channel and we took again a bit of time — remember, Organic India, we closed only in April and probably for the first 30 days we just took back stock and because we didn’t want to. So actually, we got going by June. So we are about three months behind capital pools even in organic India. There again because the team was moving on, they had moved on. Organic India, let me say my single biggest learning was while we had 2x or actually not two. We have 5x of where they were in terms of expansion in terms of outlet distribution. So I think the big learning was we need to go with those big outlets for massive depth. And therefore we are now going to go after a very specific set of outlets, build displays, build promoters, build sampling, build consumer education out there and rapidly expand the pharma channel.
Food services, we piloted in two cities. We are going to be in 16 next year. We are already in the phase of rolling out to 16. Pharma, we piloted in 10 cities, we are going to be in 40 next year. So you are going to see a substantial jump shift, I would say, at least in the next 90 days, if not the next 30, 60 days.
One more last thing. Last thing was innovation, right? By the time we figured out at least it took us three to four months-to understand the categories, understand the consumer, what are the big gaps, where can we bring value to the table. So I think you’ve started to see the start of innovation. I think you’ll see some rapid stuff coming in the next probably one or one to two quarters.
Abneesh Roy
So thanks for the candid answer. That’s all from me. Thank you.
Operator
Thank you. We’ll take our next question from the line of Aditya Suman from CLSA. Please go-ahead.
Aditya Soman
Hi, good evening. Sir, two questions. So one, are you seeing in P, when you mentioned that some of the smaller competitors, they’ve had more lead-time to adjust to prices. But is there also a sense that some of these players are also benefiting from easier access to the market, whether it’s because of modern retail or quick commerce?
Sunil D’Souza
I’m not sure. I mean the access, modern retail, I don’t think things have changed significantly. Quick commerce, I’m not sure you’re seeing all the tail-end SKUs coming. So — and that was always there. So it is not — yeah, it could be, but I don’t think we are seeing anything dramatically different in that front. In fact, e-commerce, we are the number-one player and we continue to be the number-one player and we are expanding market-share as we speak. So I’m not sure we are seeing what you mentioned?
Aditya Soman
No, very clear. Thank you. And the second question on the beverages business. So would it be fair to say that now the product is a lot more competitive from a pricing perspective and which is what is driving up the volumes?
Sunil D’Souza
No, absolutely. I mean, so if I divide the ready-to-drink business, there are three parts of the business, right? Himalayan was unaffected. It’s on a different planet, if I may in terms of image, premium type of outlet, et-cetera, that’s number-one. So number two was Tata Copper Plus, which we showed you the revenue growth of 18%. That’s on a strong wicket going from strength-to-strength. Tata was the one impacted where while the INR10 price was matched by competition, they had gone significantly deeper on retail margin and that is what we’ve matched. And like I said, the critical thing is to make sure we build momentum back under the business and then figure out how to improve profitability thereon.
While like I said in December our top-line — I think for the December, we exited at a 39% volume growth. For the quarter, it was 14% because it has accelerated month-on-month. But the 14% volume growth translated into minus 2% revenue, primarily because as we reindexed retailer margin, that has had an impact on revenue. But here’s the thing, first, as long as my unit economics works and I have question marks on the other side and therefore what exactly is going-in the future. My game is to stay-in the market, build momentum and build profitability from here on.
Aditya Soman
Understand. And just a follow-up on that. So it’s fair to say that the margins for that business, the business aren’t impacted or would there be an impact where you’ve taken down margins as well, but you’re okay with the new level of profitability. Is that what you?
Sunil D’Souza
So we have taken down prices and that has had an impact on the revenue line and the margin. But A, remember, guys, Tata Gluco Plus in perspective is 2.5% of my total revenue as a company. And if that is a business which I’m sure is a longer-term bigger bet. We need to grow. I have a competitive advantage. So I will stay the course and I will build the business. We will figure out how to compensate that margin pressure from other businesses.
Aditya Soman
No, totally understand. I just want to make sure I get sir. Thank you.
Operator
Thank you. We’ll move to the next question from the line of Mihir Shah from Nomura. Please go-ahead.
Mihir Shah
Hi, congrats on a very strong performance. Sunil, if you can just throw some light on the divergent trend that you’re seeing in your urban versus the peer set that we are seeing. Would it be a function of the categories that you are present in where there is a higher composition of unorganized players? And because of the price hikes have been limited versus them, that is leading to formalization. Would it be one key reason for using better urban growth versus peers?
Sunil D’Souza
Yeah. So number-one, my price hikes are not more or less than competition. It’s almost like-for-like, right? Either I move first, competition moves later, competition moves, I move. We don’t — I don’t think we’re going to win the game by leaving money on the table or discounting, right? So I’m not a believer on that piece. A.
B, I would say a lot of work has gone into driving better distribution. A, you see the larger feet on-street. I’ve got 30% more DSRs with a very focused set. There is a guy who is selling beverages plus organic India. There’s a guy who is selling salt plus sampan and there is a person who is selling soulful and capital food. So we’ve brought in focus on all those categories. I think that is working, number-one. Number two, we’ve got auto replenishment systems, which means every single SKU is available. Number three, we’ve got the new DMS and SFA implemented at the front-end, which means it is far more analytical, far more data oriented. Number three, for — and this is — I’m going beyond urban, we’ve expanded our number of superstock and therefore sub-distributors are close to 10,000 sub distributors now, which operate primarily the below 50,000 POPS data, and yeah, so that’s about it. Like I said, if I don’t count modern trade and e-commerce, I’m low-single digits. If I count modern trade and e-commerce, I’m double-digits, right? So I’m not sure I can comment on other players, but I can talk about my numbers.
Mihir Shah
Got it. Thank you for that. On tea, which kind of volume growth, I don’t remember when are we seeing this kind of volume growth. Clearly, I don’t — would it — do you think that these are the sustainable volume growth for the near-term Middle-East and what is the level of pricing that you have taken along with the industry or T specifically?
Sunil D’Souza
So let me comment about pricing. We’ve probably taken 40% of the cost into pricing so-far. We’ve still got 60% to go, which is a gap as we enter this quarter, A. B, in terms of overall growth rates, I — we’ve always guided saying mid to longer-term, we will see mid-single-digit beverage growth and we stick by it. Now it’s also — it could be a fact that we have put more focused A&P power. We have probably executed better, we’ve got a better pack-price strategy. So I wouldn’t exactly want — I have a detail on why we are growing seven and others are not. All I can say that I do think we pull-in every single lever to make sure if there is margin pressure, if not anything, we will make sure we are on a strong wicket when the margin pressure eases.
Mihir Shah
Understood. Okay. Lastly on food margins, would it be incorrect to assume food margins have seen a material expansion? And what would be the key reason for the same? Would it be largely from salts of the price hikes that you’ve taken or it will be a contribution a bit from all the categories that you are you investing in?
Sunil D’Souza
So in foods, there are multiple set of factors playing out there, right. In salt, we’ve taken a 7% price increase, but it has put us back exactly where it should be in salt. So I don’t think there is a margin expansion there. Sampan was a little bit of a margin dilution, if not anything, simply because in a few categories like pulses, et-cetera, I think the costs went up before we took pricing, but that’s very, very marginal.
Capital Foods, as we had said, one of the big reasons for acquiring it was that the margins were probably 50% higher than where our margins were. And as that plays in the portfolio, I think the overall pools portfolio, you will see the margins go up. It’s more a question of mix and growth rates of all the different parts of the portfolio rather than just pricing or cost advantages.
Mihir Shah
Got it. Very clear, sir. Thank you very much and wishing you all the best.
Operator
Thank you. Next question is from the line of Percy Pantaki from IIFL Securities. Please go-ahead.
Percy Panthaki
Hi, Sunil, just a follow-up on the pricing, which Mihir asked. You mentioned 40% of the inflation. So does that mean that because tea cost is up, let’s say, 25% that the price increase you have taken is 10%. Is that the correct way to read it?
Sunil D’Souza
Ballpark, yes, per se.
Percy Panthaki
Okay. So this quarter, we have seen only like 3% of the pricing come in. Is that because of — is it because of mix or is it because that the pricing was taken through the quarter and did not affect.
Ashish Goenka
The premium segment. So there was also a function of mix.
Sunil D’Souza
But that said, I mean, the initial days when the price increases happened, we saw lower part of the portfolio fire better. But now getting into January, February, the trends that we’re seeing is now the middle to higher part of the portfolio is also performing as strongly.
Percy Panthaki
Understood. So would it be fair to assume given the price increases already under the belt, not even counting anything more that Q4 should see at least a high single single-digit pricing growth even considering some little bit of mix deterioration. Is that a fair assumption?
Sunil D’Souza
So, all I can say is we’ll continue to focus on volume growth, A, we’ve taken 40% pricing and we remain committed to taking any other pricing opportunities that there are in the market, yeah.
Percy Panthaki
Understood. Understood. Coming to the international portfolio, I just wanted to understand the margins, are they — I mean, of course, there is a coffee price impact there. I don’t know-how to look at it because for the international business, the coffee price would actually be like input cost inflation and despite that international margins are healthy. So what is driving that and what do you think is the stable state international margin? Will it maintain at this level or is there a chance it could go up or down?
Ashish Goenka
So per se, if you see the portfolio of international, the large part of the margin expansion is actually coming out from UK and Canada. And because we have taken structural interventions in these markets. UK, of course, has talked about it earlier, we did a lot of structural interventions which are playing out now. US margins are actually lower and largely impacted to improve versus last year because overall coffee impact has not been that material in that market.
Sunil D’Souza
So — but that said, I think I will put back a certain amount of margin improvement in the UK into brand-building now. Now that we’ve got the business on steady footing, whether it is in terms of the manufacturing, sustainable packs, product quality, fully biodegradable tea bags, execution at the front-end, got food and herbal specialty all firing up, I think it is high time to start building the brand to a stronger position. So we will start giving this off. But international overall will be in the ballpark of the margins because while I give UK off the US, I would expect to improve from here on as we improve two or three things. A, is the big opportunity of K-Cups is what we are pushing for that is a better margin than bags. We have a significantly lower market-share in that, number-one. Number two, availability is a big opportunity. The team is focused on that. See, smaller customers whom we’re not focused on, who are more profitable from execution standpoint are getting focused on. And D, most importantly, in the US, while earlier our entire sales system was based on third-party brokers, we have now taken control of key accounts with putting in an in-house team to manage all the big accounts like a Walmart, Kroger, Publix, etc, directly?
Percy Panthaki
Got it. So just — I know it’s a very short-term oriented question and apologies for that. But do you think that we could have a couple of quarters where the India margin is still under pressure on a Y-o-Y basis, whereas the benefits of unbranded and international on a Y-o-Y come into the base. And therefore on a consol level, there is a lot more pressure on the EBITDA than what we’ve actually seen this quarter. Is that a possibility?
Sunil D’Souza
So Percy, if you tell me what is happening to coffee prices, if you tell me what is happening to the coming tea crop and if you tell me what is happening to competition in the local market on tea prices, I will be very happy to do that computation. Unfortunately, the only thing I can do is react to the market. If players are rational and if they put in a — I mean, behave rationally on cost, prices, et-cetera, as I said, if I had computed my margins net of teap cost — cost increase and price increase, my EBITDA margin would have expanded 75 — at least 75 to 100 bps, right? So if anything, I think we should start seeing expansion rather than contraction.
Percy Panthaki
Okay. Thanks,. Thanks very much and all the best.
Operator
Thank you. Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, please restrict your question to one at a time. You may join back the queue for follow-up questions. We’ll take our next question from the line of Sheila Rathi from Morgan Stanley. Please go-ahead.
Sheela Rathi
Thanks for taking my question and I have two questions. So my first question, Sunil, was on the point which is made in the presentation that with respect to prioritizing long-term competitiveness in the tea portfolio. Is there a way we can think of that 7% is kind of a new narrative on the volume growth. Of course, we cannot make such projections, but how should we think about the volume growth trajectory in terms of what you are seeing here?
And the second question is, I think Consumer is the first company to call-out that e-commerce is bigger than modern trade for us at 15%, e-commerce and modern trade at 14%. Just want to understand is what part of our portfolio is driving this or we are going all-in because lot of consumer companies say that they have a different portfolio for e-commerce vis-a-vis, how are we different here? The two questions.
Sunil D’Souza
So let me answer the second question first. Sheila, as a consumer, will you buy a different pack on e-commerce than what you get-in your Kirana store or modern trade that I’m not very sure, right? We do play pack-price from time-to-time, but broadly categories, et-cetera, I would go all-in, a, B, my philosophy is I will be where the consumer is shopping, right? I will not try to balance my margin profile and my channel profile versus how my mathematics works out. I will be where the consumer is and then work backwards to figure out how do I fit my profit profile. So that’s number-one.
Number two, on the key margins, if this was the number, I would use the term on a lighter note, if also Sunil would rise, right? So the 7% volume growth, I wish, but I think longer-term, it is mid-single digit that we are guiding for and we remain committed to that.
Sheela Rathi
Thank you.
Operator
Thank you. We’ll take our next question from the line of Bhavdeep Vora from Franklin Templeton Asset Management India. Please go-ahead.
Bhavdeep Vora
Yeah, thanks for the opportunity. I have two questions. The first is, could you comment a bit on this recent news of on the snacking business about the tie-up with Pepsi for the cool and kind of what does this entail and are there kind of further such plans in the pipeline?
Sunil D’Souza
So the single biggest thing that we believe for Capital Foods is that for example, Chutney, we’ve got an 89% share of the segment and the game is to grow that segment. The easiest way to grow that segment is sample the product because I would find it very, very difficult to believe that someone sampled it and didn’t buy the product, right? And therefore you need to find a vehicle with whom you can partner with to do that. So by partnering with, we’ve got the flavor with the bottle on the pack in front of every consumer picking-up. So for a very cost-effective, I would say, execution, I have got A, I’ve got an ad which has yet to come out, right, which you will — I mean, I think will be a breakthrough when two brands are coming together, A, B, I’ve got sampling across the entire range going on. And therefore, I expect my a entire tailwind to come in into the Chutney and the portfolio.
Bhavdeep Vora
Yeah. Okay. So does this kind of — this is more of a partnership for kind of building the brand profile and this thing or I mean, is there any further investments involved in this or?
Sunil D’Souza
We will put in a little bit of money on ANP. Pepsi will put in a little bit of money on A&P, but if your question is, is there a commercial angle to this? Is there a royalty? Is there a this thing? No, there is none. I mean, it is more of a branding and sampling exercise for us. Okay. Okay, fine. The second question is on the kind of profitability aspiration for the Sampan portfolio. If you could comment where are we? And over next three to five years, where do you plan to be in that part of the business. So when we had started out, Sampan was zero or slightly below water, I would say. Over the past 4.5 years, five years, we built it to close to very-high single-digits, close to double-digit margins. I don’t see a reason why gross margin and our gross margin is defined as including variable freight. I don’t see a reason why over a period of time, it can’t go to 12% to 15%.
Bhavdeep Vora
Okay. Okay. Fine. Great. Thanks. That’s from my side.
Operator
Thank you. We’ll take our next question from the line of Jitendra Arora from ICICI Prudential Life Insurance Company. Please go-ahead.
Jitendra Arora
Hi, Sunil. Thanks for taking the question. Just wanted your qualitative comments on how our market shares panning out across channels, especially in quick commerce versus, let’s say, GT for right now?
Sunil D’Souza
So I like Abneesh’s comment on Nielsen market-share, right? So if you’re asking for Nielsen market-share, I would say compared to last December, we’ve narrowed our share gap in GT. In modern trade, we remain constant. And in e-commerce, which is the fastest-growing channel, we continue to expanding to maintain our market-share, I mean, number-one position. Incidentally, Nielsen doesn’t put e-commerce into its market-share calculation as well, right? Though they give you a market-share on e-com, but when they report it, they only add modern trade and e-com, modern trade and GT don’t put in e-com at all.
Jitendra Arora
Okay. But basis your own investments given that the country will be getting a feed with an e-commerce companies. How do you think they are? If you want to comment.
Sunil D’Souza
Okay. I wouldn’t comment on specific things. All I can say is while I reported a close to double-digit value growth, I think my closest competitor said low-single digit value growth.
Jitendra Arora
Thank you.
Operator
Thank you. Next question is from the line of Lokesh Gusen from BOB Capital Markets. Please go-ahead. All right, thanks. So my question is on tea pricing. So you mentioned 40% of the 25% inflation is through. So is that the net pricing inclusive of the mix impact or is that the list, I mean, pricing across the portfolio.
Sunil D’Souza
This is net including all the mix impact.
Lokesh Gusain
Understood. Thank you.
Nidhi Verma
Thank you. Moderator, can we go to the webcast for maybe one last question please. Yeah, I just read it out. There is a question from Chair at Kota who’s asking is the benefit of split food implementation now reflecting your numbers?
Sunil D’Souza
And so split route implementation, I think by the time we got implementing, it was end-of-the quarter. I think we’re still — there are still certain percentage of vacancies that I see on a daily basis, I think that’s fully not there, A. Jay and the second thing is I think putting in the salesperson is the easier part, getting the confidence of the retailers, getting the product knowledge up, building the relationship and making sure execution happens at the front-end is going to take time. So I would say it will only build-up from here.
Nidhi Verma
Yeah. The second question is, has sales and distribution now geared up and is the demand environment for 25% growth in capital suits and organic business?
Sunil D’Souza
So Jay, I wouldn’t comment on the demand environment because I do think both capital Foods and organic India are small, I mean and the runway remains huge. So irrespective of demand, I think we should have significant growth. A and our core to grow. A, understanding the categories completely; B, making sure that we have enough innovation to make sure we’re leveraging the brands and powering them and see, making sure that we build-out the new channels that are required to make them grow, Alla, the pharma channel for Organic India or the food services for capital pools and the other thing is building the brands into stronger places. So I do think the growth rate is achievable irrespective of the demand environment from the simple fact that we’ve got a long way to go.
Operator
Thank you. Ladies and gentlemen, we’ll take that as a last question for today. I would now like to hand the conference over to Ms. Nidhi Verma for closing comments. Over to you.
Nidhi Verma
Thanks everyone for joining. And I understand due to paucity of time, perhaps we haven’t been able to address everyone’s questions. So you can reach out to us for any remaining questions. On behalf of the management, I want to thank you all and thank you ICICI Securities.
Operator
[Operator Closing Remarks]