Tata Global Beverages Ltd ADR (TTAEY) CEO Sunil D'Souza on Q1 2023 Results - Earnings Call Transcript

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Tata Global Beverages Ltd ADR (OTC:TTAEY) Q1 2023 Earnings Conference Call August 11, 2022 2:30 AM ET

Corporate Participants

Nidhi Verma - Head - Investor Relations and Corporate Communications

Sunil D'Souza - Managing Director and Chief Executive Officer

L. Krishna Kumar - Executive Director and Group Chief Financial Officer

Conference Call Participants

Abneesh Roy - Edelweiss

Manoj Menon - ICICI Securities

Trilok Agarwal - Dymon Asia

Jaykumar Doshi - Kotak

Sheela Rathi - Morgan Stanley

Percy Panthaki - IIFL

Amit Purohit - Elara Capital Plc

Sumant kumar - Motilal Oswal Financial Services

Richard Liu - JM Financial

Devika Jain - Ratnabali Investments

Operator

Ladies and gentlemen, good day and welcome to Tata Consumer Products Limited Q1 FY '23 earnings conference call hosted by ICICI Securities Limited. 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. [Operator Instructions] Please note that this conference is being recorded. And I'll hand the conference over to Mr. Manoj Menon, Head of Research ICICI Securities. Thank you. And over to you Mr. Menon.

Manoj Menon

Hi, everyone. It's a wonderful, good morning, good afternoon to you from India. On the auspicious day of a celebration day today. Thanks for taking time out and joining this call. Now I just hand over platform to Ms. Nidhi Verma from Tata Product Consumer for the introduction of the management and for further proceedings. Nidhi over to you.

Nidhi Verma

Hey, thanks, Manoj. And hi, everyone and welcome to our call. And thanks for taking the time to join us today. We announced our results yesterday and published all the material so hopefully you've had some time to go through them. But for today's call. I'm joined by Mr. Sunil D'Souza, Managing Director and CEO, Mr. L. Krishna Kumar, Executive Director and Group CFO and Mr. Ajit Krishna Kumar, CEO. So, in terms of the format, we spent about 15 minutes or so, walking you through the key highlights during the quarter, and then we will open up the floor for Q&A. So for further proceedings, I'll hand it over to Sunil. Sunil over to you.

Sunil D'Souza

Thanks Nidhi. So if I can go straight to Slide six in the deck, which is the executive summary. During the quarter we grew by 11% on consolidated revenue, 10% in constant currency terms, despite huge volatility and inflationary headwinds. On a three-year basis this is 12% revenue growth, expanded our margins, EBITDA grew 14%, 13% in constant currency up by 40 basis points. EBITDA margin is now 13.8.

India business grew nine, 1% volume in India beverages and revenue of three. India foods volume growth was a bit soft as we took strong pricing in respect of inflation which you're seeing in that business but revenue of 19%. International business was up by 9, margins more or less maintained in the international business gross margins.

Segment margins in India expanded 20 basis points despite cost inflation in salt and significantly higher A&P. We continued to invest in our brands while overall as a company we upped our A&P by 34, India business was up 48 and that shows the market share gains in both tea and salt.

Innovation momentum was accelerated, and we had several new product launches across all our platforms. And group net profit increased by 38% led by higher EBITDA and most importantly, improved performance or JV/Associates. We've also announced our new sustainability strategy with realistic goals and targets.

I will move to Slide nine, which is a summary of our key businesses. So India beverages I talked about volume up 1, revenue up 3. India foods, volume negative 3, revenue up 19. U.S. coffee again strong pricing actions in line with commodity trends out there, volume down 3, revenue up 20 and as you will see market share beginning to trend up there. International tea volume growth negative 2, revenue up 2 because all the pricing actions that we've taken have not translated into the market, given the fact that we deal with several large customers. But we solved that puzzle end of last quarter, and we should see better traction going forward. Tata coffee volume growth up eight and revenue up 25 driven by coffee prices all in 3327 crores of revenue up by 11%.

Next Slide. In terms of metrics, I think you saw a flow through completely 11% revenue, 14% EBITDA 14% PBT and group net profit up 38 most importantly EPS is up by 38 and we're sitting on 1900 crores of cash.

If I move to Slide 12 just to give you highlights of where we are on our strategic priorities. We were on 1.3 million -- we are committed 1.3 million outlets direct reach in March which we've completed, and we said we are targeting for 1.5. Going trends you might be slightly ahead but as of now we stay with 1.5. But most importantly we said we have to now get the wholesale multiplier as we pump in innovation and A&P through our distribution system.

Wholesale coverage is up by 2x from 19,000 to 38,000 outlets. Most importantly, also all our alternate channels are firing full speed. Modern trade is up 35, ecommerce which we had ended at about 7.5% of sales last year is now up to 8.2 and the two-year CAGR is 73, very healthy trend.

Next slide, we are continuing to power our packaged beverages overall India Business A&P is up by 48%, Coffee is now growing very, very healthy for us up by 73% for the quarter, but we have about a 3 to 5 share depending on which geography you will take into account and we continue to inch ahead on our market share in base tea.

Next Slide on salt, we continue to power A&P but most importantly, we now will start ramping up our investments behind Sampann. We have always said the opportunity in salt is both on top of base Tata salt as well as below. So rock salt and premium salts overall I mean grown significantly. And we had launched this new variant of fortified salt as a pilot in Delhi. That doing very well. With a few tweaks in the marketing mix. We will now be rolling it out across the country. Most importantly, our salt share is in the ballpark of 38% and continues to show 400 basis points improvement over last year.

We are fueling innovation. The first slide I think is a critical piece where we are rejigging our blends, the whole marketing mix across the country, but most importantly 40% of the spice market is in the southern markets where we had not played seriously so far. We are now customizing both product and communication to match the southern markets. Just started our rollout in Andhra, Telangana and we will be shortly entering Karnataka but way to go. All I would say is watch this space.

Moving from coffee into cold coffee. We probably were a slight bit late to this season. But going forward we feel very good about this product. Expansion of portfolio in Nourish Co was another big thing and we have launched Tata ORS on a pilot basis in specific markets and internationally also we continue to expand with the sweet tea, cold brew in the U.S. now. When we had acquired Soulfull, we had said we acquired Soulfull not only for what it is but what it could be. And we had said that is going to be the base brand for our platform in breakfast cereals, mini meals and snacking. Now that we've got the base business more or less tightened up now we are expanding, with this is the first of many more innovative launches expanding categories in the platform, a blind taste it is a winner versus the market leader. We are already about five to eight share in about the last 60 days since launch in markets and outlets where we are present.

Next slide. Himalayan, we figured that the share of equity and mind space in consumers is far ahead of our share of wallet, and we have the opportunity to expand this into many more segments. So we are transforming Himalayan into a provenance brand. You will see many more opportunities coming up for Himalayan but now we have started with jams preserves, and honey, all sourced authentically from the Himalayas.

Next slide. The other thing in this quarter is here always said that we have a four plus one platform play not elaborated too much on the plus one platform. I think by now everyone on the call will be familiar the fact that we have entered the protein platform, I will highlight saying that we've entered the protein platform and not only a product.

In the next slide, the first category that we're entering is alternate means we've launched Tata Simply Better, off to a good, albeit it’s just two and a half weeks old. And we see a lot of potential unlike many of the competitors in the space. A, we've got a winning proposition, both in terms of the protein content in specific products that takes taste and texture feedback from consumer and most importantly an ambient play which then allows us to expand our distribution width far-far more than competition.

Next slide. We've always maintained that while we will strengthen and accelerate our core businesses, we will co-funding our field of play. Our new engines of growth last year delivered 52% growth this year also continuing that trend, quarter one, they're up by 53.

Next slide. We won lots of awards in sustainability, but most importantly, Slide 21. We've announced our new sustainability strategy. We've already put it out in public, better sourcing, better nutrition, better planet and better communities. Detailed items under this detailed targets. These are stretch, I would think achievable targets which we aim to deliver, whether it is supplier assessments, or sustainable products in one form or the other in the product form, or in the climate phase net zero, water neutral, zero waste to landfill, and packaging, or committing to diversity in the workforce. We have now very specific targets with very specific timelines, which we aim to deliver over a period of time.

In terms of the macros, on the right-hand side, commodity trends, a little bit of softening, but albeit overall versus last year, still higher Kenyan teas, which translate into a bit of inflation in our international geographies, because of which we're taking pricing. In India, tea was broadly operating in a range, small bit of a blip, I would say, with the floods in Assam, mid-June to about early July. But given the broad base trend of supply greater than demand in India, we do expect to start seeing the secular trend coming back.

Coffee prices, having hit a high of about 260 per pound, some time back and now operating more or less range bound. And given what we're seeing in [indiscernible] et cetera, which is where coffee prices are dictated. We expect them to be staying in this piece. Good news is we've taken pricing primarily in our coffee business in the U.S. to account for this.

I will move to slide 28. Yes. So there's some of the businesses, India packet beverages 1% volume growth, revenue down because we have reindexed pricing in line with softening tea prices, and 40 basis point share gains.

Next slide. India foods volume was negative three. But just to point out that vacuum evaporated data base salt was flat despite the pricing that we've taken, and that I mean our overall pricing actions that translated into 19% revenue growth. Most importantly, with the new price hikes that we've just gone in with moving up prices from 25 to 28. We do think margins will be back on track. And as you see on the slide, we are continuing to hold on to market share gains, we are 400 up versus last year.

Next slide, NourishCo very, very strong trajectory 110% revenue growth and an 80 crores for the quarter. NourishCo, this is the first summer that they've seen since we've taken over and like all beverage majors as the heatwave -- extended heatwave hit northern India, we were also hand to mouth on capacity and we therefore, as we expand geography and portfolio we see bright future business.

Next slide. Tata Coffee, extraction and coffee plantations drove revenue growth to 25%. Next slide. But again, you got to remember we are cycling quarter of triple lockdown last year. But now we are at a 275, 99% of stores have reopened. We are in 30 cities, strong advocate EBIT positive quarter for Starbucks, which shows the power of the operating Starbucks and therefore the ability to generate value in the longer term. Given it's a 25% increase in same-store sales versus pre-COVID, we do feel good about the business.

International slide 34, we maintain, more or less maintaining shear in everyday black in the UK, but most importantly, we have put money behind A&P for Teapigs which is our super premium brand. And we've seen a 16% revenue growth there and overall the business delivered a plus 3% revenue growth.

Slide 35, Coffee bags. We are now climbing back on share, tea was a bit soft but I think it will get corrected over the cycles. Overall coffee revenue growth of 15% primarily again driven by pricing. Canada, our star in the international market continue to maintain share, growing specialty tea and overall delivering 14% revenue growth.

I will now handover to LK for a quick snapshot of financials.

L.Krishna Kumar

Thanks Sunil. I will just talk you through the company financials. Starting with a consolidated [indiscernible] revenue was 3300 crores grew by 10% in constant currency. Within that the India business grew by 9%. And in the India business, the salt portfolio grew by 20%. And the growth initiatives which are basically water, Sampann, Soulfull and the like grew by over 50%.

International Business saw revenue growth with our non-branded also had a stellar quarter because of coffee prices and higher volumes grew at 25%. In EBITDA terms, the growth was 14% higher than with an improvement in EBITDA margin, driven by the India Business, largely by tea, but also overall on common cost. International business grew by -- EBITDA grew by 9%, and non-branded business had higher EBITDA.

Moving on to the next slide. On the standalone just go back. On the moments, we saw revenue growth of 6% and EBITDA growth of 12%, let me just clarify that the EBITDA, which is shown here is sort of derived from the [indiscernible] where we've broken out the other income, dividend portion and kept only the operating income to give you a reflection of true performance. So underlying performance from EBITDA growth.

Moving on to the next slide, again, talking first about the consolidated results, revenue from operations 11%, EBIT higher EBITDA margin improvement, I want to point out the PAT number 277 versus 241. And then, if you move to group net profit versus current quarter, it's the same as the PAT. That means the share of profit loss from JV & Associates is zero at breakeven compared to a loss of about over 40 crores last year. This basically reflects the improved performance of Tata Starbuck, as well as amalgamated plantation, which is a North India plantation that we have both performed extremely well, in this year.

There is standalone again, we have seen that operating EBITDA grew by 12%. But if you look at the reported PBT, it is sort of lower compared to the same period last year, largely because of dividend investment income. And within that mainly because of dividends. We add a significant dividend flow from the overseas entities in the last year. We expect to have some of the dividend flows in the later part of the year. It's also to do with the restructuring plans that we have. We're hoping to complete with necessary approval.

So moving on to the next slide, which is segment wise performance, both revenue and EBIT of the India business is 72% of the overall branded business and within the individual components, we are reporting India business on a consolidated basis because that's how we managed different product portfolios within that India business. So overall profitability higher than revenue growth of 9% international business profitability in line with revenue growth. And Sunil sort of talked through individual parts.

I think overall, we have been able to take price up in a competitive environment and maintain volumes, we have seen strong volume growth in the growth business part of our portfolio, which is Water, Sampann and also Soulfull. Sampann performance was slightly muted because of certain reasons very soon, as mentioned, but we expected growth to come back strongly in the quarters ahead. That's it from my side. We're happy to answer any questions.

Sunil D’souza

Just a quick, sorry, just a quick summary of what we're seeing going forward. Inflation, volatility, I think is a reality, we will have to keep moving plus and minus depending on where it goes. We will focus on driving and balancing both growth and margins. I don't think it is an either or situation. We've got to manage both. Just to put it in perspective that if you look at the last three years, we've delivered a very healthy CAGR of 14% in beverages and 19% in foods, salt costs, where we thought the cost inflation was behind us and we had moved from 24 to 25 end of last quarter. Forex moving against the Indian rupee and the cost of coal going by roughly 2.5 to 3x of what it was last year. We now moved the pricing from 25 to 28 That's it.

I mean, like, for me, the most big indicators in a volatile environment are maintaining margin and market share so that you continue to balance between all these three including top-line. Our growth businesses are on a strong trajectory, you've seen the 50% plus, given the lock downs, hopefully behind us. Our out of home businesses NourishCo and Starbucks should continue to deliver momentum. Tata Soulfull strong momentum, triple-digit growth, which will continue to drive as we expand portfolio and enter newer categories for the platform.

International Business, we have taken strong price actions in the UK, probably it is just about landing, because it took some time to translate into the large outlets but that also should be on a good wicket. The most important thing I would want to highlight is we manage the India -- we manage the overall business as a portfolio. And we will have puts and takes in certain businesses depending on what we are seeing as opportunities or headwinds. With that back to you Nidhi.

Nidhi Verma

Thanks, Sunil. So moderator you can now move to the Q&A queue, and we can start taking questions.

Question-and-Answer Session

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from the line of Abneesh Roy from Edelweiss. Please go ahead.

Abneesh Roy

Yes, thanks. My first question is on Sampann and two, three sub parts of that. First is in your presentation. You're mentioned short-term impact of trade term margin, rationalization, and realignment. So if you could elaborate. Second is, at the company level, your gross margin is 43% and EBITDA margin 13% to 14%. Sampann, I do understand currently will be actually EBITDA margin will be much lower. My question is on Sampann say four years down the line, when things stabilize, where do you see versus the 43 GM and 13 EM at company level? And last part is the 5% GST which has been put on packets, cereals, pulses et cetera. Do you see a big benefit because of shift from the other place?

Sunil D’souza

Yes. Thanks, Abneesh. Let me take your questions. So number one on Sampann very specifically in the quarter, we corrected some channel and trade margins. For spices about 25% of our mix comes from online for pulses and spices about 40% comes from online. So we did take certain margin corrections to make sure margins are on the right track. In a business like Sampann which is a high growth and probably I would say not low, mid margin, you got to make sure that the ballpark margin is right as you're accelerating. So, one is the trade margin connection.

The second piece is like I pointed out for spices, we are going in for a full relaunch of our blends and we are entering the southern markets with a completely different mix. So we did pull back our spices business to an extent to make sure that we hit the ground running when we come back new. And these are the two factors but just to give you comfort on the Sampann business, it is a huge growth opportunity for us doesn't change. The total addressable market is huge, pulses is what 155,000 crores, spices is 60,000 crores, spices is bigger than my tea business addressable market. So we've fully cognizant of that. But we've got to play in with the right margin. So that that is why we probably took a pause so.

But last three years CAGR, if you look at it, Sampann is still on a 30% CAGR and by the way, July has still trended directionally in the same number. So that's the reason why LK is very confident of coming back to that category. So that's your answer on the Sampann question.

Number two, in terms of your where could Sampann go? Sampann, you have to remember very, very high ROC for Sampann from TCPL perspective. So, it does unlock a strategic question for us as we go forward. And it will be -- I would say high single digits, low double-digit margin is a very, very long-term aspiration, but we have various levers to pull to get there. Number one is, as we build scale, we've got to flex our procurement model get better at that, including forward contracting, forecasting all those pieces.

Number two, we've got to get into distributed manufacturing, because freight is a huge component in these pieces, we've just finished a piece of work in which we are relaying our entire network, we've got to execute that, which takes a bit of time. And number three, of course, we've got to bring our technology jobs to bear, because our R&D team now needs to figure out how to value add into these categories. All I would leave you on that front is, I think we've built a fabulous R&D team having invested in significant resources behind that. And in the next, I would hazard between three to six months, you will see some really differentiated products come in the Sampann based business itself.

Abneesh Roy

And that 5% on the package?

Sunil D’souza

Oh, yes, sorry. So Abneesh you are absolutely right, the 5% on the package, pulses, et cetera, will play to our advantage. One is the compliance on the ground. But especially in organized channels like ecommerce, modern trade, et cetera, where people -- I would say a lot of competitors were playing on the borderline with a brand but not registered, so to speak. I think if the compliance is tightened up there, the premium that Sampann was charging vis-à-vis, how do I say unbranded local loose or brands which we're not playing in the GST space, I think that would reduce and therefore, we would see more consumers moving into our products. Because Abneesh, one thing I picked up across the country, different retailers, especially [indiscernible] stores, right? The point is, if a consumer has picked up Sampann and taken it home, then guaranteed you've got a consumer for life. The catch is getting the consumers to pick it. So, apart from the GST piece, you would also see us cutting up the A&P on Sampann, so that we start to get trials and therefore continued consumers.

Abneesh Roy

So, my last question is on the masala oats. So already intense players are there, Safola is very dominant and we have Quaker oats also. So my question is, when you say 5% to 8% share in the current distribution, what would be the plan in terms of scalable distribution and advertising versus Safola over a three year timeframe. And second is, we have been in food, if you're too niche, too healthy there is a limited opportunity. Case in point is for example atta noodle, it has remained a smaller part. So just adding millets and when you are so niche, why should this product succeed?

Sunil D’souza

So, Abneesh, first of all, let me clarify we are looking at Soulfull as a brand. And Soulfull will play in many, many categories. Some will be large, some will be small. But we will only enter categories where we got a right to win. Soulfull, healthy brand millets differentiator, better product profile and the value proposition should work. And thereby, this is one of the very many extensions for Soulfull that you will see.

On a blind taste profile versus the leading competitor. We are a win because we are currently here because we've got ragi there and of course the health question dials up. Now you're absolutely right, we've got to now up our game both on distribution and consumer communication to make sure we get traction. But I was just trying to give a perspective that within about 60 to 90 days of launch, we are already at a 5 to 2 share in markets where we are present.

Now like I said Soulfull is our brand for breakfast, mini meals and snacking. This is our first foray into snacking. I would say watch this space as we enter many more categories. The whole idea is Soulfull, overall, we are seeking to build a very large brand.

Abneesh Roy

Thanks. That’s all from my side.

Operator

Thank you. The next question is from line of Manoj Menon from ICICI Securities. Please go ahead.

Manoj Menon

Hi, team. A few clarifications that if I may, one, Sunil on this salt business. How do I look at the salt volume performance of the last couple of quarters? Is it just the high base of last year specifically? Or is there any other big picture, drivers here?

Sunil D’souza

So Manoj, let me just say the reason why salt pricing we've taken up is because of two factors inputting costs. Number one is brine. But number two off late the more important one is coal prices, right? Brine more or less has been stable, but coal is what we did not see coming if I may. And that is why we've taken up these prices.

Now, that said, both energy costs as well as brine hits every single competitor in the market. So, if you look at the raw salt prices, out of the salt pans in Gujarat, it is up substantially versus last year and therefore it did close down the chain. So, therefore, you will see, hopefully, we will see industry overall moving up. That said, if you dissect the salt pricing, the strength of the Tata salt vacuum evaporated iodized salt is so strong, that despite the fact that between last July where we were at 21. And as we exited the quarter, we are at 25, the volume is flat, and we've been able to take up pricing and maintain market share, right?

The negative volumes are mostly on account of traded salt, which there was a little bit of a hiccup up and down. But going forward, we should be able to correct that as well. But salt I think, Manoj I think the focus is given the fact that we have a very strong 38 share, given the fact that we've got probably the best distribution in town on salt. And the fact that we were slightly late to the party in anticipating that coal prices will move further up. We took another price correction from 25 to 28 at the end of the quarter.

And like I said, we take price corrections in salt, there is a downside down stocking in channels, because they do expect to go shopping around and find some cheaper Tata salt from some other trader wholesaler, et cetera. I think we've seen a bit of that. But I would say this quarter, you do see stability coming back into the business. Again, like you rightly pointed out, it's negative 3% overall total salt in volume terms versus last quarter, same quarter last year of 17%. And the other thing I would want to highlight is, foods business, FY '21 Q1 20% growth, FY '22, Q1 20% growth, FY '23, again, 20% growth. So if anything, I think we've been consistent.

Manoj Menon

Fair. Just two follow ups on the salt part of it, how do we think about the medium term opportunity, let's say to maximize or optimize profit goals for you, let's say using price as a lever in salt. That's one sub question. The second one is, let's say the scenario of let's say significant deflation in your input, let's say prices, it could be coal, it could be brine, it could be any of those. Do you think that there is an opportunity to retain some of the let's say input deflation benefits and expand? Let's say the gross margins in perpetuity without obviously affecting your share et cetera?

Sunil D’souza

So, Manoj, number one is the reason why we've taken pricing up. If you look at my last quarter, if you look at the three big commodities that we have on India beverages, right tea we have expanded our margins by 1000 basis points to put it where it should be. So we will try for volume from here on. Second is India salt margins, gross margins, declined by 500 basis points. And that's why we took up the prices. International more or less is stable margins after all the price increases, right? So salt, once we put the margins back on track, we will go for volume, because we do think there is a share opportunity out there.

On your question of as deflation comes in, the question is as and when deflation comes in, we will have to play very, very close to the year. I would like to keep some of the margins, albeit, I do not want to lose market share, I would want to continue market share. So again, it will be a tiered pricing approach. And if you look at the last one year, what we have done is now we've got two brands across different price segments. We've got a rock salt and a set of salt playing at the higher end. We've got now Tata salt, the base vacuum evaporated salt, we've launched a fortified, they've got a I Shakti salt at the bottom. And we've just launched Shuddh which we are learning in the pilot and we will, again tweak the marketing mix to expand it across various geographies.

So we will make sure that we do a portfolio play give value to the consumers, while if possible, increasing margins consistently. But the whole idea is continue to gain market share. But you're right, salt is one of the big pillars bases, which we will continue to have fuel to expand into other categories as you go forward.

Manoj Menon

Sure, sir. Thank you so much for the detailed response. I shall come back in the queue. Thank you.

Operator

Thank you. The next question is from the line of Trilok from Diamond Asia. Please go ahead.

Trilok Agarwal

Hi, good afternoon, sir. Thanks for the opportunity. Just want to understand on food business, how are we -- I mean, obviously, we are entering into new categories in debate. And we also had rated about the protein platform, sort of internal targets are we think you from a growth perspective, you already alluded to one of the participants about the margin. But what's the growth that you should be happy with? Are you happy 20% growth that you guys are talking last two, three years?

Sunil D’souza

So let me put it this way. I think foods is going to be the big growth engine for us. Till now, even right now, if you look at it, it is overwhelmingly a salt driven business. And now Sampann expansion. We have added different levers to the whole business across including Tata smart foods, for example, in which there is a full relaunch and process to start diving into that category. So we have very clearly identified the platforms. And within those platforms, the categories where we will play, where we've got a right to win, it is a big growth opportunity, both in terms of size, as well as momentum of growth in that category, we've got a right to win and expand.

So we've just for example, Sampann we've identified dry fruits, as a category, I would say in the six months, we've hit it out of the park only online, the run rate that we have on dry foods is probably rivaling some of the new startups out there. And this is all within the last six months. That's the power of the Tata and the Tata Sampann brand name. So we will continue to expand. Foods is big, big vector for growth for us, Sampann leading the charge, but it is also Soulfull, Tata Smart Foods, where there is a full marketing mix planning going on. And of course, like I said, the idea is to continue to expand market share in salt. Are we happy with 20? Obviously not right, we will be shooting for higher numbers as we go forward.

Trilok Agarwal

But just you know, follow up on this, between when you enter a new category, is the cross margin and profitability are key, metrics because these all are full of high unorganized categories with obviously low margin profile as per our understanding.

Sunil D’souza

So yes, absolutely right. When we enter new categories, we do our full fledge analysis of what is the size of the category, what is the scale that we can get? And what are the margins that we can get. Number one, you have to remember Sampann is a high ROC, I mean, I would say significantly, high ROC because there's almost no capital on the ground per se. But we're very, very mindful about two things. Number one is, wherever we are entering is incremental in terms of where we are entering. So all I would like to leave you with this compared to the base categories. We are incremental in some of the things like protein, Soulfull significantly incremental and some of the categories that we're entering with Sampann incremental to our current base. So the directional movement of margin will continue to be upwards.

Trilok Agarwal

Understood. Thank you very much. I will get back in queue.

Operator

Thank you. Next question is from the line of Jaykumar Doshi from Kotak. Please go ahead.

Jaykumar Doshi

Yes. Hi, thanks for the opportunity. My question is on tea, when I look at 3-year volume, CAGR, it's about 2.6%. It is much lower than 7%, 8% and 9% that you were tracking in the previous two quarters on 3-year CAGR basis. So is there a one-off, I mean, kind of channel destocking or anything in this quarter? And how should we think about evolving trajectory either y-o-y on three year basis forward?

Sunil D’souza

You are absolutely, right. I think we've seen a lot of y-o-y's in the last three years both on the price front as well as the volume front in the tea business. But if you're right, structurally still 1/3rd of tea in India is unbranded. Number two is historically you've seen a 5% to 7% volume growth in the category itself. And the fact that we have not lost out our position in the category is shown by the fact that we've gained share in the tea category.

Now, overall this quarter compared to same quarter last year, recycling a very heavy revenue growth. But you're right in terms of volume, it's probably not come to par. I would say one of the reasons or two of the big reasons. Number one, is the stress in certain specific geographies, I would say most mostly rural across, and the indie belt, per se, has been a bit of an issue. It's not come up. Hopefully, a good monsoon should bring it up, coupled with the fact that we had an excellent summary. And I would say proof of the fact lies in, if you look at all of the soft drink majors and including our NourishCo business, hit it out of the park with struggling for kill. I think people moved to cold rather than hot for some time. That's not an excuse for the business. But we do think as we go forward, volume growth should come back.

Now the other piece that I would leave you with is in our portfolio, our focus has been to grow the mass premium and premium because that is our share opportunity. But more than that, the stress in the rural and the indie belts has been showing in the lower end of our portfolio. And that's the reason why you're seeing a margin expansion of 1000 basis points in the tea business. But now that the margins are back on track, we will be going for volume growth. In fact, we have just given up some more pricing in the north and coupled with our distribution drive, which is, we are going to top gear on expansion onto total number of outlets, numeric reach and A&P cover, we do think we will get the volume growth back to, I would use the word par for the India business.

Jaykumar Doshi

Understood. Can you give a little bit of outlook on raw material prices given that there's flooding in Assam whether the second flush, which is where you do bulk of your buying, how has pricing trended and what it means for tea gross margin bring forward, sustain at these levels, is there scope for further improvement.

Sunil D’souza

So, I would say essentially given the fact that we are expected this year to be a normal year. We had seen a downtrend in tea prices both North India and South India till the Assam floods middle of June were an unexpected event. That said I think primarily they impacted probably about 30 days of cropping or so, but you have to remember one fundamental structural point in the India Tea business supply is greater than demand. And whenever there is supply greater than demand prices will trend downwards. So therefore, while we have seen a blip, and I would term it a blip for a short-term, and you might see some impact, maybe for a quarter or so, but not as significant as the blip that you saw. I would say a secular, you will be pricing trending downwards and then playing in a range. So while we do see a small blip, I don't think we need to course correct big time, there might be a small dip in margin. But like I said, from Q1 FY 22 to Q1 of FY 23 we expanded margins in the India tea business by 1000 basis points. So we are in the ballpark of where we want to be. We will have some puts and takes but again it's a fine balance between top line and margin. We don't expect margins to be as depressed as they were during the COVID lockdowns et cetera. small blip but something we should be taking in our stride and moving ahead.

Jaykumar Doshi

Sure. Final quick one, when the results are modern trade outlets in this side of the country, they sell some news pulses and staples that potentially to benefit from the GST. So will that still continue? So recently, know what is essentially the definition of labels? Can modern trade outlets and new sort of pulses and all that sort of staple products without customers incurring GST?

Sunil D’souza

So, I wouldn't hazard about what they can sell and what they cannot sell. All I can tell you, GST regulation which has come out is very specifically anything that is packed before source or before the selling point has to pay GST. The only thing which is exempt from GST is one that is packed to order. So if I can use some chest Hindi out here [Foreign Language]. So then there is no GST, but that is not what happens in modern trade and online and therefore and I use the term if there is compliance, we hope to see advantage.

Jaykumar Doshi

I understood. That’s helpful. Thank you so much.

Operator

Thank you. The next question is from the line of Sheela Rathi from Morgan Stanley. Please go ahead. Sheela, may I request you to unmute your line from your side and go to the question, please.

Sheela Rathi

Hi, thank you for taking my question and hello Sunil. My first question was, again, with respect to the food business, just wanted to understand your strategy going ahead with respect to the distribution, because you just said that the dry fruit business you're seeing very strong demand on the online side. However, I've seen that caving on the food business will require a lot of offline strategy, which is on the GT and MT side. So just wanted to understand what's the strategy and where are we with respect to the distribution reach of Sampann as well as cold food?

Sunil D’souza

Sheela, absolutely right. If you really want to scale any of these staples, if I may call it, you do need to play the GT game. The reason –

Operator

Participants, please stay connected in line for the management dropped. Ladies and gentlemen, please stay connected while we rejoin the management back to the call. Ladies and gentlemen, thank you for your patience, we have the line from the management reconnected. So you may go ahead.

Sunil D’souza

Yes. So Sheela to answer your question. The reason why I alluded to dry fruits was, in today's world, the online platforms provide you a fantastic piloting opportunity. So that is why we launched it only online, because there it is no one between you and the consumer, you're on the platform, you're deciding the whole marketing mix, consumer sees it online, and therefore picks it up. After that, if the proposition is strong, then you've got to get into distribution and put it into the stores where there is something called a retailer standing between you and the consumer. So now that we've proved the proposition, now we've got to tweak the whole mix to make sure we are well distributed. And given the fact that we are going to be touching 1.5 million outlets by September 2023. And hopefully, we are already what 2.7 million indirect reach, total numeric reach if you count, I think we've got the scale to do it. In the staples category, it takes a little bit of time because you're competing against lose even backed by the retailer themselves at certain points, but I think we've demonstrated with a CAGR of 30% with Sampann that we are capable of doing it. The idea is now to take the dry fruits proposition into the GT and modern trade for that matter and that is work in process, you should start seeing it come into some of the modern trade channels very shortly.

On where are we with respect to distribution of Sampann and Soulfull, I would say we made significant progress, for example, Soulfull which we acquired, what about 18 months back at about 15,000 outlets, we are on a three monthly billing basis is which we -- how we measure availability, we are close to 400,000 outlets. So very, very and this is -- we are only counting direct outlets. So we are in about 35% -- about 25% of our total outlets. And it would be a very similar number for Sampann as well. That said, I think the fastest expansion in our 1.5 million base which we should have by March is, you should see the width of -- sorry, depth of expansion because I don't think you will find too many more outlets which will stock teas but Sampann, Soulfull, Smart Foods that is what we will now seek to exploit.

Sheela Rathi

Understood. Thank you. And my second and final question, again on food is, with respect to the new categories which we are getting into. Do we think that this is the right time to get into more and more categories or first you kind of stabilize the database business and reach a certain level of margins, and then probably get into more and more categories? I mean, just wanted to understand your thoughts on that.

Sunil D’souza

No, Sheela, absolutely right question and that is why I keep harping to my team that in any category especially established categories it is market share and margin. As long as they are on the right track. That is when you start moving and start moving into other pieces. And I mentioned my beverages margins is back on track with 1000 basis point increase my foods, my salt business was down 500 points we've taken a 25 to 28 pricing and stabilized that. We do think we will not have hiccups on the way to maintain market share in both beverages and salt. And that is why we are now moving into other categories. So for me, it's not our game, it's the end game.

And Sampann as a portfolios, has huge, huge, I would say under leveraged equity, if I may, we have not executed to the tea. And that that's why we are moving into these categories. As far as you're alluding into protein, et cetera. You are right, they will not be scaled categories today. But we do think it is important for us to have first mover advantage, put a stake in the ground that we are one of the leaders out there and build the entire platforms as we go forward. But we have the advantage of having I would say strong brands, great team good execution and stable margins, if I may, in our base categories, which will afford us to do that.

Sheela Rathi

And just one final follow up here. You just said great team. So are we really hiring, in terms of the senior level, in terms of because we are expanding to lock many categories, or just maintaining the same thing.

Sunil D’souza

So, let me put it this way, I think we've got a very strong senior leadership team now. We've sort of expanded over the last two years. That's number one, the big, big expansions, which is happening in foods, we've ramped up the team significantly. Apart from that we've ramped up the R&D team, because we need to up the ante on innovation. And how do I say the scientific basis behind all these new categories, we are investing in behind creating very strong R&D, infrastructure and resources for the team. We have expanded significantly in digital, where we do think it will drive both efficiency and effectiveness going forward. And now we're taking digital into the next phase of data analytics, et cetera, including in our procurement scenarios, for example.

So answer to your point is, we are adding across the board in spaces where we see either we are deficient, or we need to add as we expand categories. Thank you.

Sheela Rathi

Understood. Thank you. That’s it for me.

Nidhi Verma

Thanks, everyone. May I please request everyone to restrict their questions to one so that we can address everyone's questions. And given that it's 12:55 already, if I could just request to extend the call by another 10 minutes. So we'll hold the call until 1:10. Yes, moderator, on to you.

Operator

Thank you. The next question is from the line of Percy Panthaki from IIFL. Please go ahead.

Percy Panthaki

Hi, sir. Am I audible?

Operator

Yes, sir.

Percy Panthaki

Yes. So your NourishCo growth, if you just continue to grow this fast, I'm sure in a couple of years, you will be clocking close to 1000 crores per annum. So at that kind of scale, what kind of EBITDA margins can this business generate? That's one thing I wanted to ask. And second thing is on tea. We have done this acquisition of Lal Ghoda, Kala Ghoda tea in Rajasthan. Can you give us some update on what is the success of that acquisition in terms of what was the market share immediately after the acquisition? And what is the market share today? And if that has been a good experience, do we plan to do such small acquisitions in sort of individual states in our tea business, or that sort of is not something which is a priority right now.

Sunil D’souza

So, Percy, NourishCo, first of all, I should say it's a fantastic business, again, from a ROC perspective, right? Because we are all on a third-party basis, both in terms of manufacturing as well as distribution. We spend, we put our resources into supervising the sales and the marketing, branding, product development and all those kinds of cases. So that's number one. We clocked 180 crores last quarter. So you're absolutely right. It's on trajectory to get to a four-digit business very quickly. All I would leave you with is, the margins in NourishCo are accretive to quite a lot of my current portfolio. So that's number one. And we had bought in NourishCo with that whole premise, right, given the fact that it was a strong business operating in a very small playing field, if I may, expanding both portfolio and geography would give us disproportionate growth. That was the whole logic. So absolutely right. And we are full press ahead on that piece.

That's number one. Number two, on your Lal Ghoda, Kala Ghoda, I would answer your second question out there. Ultimately it's about creating value for shareholders, right? So do I put my money into growing Sampann, or do I go and buy a small tea brand in a part of the country? I think that's the critical piece. And in tea, what is that amount of money that we're putting that we should be able to get better out of an acquisition than what I can’t do myself? That is other questions to ask, right?

Capital allocation, if I may, from that perspective, I don't think you will see us doing too many small tea acquisitions, I think, our ability to do it organically, if we really put the money there, that's number one. And number two, when I -- if I pick up my choices of where to put the money, I think there is significant opportunity in many of the newer categories that we're going with. Lal Ghoda, Kala Ghoda, I think has performed, more or less to expectations, but is it hitting it out of the park? I don't think so. But, I mean, it is fulfilled the business case, more or less that we had gone in with.

Percy Panthaki

Okay, sir. That's all for me. Thanks and all the best.

Operator

Thank you. Next question is from the line of Amit Purohit from Elara Capital Plc. Please go ahead.

Amit Purohit

Yes. Thank you, sir for the opportunity. Just one question on the salt and food business, you indicated price increases. So going forward, how do you see the margins in the food business? So we were talking clocking close to about in the band of around 11%, 13%, 14% margins? Should this price hike bring us closer to a double-digit margin? Or how do we see this for the year and going forward?

Sunil D’souza

Yes. I did allude to it. Gross margins in salt, if you compare it to the same quarter last year, we're down by 500 basis points, right. And the reason why we moved up the pricing from 25 to 28, is to put the margins back on track. I do think we will come back to a stable state once we put this pricing back. So this quarter, at least you would see the margins come back on track, there might be a little bit of ups and downs in the beginning of the quarter as the price settles into the market. But like I said, given the fact that the pricing is being taken because of cost increases in energy and brine which are hitting everyone in the market. I don't think you should see too much moment on market share per se.

Amit Purohit

And just one small thing on the Gujarat rains which have happened, is that going to have a better competitive advantage for us, is the supply side for some of the competition is a bit inferior than us, it's a every year phenomenon, nothing much to read about? Hello?

Sunil D’souza

That is the reason the brine prices had moved up was because of the extended monsoons last year. Unfortunately, there were some heavier rains in Gujarat in the beginning of the monsoon season. And that's why the corrections which we were expecting to see in drying have not happened. But that said, there has been almost no movement up or down not marginal if I'm address. I would say the picture will become clearer towards the end of September is when the final monsoons have retreated. And you'll know where we stand in terms of the net output from the brine fields. As of now we're seeing brine prices elevated but stable from where they were, the big moment that we saw was in coal prices because of which have taken the price increases.

Amit Purohit

Okay. Thanks a lot.

Operator

Thank you. Next question is from the line of Sumant Kumar from Motilal Oswal Financial Service. Please go ahead.

Sumant kumar

Yes. Hi. My question is regarding NourishCo. So can you talk about the channel expansion for NourishCo? And what is our target for next three to five years?

Sunil D’souza

So NourishCo effectively, I think we are -- if I'm not mistaken about 350,000 outlets nationally is what we touch, which is a significant increase from where it was. Sumanth, I wouldn't want to hazard a guess, I think ball is in our court as to figure out how high is high. From about operating in about 25% of the geography -- of the Indian geography, we probably had a 70%. We've still got a long way to go. So you could see continued growth on NourishCo for some time to come as we expand geography and apart from that, like I said in NourishCo, it's not only the base Tata Gluco plus business, the Tata copper water is really, really scaling up. Apart from that, we are in the process of launching -- we've launched jelly In cups, but unfortunately in season with a lot of capacity, couldn't really expand that you'll see the expansion happening now.

In Fruski, you will find a jelly drink coming out. We've launched Tata ORS, we've launched Tata Nature Alive, the NourishCo business has put Himalyan back on track because of its now EBIT is positive. I think huge amount of work done, but a long, long runway yet to go.

Sumant kumar

Okay. Thank you so much.

Nidhi Verma

Moderator perhaps we can go to the webcast to take a few questions. So Sunil there's a question from Tejas [indiscernible]. He's asking about from the inflationary pressures in salt category, there seems to be a sequential contraction in 4Q versus 1Q in gross margins in past as well, is there any underlying seasonality playing out here?

Sunil D’souza

I would ask LK to come in. But my top line there would be –

Operator

Sorry, we are unable to hear you.

Sunil D’souza

So normally, you have slightly higher seasonality in beverages in Q3, Q4. And compared to a Q1, maybe there's a little bit of that we've actually not, we don't think there is too much pieces out there. But the salt cost pressures would have played a significant impact. And the other pieces, I think the freight and logistics, inflation, which is coming, I think we're seeing more of an impact of that in Q1 versus Q4. But that said, given the fact that we are seeing a declining trend on crude, we should hopefully see that piece starting to stabilize if not inched downwards, but LK?

L. Krishna Kumar

There's no material underlying seasonality. So it's really to do with inflation on a coal, brine, overall trade cost as well. So no specific seasonality.

Nidhi Verma

Thank you. And the second question from him is, the heightened A&P spent that we incurred was it to support the existing portfolio mainly or to support new launches.

Sunil D’souza

I think it was a mix of both. And Tejas, just as a point of view, if you look at -- we had initially itself, our hypothesis was that we were relying quite a lot on the Tata brand name. So if you looked at our share of voice versus share of market, which is the standard benchmark used in all FMCG categories, we were slightly behind. Now, we have up the spend. Again, if you look at most of the FMCG majors, you’re A&S line advertising and sales promotion line A&SP line, compared to sales is anywhere between I would say six and a half, seven to about I mean best in class is about 10%, 11%, we were quite behind the curve, we have ramped it up even for the last quarter, we have upped the number to 6.4 versus 5.3 of last year. So I would say we are coming to par right now on overall spend. But the spend is both behind base as well as new launches, just that. Also mindful that we are not catering it across brands.

For example, in tea, we have now distilling it down to four or five umbrella brands. And therefore advertising in one variant as a rub off on the mother brand. We are leveraging Soulfull who are breakfast, mini meals and snacking. So advertising in one particular segment, we'll have a rub off. So efficiency of the spends is also something that they are looking at closely.

Nidhi Verma

And the last question is Sunil, how are we tracking in market share in ecommerce and modern trade versus GT and tea and salt?

Sunil D’souza

So as I think -- to Sheela's question, I had mentioned that the beauty in ecommerce is that it is only you and the consumer, there is no one else in between and therefore it has the power of your product and your brand and your value proposition with the consumer. We are still market leaders by far on ecommerce in tea. And we are lagging behind on GT for example. Modern trade is better than GT and ecommerce is better than modern trade. We are leaders in ecommerce and that again puts the ball back into our court and expanding distribution and making sure availability is there in the outlets, we lag competition on numeric distribution by about 10% and our market share is off by about 7% to 10% again versus the market leader. The hypothesis being if we cover the reach, we should be able to cover the market share and that is why the immense focus on distribution.

Nidhi Verma

Okay. And the final question from [indiscernible], can you talk about restructuring costs and their recurring nature in the past few quarters? When can we expect complete restructuring to take course?

Sunil D’souza

I would use the term that I use with a lot of my team, we are a work in process company. We're still not finished where we want to be, it is still not stable state, we've got a long, long, long way to go. Aspirations are very large. This quarter the restructuring --so in the past year, I've seen restructuring costs because we had cut down layers in our teams. As we acquired some of the businesses, we rejig the teams to make sure we are deriving synergies. So while long-term you will derive synergies, there'll be some short-term restructuring costs to make sure the business is right sized. Last quarter, you would have seen it or previous quarter, you would have seen it with regard to Tata Smart Foods. Last quarter, there were some costs and I think the picture is yet to be played out in terms of the entire international and India Tata coffee restructuring that we've announced. We've still not executed fully, because we don't have full regulatory approvals. But restructuring, I think, at least in the short-term, you could see this cost coming out. But all I can assure you is that fundamentally, this is to right size, and make the business much more effective and efficient. And therefore in the longer term, it will bear phenomenal fruit.

So before we put in restructuring costs, we always do a business case analysis, look at the paybacks, and then press the triggers.

Nidhi Verma

Given the timing, we will just take two last questions. Please.

Operator

Thank you. The next question is from the line of Richard from JM Financial. Please go ahead.

Richard Liu

Hi, thank you for taking my question. Sunil two questions here. For category like salt, and considering all the value added and premiumization initiatives from your end, what could be the growth rate of this category? Like let's say five to seven years out, versus your say estimated 2400, 2500 crore turnover in this business? Do you see this business at like, let's say, 4000 to 5000 crore in the next five to six years timeframe given, how it's been growing? And what could be the risks in this kind of assumption.

Sunil D’souza

So, Richard, I wouldn't hazard a guess on 4000 or 5000 crores, it we'll get to that. But the timeframe, I think is a matter of time. That's number one. I would say I would continue to shoot for expanded market share, expanded price realization, and continued expansion of the portfolio as we go forward, right? Just to give you a perspective, we were a 30 share exactly two years and four months back when we took over the portfolio, we are at 38 share now. And we continue to expand the market share. So double-digit revenue growth, I think is a given.

Richard Liu

Okay. Over a sufficiently long period of time, you think double-digit revenue growth.

Sunil D’souza

Oh, yes. So that I can assure you that I think we can put enough pressure on all our teams to make sure we are continuing to deliver double-digit growth for some time to come.

Richard Liu

And what do you think would be a risk to that double-digit assumption?

Sunil D’souza

I think, basically, Richard in salt is, I think the ball is in our court on execution. I don't think it is as much we are at 38 share, number one. Number two, we have levered or layered the entire value proposition, right from entry salt or the premium salt. So we have the ability to pull levers across various price points, we're offering a full portfolio, it's a question of, there might be subtle shifts in consumer preferences, we've got to play to that. I do think we are slightly ahead of the curve on that piece, including the 30% lower sodium salt, for example, or some of the new launches which you will see in the next 30, 60 days. I actually think the risk is in our ability to execute.

Richard Liu

And Sunil, one more on Sampann. You talked about trade realignment and change in terms of trade and margin, et cetera. How much would this exercise boost your Sampann business margin by and against that how does this impact ROC for the trade partners?

Sunil D’souza

I wouldn't comment on the ROC for the trade partners, Richard. I think it's a calculation they have to do. All I can say Sampann is a very, very high ROC business for me. And in Sampann, I think we've got to be mindful about the fact that you've got to maintain a healthy margin while continuing to press accelerator on top line in various other staple categories, you have seen in the initial phases of category development, you will have a lower margin, which you got to figure out ways to build it as you go forward. So that is where we are.

I would think we have put Sampann back onto a margin profile where we would want it to be, is it the best of places to be? No. I think it's still got way to go. But again, like I said, we need to get back to the 30%, 35% plus CAGR on the top-line. And it will be a periodic, I keep using this term with Nidhi, it's a snake in a tube, right? You will have yours but directionally, it will keep pointing upwards.

Richard Liu

Sorry. Just last one. So this trade realignment and the boost in the Sampann margin, I mean, this was necessity for you to get to that high single digit and low double-digit, long-term spices margin that you talked about?

Sunil D’souza

I would say spices we are in a comfortable position, it does the pulses and basin category, which we corrected. And I would say mid plus single digits mid to high single digits margin is where we have landed up. It was getting slight bit of erosion. And Richard, I'm not a fan of going to very low margins, very low average and going for high top lines, because after that correcting it is a huge problem. I am more a proponent of go full-fledged on top-line for some time with decent margins, correct margins, and again, press the accelerator. So right now I think they're in a comfortable place to push the accelerator for the next phase.

Richard Liu

And did you say that the long-term horizon for the margin for this whole Sampann business is high single-digit and low double-digit?

Sunil D’souza

It is. Yes. Absolutely right.

Richard Liu

And how many years out would that be?

Sunil D’souza

I would want it to be as quickly as possible. It just that I think will take time to get our procurement engines right with scale. We'll get - take time to put our entire network in place. We will take time to roll out all the value additions that they have envisaged. Like I said, you will find some pathbreaking innovation from Sampann coming out in the next 60, 90 days or so, which will show you directionally where we are headed in terms of ramping up the margin in premium profile.

Richard Liu

Got it. Thank you very much, Sunil. Wish you all the best.

Operator

Thank you. The next question is from the line of Devika Jain from Ratnabali Investments. Please go ahead.

Devika Jain

Hi, thank you for taking my question. So I wanted to understand what would be the impact on our tea business given the inflationary trend that's happening in Europe?

Sunil D’souza

If you're asking for inflationary trend on the tea business in international because of what's happening in Europe, so it's not only Europe, you saw the graph on Kenyan tea which has moved up versus last year. Added to that the inflationary both in terms of gasoline prices which has an impact on packaging, freight and overall cost of doing business. That is one of the reasons why we've taken some aggressive price increases. U.S. is primarily coffee which we've already taken up and stabilized the margins per se and by the way gain share. Our big business of Canada I think is on right track having already implemented the price increases. In the UK, while we have announced the price increases, the price increases are still not landed, because there are several large retailers to deal through with on the execution piece. But I think the last pieces of the puzzle have fallen into place end of last quarter. So our margin should be back on track. Will volumes be slightly impacted? I would think so. But I think revenues and margins will be on the right trajectory which is what I would target for in the international space.

Devika Jain

Okay. Got you. And a second question. So I wanted to understand the reason why we're losing market share in the international market boards for coffee as well as tea like every quarter -- value market share?

Sunil D’souza

So as I mentioned in the U.S. market, our coffee market share is back on track and started going up branded bags moving faster than K cups. K cups also you should start seeing the share going up. Canada again is starting to move up. Canada, we are anyway in the number one position overall per se. In the UK, there is work to do versus black tea versus specialty tea and herbals. That is the reason why we are putting money behind Teapigs because we do think there is enormous amount of growth to be had there. You did see the overall growth of Teapigs versus the rest of the portfolio. I think the action has started to move. By the way Teapigs was the fastest growing specialty tea brand in the U.S. also in the past quarter. So we've got to play the right profile of where the growth is black tea is almost stagnant, the growth is happening in fruit and herbals, and specialty tea that is where we are putting our money starting to move the curves. I think it is a matter of time before you start seeing the share trajectories change here.

Devika Jain

Okay. Got it.

Nidhi Verma

Yes. We will conclude because we run out of time and I just kind of conclude. So thank you, everyone, for joining us on behalf of the management. Sorry for having to extend the call. But if you do have any further questions, you can get in touch with me. Thanks. Thanks, Manoj, and team for hosting us.

Operator

Thank you very much. On behalf of ICICI Securities Limited that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.

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