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ITC’s appetite appears voracious at the moment, as it takes an ever bigger bite of India’s growing FMCG pie. From pink salt, vermicelli, Korean flavour noodles and chips to shower gel, acne spot corrector and agarbattis — its product portfolio is rapidly expanding.
Along the way, the Sanjiv Puri-led diversified conglomerate has also banked on timely acquisitions to plug gaps in the portfolio.
“Today we are amongst the largest in the FMCG business. We have grown rapidly by entering several categories across foods, personal care, education and stationery, as well as agarbattis and matches,” ITC executive director B Sumant says.
In line with Puri’s ITC Next strategy, the company focuses on fortifying core segments, leveraging its mega brands to build adjacencies, and building new categories. Its non-cigarette FMCG business, powered by 25 mother brands, has grown rapidly despite the long gestation involved in some categories. Revenue for this segment touched ₹20,967 crore last financial year.
Sumant attributes the strong growth to core competencies — sourcing directly from farmers, gauging consumer tastes through the hotels business, a large distribution network, and focus on R&D.
Food as growth fuel
Even after the proposed demerger of its hotels business, ITC is expected to leverage the hospitality segment’s culinary strengths to promote its foods business. In the last financial year, around 80 per cent of its revenue in the FMCG business came from the foods segment.
Sumant describes as “logical” the company’s decision to pick the foods segment to launch its FMCG business.
The country’s largest cigarette producer launched atta, or wheat flour, under the brand Aashirvaad back in May 2002.
It also meant taking on entrenched market leaders. ITC decided to bank on differentiated products to woo consumers. For this it leveraged the product innovation capabilities at its Life Sciences and Technology Centre in Bengaluru. For its atta, for instance, it worked on consistency of blends and introducing newer variants.
In the noodles segment, where Nestlé’s Maggi ruled the roost, ITC focused its attention on a key consumer segment for this product — children. Since children typically like to play with their food, ITC decided to add a fun element — long and slurpy noodles under the Yippee brand. Its research team changed the formulation to keep the noodles from sticking together. Additionally, the noodles came in round blocks, in a break from the commonly available square ones.
Sumant points to yet another innovation — berry and custard apple smoothies with fruit chunks (under the Sunfeast brand). “Nobody else till now has the technology to put fruit chunks into the products. And we are directly sourcing the fruits from farmers,” he says.
Many top spots
ITC’s innovation centre in Bengaluru has helped launch about 100 products each year, he says.
Aashirvaad quickly became the No.1 branded packaged atta countrywide. Other popular recent launches under this brand are Himalayan pink salt, vermicelli, gluten-free flour and low-cholesterol ghee, all of which come with a premium, ‘healthy’ brand positioning.
B Sumant, Executive Director, ITC Ltd
Other products from the ITC stable that have knocked off reigning numero unos include Bingo! (bridges segment of snack foods), Sunfeast (cream biscuits), and Classmate (notebooks); coming in second place are Yippee (noodles), Fiama (bodywash), and Mangaldeep (agarbattis), according to the company’s annual report.
Yet, the company appears to believe that it has only just sat down for the feast. And with good reason. The market penetration for branded atta is only 37 per cent, while for branded noodles it is 54 per cent.
ITC’s recent major launch in the foods segment is the ‘Right Shift’ brand for the health-conscious 40-plus age group. The line-up includes multi-grain atta, speciality flour, and jaggery-ragi cookies.
Personal care
To tap the big spends during the festival season, the company’s personal care segment launched gift sets under its Fiama range of personal wash products and Engage range of fragrances in the first quarter this fiscal.
“Gifting is becoming very big. In India people want to give gifts on all festive occasions... All these gift packs are doing extremely well and the audience response has been very encouraging,” Sumant says.
Localisation is yet another strategy in focus for the company, especially in the skincare segment.
“Indian skin is very different from Caucasian skin or even Korean skin. So the products have to be very different. We have created products for different skin types and conditions,” Sumant says. ‘Dermafique’, a digital-first premium skincare brand from ITC, recently added an acne prevention and/or treatment product.
Buying habit
On acquisitions, Sumant says they must not only plug gaps but also make financial sense and add value.
Buyouts of popular brands like Savlon (antiseptic), Nimyle (sanitiser), and Sunrise (spices) have paid off well — Savlon and Nimyle have since grown five times over.
On the ground, the company has seven million outlets, of which 2.5 million are direct outlets and the rest through wholesale trade. “We keep on increasing the number of outlets... We have been one of the pioneers in driving penetration. We go down to a population size of even 2,000,” Sumant says. “We will be with our products wherever the customer is,” he declares.
ITC’s omni-channel distribution includes e-commerce, quick-commerce, direct-to-consumer (D2C), modern trade, and retail.
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