The imposition of President Donald Trump’s tariffs is likely to give Tata Consumer Products Ltd. a competitive edge since the US mainly imports coffee, according to Chief Executive Officer Sunil D’Souza.
However, the real impact will depend on the final tariff rates. “If I take 10% as a normative norm, our big business in the US is coffee and coffee is not produced in the US… it’s all imported,” D’Souza said during post-earnings call on Wednesday.
“Therefore, from a competitive standpoint, we stand on an even-keel with other players. In fact, because we are manufacturing onshore, we might have a little bit of a handicap in our favour as we go forward,” he said.
Again, the US doesn’t grow tea, and, therefore, on tea, there will be a little bit of difference if someone is manufacturing in Canada versus the UK, but not significant enough, according to D’Souza.
The US is one of the world’s largest coffee importers but India’s share of coffee exports to the US is relatively small, accounting for just about 1% of total Indian exports. Brazil and Colombia are the primary exporters.
For the quarter ended March, Tata Consumer’s US tea business saw a strong 15% growth, while US coffee grew 3%. For fiscal 2025, the overall US revenue grew 2%, while earnings before interest and taxes grew 11%.
The company derives about 29% of its revenue from international markets. It, however, does not disclose the specific contribution of each market.
For categories like supplements, infusions, and rest of the India business including salt and staples, he believes there won’t be any changes from competition perspective due to tariffs as they are supplied out of India. “But, overall category-wise, there might be a bit of pressure as inflation builds up.”
TCPL’s recently acquired Organic India brand, which sells supplements, teas, and infusions, generates almost 40% of its revenue from the US.
India is among a number of countries rushing to negotiate trade deals with the US during Trump’s 90-day pause on higher tariffs, which ends on July 9. India was set to face 27% US tariffs before the pause was announced. Since then, Delhi and Washington have been working towards an early conclusion of trade negotiations. Officials of both the countries have begun formal talks on a proposed bilateral trade agreement from April 23.
TCPL avoided raising coffee prices in the US, which has impacted its margins. “Because there was so much volatility, we had not gone in with a price increase,” D’Souza explained.
However, despite the looming risk of a recession, the company has announced a price hike set to take effect in June. “So, you will start seeing the margins coming back in the U.S. on the coffee business.”
On recession concerns, D’Souza said: “Fingers crossed… For now, I’m not sure about where it’s headed. But tea and coffee are basic consumption categories and not a discretionary product. So, while there may be some impact from recession, I don’t think it will be significant enough.”
