Tata Consumer joins the vending industry and achieves 1,000 machines

Sunil D’Souza, the managing director and CEO of Tata Consumer, which produces Tata Tea, Tetley, and Eight O’Clock Coffee, said on this week’s results call that the firm has initiated a new vending venture. He continued, saying that the company, which surpassed 1,000 machines in FY24, is primarily being pushed into the institutional channel.

Tata Consumer entered the vending industry four years after the firm withdrew its offer to buy Cafe Coffee Day’s vending division due to worries over value. With more than 50,000 machines, Cafe Coffee Day was at the time the biggest vending machine operator in the nation, with a company valuation of Rs 2,000 crore. As part of their plan to increase their footprint in institutional and out-of-home channels, the Tatas were reportedly considering cutting that value in half.

Experts predict that Tata Consumer’s vending business will grow significantly in FY25 as competitor Nestle India prepares to introduce its Nespresso coffee brand and vending machines to the Indian market. Although the company said on Thursday that Nespresso vending machines would be aimed for domestic use, experts following the company speculated that the machines may eventually be introduced in businesses, as they are in the West.

India has seen a tremendous increase in coffee consumption in recent years, with a clear tendency toward at-home use. India is now one of Nestle’s fastest-growing coffee markets, according to Suresh Narayanan, chairman and MD of Nestle India. This growth may be attributed to the country’s expanding youth population, exposure to international trends, and novel experiences.

The beverage vending industry in India is estimated to be worth between Rs 3,000 and Rs 4,000 crore, with major firms like PepsiCo and Coca-Cola among them. These businesses are mostly found at workplaces, retail locations, and affiliated institutions.

Cafe Coffee Day has started to increase the number of its vending machines after previously removing them due to debt worries and legal challenges from lenders. The vending machine count increased by 12% year over year to reach 52,609 machines from 46,884 devices in the previous year, according to its December 2023 quarter data, which indicate that it has been regaining ground in the region.