LAST YEAR, MY NOTE TO YOU WAS TITLED “GROWTH & INNOVATION IN A POST-COVID WORLD.” THE UNDERLYING ASSUMPTION WAS WE’D BE LOOKING AT THE PANDEMIC IN THE REARVIEW MIRROR, EVEN AS WE ACKNOWLEDGED SOME PERMANENT BEHAVIORAL CHANGES FOR A NEW TOMORROW.
Instead, we have seen a global spike from 7 million cases I mentioned in the Annual Report last year to an alarming 173 million cases a year later. Tragically, almost 4 million people have died and even this is acknowledged to be vastly under-reported. The cases in India skyrocketed recently and today we stand 2nd only to the US in Covid cases and fatalities.
This has been a very difficult year for the families of our employees, contractors, suppliers and farmers. I know you too dear shareholders, are dealing with more than you planned for. I wish you a safe return to normalcy from this long period of turbulence.
As a company, we have been agile and responsible in dealing with this situation, the best we can. We have, and will be contemplating further measures to deal with this uncertainty but before I get into that let’s take stock of the difficult year gone by:
After a 5-year annual growth rate (CAGR) of over 20%, your company saw net revenues decline for the first time ever by 11% to INR 4.04 billion from INR 4.55 billion.
Our Consumer business though, represented by exports managed to grow 9% for the year from INR 2.76 billion to INR 3.01 billion. The US continued to reel under Covid most of the year but Tasty Bite sales were up in all channels (grocery, club & private label). Not surprisingly, online sales continued to grow the fastest yet another year.
Organic Madras Lentils and the range of Organic Grains was followed by the introduction of several new SKUs and today, with 60+ organic SKUs, Tasty Bite has become a largely organic brand in North America.
The TFS (Tasty Bite Food Service) business which is essentially domestic dropped 44% from INR 1,502 million to INR 842 million as our QSR customers were hit hard.
‘TastyBite Xclusive’ launched last year targeting HoReCa has been aborted as restaurants and catering establishments struggled to keep their doors open across our test markets. We are in the process of redesigning this initiative.
These setbacks did not stop us from continuing our capacity expansion plan through the year despite the physical challenges posed by Covid, adding INR 371 million to our asset base to prepare for the growth ahead.
It’s a tribute to our resilience and discipline that profits after tax (INR 393 million) managed to remain at 96% of last year (INR 409 million) enhancing profitability to 9.7% of revenues, up from 9%. This was driven by across-the-board improvements in operating efficiencies, cost discipline and incredible dedication of team Tasty Bite.
Is Covid here to stay?
Every day, we wake up to news of increased infections, new variants, vaccine shortages, poor infrastructure and inadequate preparedness. To a lesser or greater extent this seems to be the situation everywhere in the world. There is a widening acknowledgement that this virus is now endemic - here to stay permanently as our unwelcome guest. How we deal with it as individuals, as a community and as a business will set us apart and determine our future. So far there are no global or corporate role models - only temporary heroes, shifting fortunes, and the lucky or unlucky ones. The only common denominator the whole world seems to be dealing with is the terrible duo: unpredictability & uncertainty. For a business that is unprepared, this can translate to fuzzy forecasting, poor planning, tentative execution and a faulty review. Fortunately, I believe your company is acutely aware of its environment and dealing with crisis of today without losing its focus on the future.
Here is how we are looking at the changed environment.
Necessarily Natural, Preferably Organic:
Consumers globally have a heightened
awareness of food and its role in
wellness. This has been a megatrend
Tasty Bite has championed for more than
25 years. Our commitment to keeping
products all natural without the need
for chemicals, artificial colors, flavors or
preservatives is well documented. This is
a very high bar for most food companies.
For us it’s a way of life.
This year however, we raised this bar
further. You will recall my earlier message
that on the back of our organic rice and
grains line, we launched our bestseller
SKU Madras Lentils across all channels.
The results were so encouraging that
we currently have nearly 60 organic
SKUs and more than 20 variants across
Canada and United States.
Growth of the Tasty Bite organic range
has been nothing short of spectacular.
Just 3 years ago, only 10% of our branded
volume or revenue was organic. Last year
it was about half. This year 70% of the
Tasty Bite branded business is organic.
This is truly mission aligned as we
continue to build a socially responsible
business that will continue to provide
Food Service industry pivots globally - expect new winners and losers:
Lockdowns came in different flavors
through the year, creating new
problems, unfamiliar to the Food
Service industry. Partial store openings,
restricted hours, new safety protocols,
ageing perishable commodities, cost
escalations and an uncertain consumer
turnout, in the dine in, takeout and
delivery segments are just a sample what the industry is dealing with.
No one was spared-fast food chains,
restaurants, catering establishments,
hotels. The effect on our customers
impacted us quickly.
The ramifications to the nearly USD 4
trillion global industry are widespread
and long lasting. But it has also opened
up opportunities for innovators. Our
customers are looking at new technology
enabled business models. Everything
from precision farming, emerging cellbased
foods, plant-based meats, new
processing technologies, customized
nutrition, cloud kitchens, driverless and
drone deliveries are each examples of
multi-billion industries in the making.
We are witnessing green shoots in our
local and regional markets of these
emerging technologies and we will be
exploring new business options with
our customers. If we are to stay mission
aligned with our TFS purpose of being
the natural partner of choice to leaders
in the Food service industry, then I am
persuaded we can do nothing less.
Tasty Bite Foundation repurposed for Covid Relief:
I am extremely grateful to our parent
company Mars and to our Board of
Directors for having repurposed the Tasty
Bite Foundation during the year, from
“integrated rural development” to Covid
relief. The work and the speed at which
programs were implemented these last
few months by the Foundation and the
employees of TBEL in supporting our
local communities will forever inspire.
It is true this was one of the more difficult
years in our history as the largest Covid
cases happen to be the US and India,
our 2 most important markets. But the
measures we have in place now to tide
over the short-term impediments and the
strategic plans we have across product
segments, geographies and channels
allows us to face the future not with
anxiety but with renewed energy.
It is difficult and probably unwise to
describe a company in one word. But
there is one that best portrays Tasty
Bite and one that has been repeatedly
demonstrated over the years. Resilience.