Also, with the 20 ICMLs getting commissioned across the country, we will be able to produce more and more products close to the market and ensure freshness of products.
While ITC will leverage opportunities for potential acquisitions, which will enable the diversified conglomerate to scale up businesses in FMCG space, it will continue to build new categories organically, says executive director B Sumant. In an interview with FE’s Mithun Dasgupta, Sumant points out that there is headroom to grow in every FMCG segment given the low levels of penetration across various categories.
ITC is aiming to be India’s largest FMCG player by 2030. How far has the diversified group gone to attain this goal?
We have scaled up our presence significantly across all FMCG segments, including foods, personal care, education & stationary, matches and agarbatti, and so on. ITC today is a leading FMCG marketer and one of the largest food companies in India. Within a relatively short span of time, we have built 25 mother brands, many of which are market leaders in their segments. ITC’s unique enterprise strengths in terms of its deep consumer insight, intimate rural linkages, superior agri-sourcing, cutting-edge research & development, world-class manufacturing, brand building skills, culinary insights of ITC Hotel’s master chefs, innovative consumer packaging, and an extensive trade marketing, distribution and logistics network provide distinctive competitive advantages to its FMCG business.
In FY18, the new (non-cigarette) FMCG segment Ebitda was up 72% at `456 crore. In just over a decade, the consumer spend in ITC’s new FMCG business has touched `16,000 crore. Today, many of our products have assumed market leadership.
In FMCG segment, the conglomerate has entered many new categories in both food and non-food space. Are you satisfied with the present pace of growths in each new category?
We are putting all our weight behind the new FMCG business through large-scale investments to build scale. We believe there is headroom to grow in every segment given the low levels of penetration across different categories. We are strengthening existing categories as well as continuously foraying into new categories. We launched more than 60 products in FY19. Last fiscal, we significantly expanded our offerings in the high-potential dairy segment. We also entered the fast-growing frozen snacks segment by launching a large variety of ready-to-cook frozen snacks under the ITC Master Chef brand. In existing categories, we have concentrated on launching innovative adjacencies that will add value to the respective portfolio.
The company has invested in building an innovation engine, which is at work 24X7. Innovation is instilled in products, processes and technologies. The outcome of its R&D strength is visible in ITC’s unique range of skincare products launched recently under the Dermafique brand. The focus is on crafting a bouquet of innovative, distinct, superior first-to-market products… All these products have gained significant consumer franchise, which encourages us to roll out a large number of new and superior product offerings during current fiscal as well. We are also investing heavily in manufacturing to scale up its new FMCG portfolio.
You have already taken inorganic route in FMCG segment. Are you further looking at inorganic options to spruce up the growth momentum in some categories and also to enter new categories?
While we have built many successful FMCG brands from scratch, we are open to inorganic route only if it is a strategic fit to our plans and brings in value commensurate to our financial commitment. While looking at acquisitions, our focus has been to expand the concerned portfolio significantly in newer categories. While we will leverage opportunities for potential acquisitions that will enable us to scale up our businesses, we will continue to build new categories organically. This strategy emanates from our commitment to build world-class Indian brands that anchor competitive and inclusive value chains that create, capture and retain larger value within the country.
The group has firmed up plans to sell its FMCG products through e-commerce space as well. Tell us about the work done in this direction.
Our wide range of FMCG products are available across a number of e-commerce platforms, including Big Basket, Amazon and others. ITC’s Sunfeast YiPPee! unveiled its new ‘My’ range noodles with four new exciting variants – My Crazy Chow, My Madly Manchurian, My Mystery Masala and My Truly Chicken first exclusively on Big Basket and then was distributed to all modern format and general trade stores nationwide. Niche FMCG Products, including premier skincare range Dermafique and Fabelle Luxury Chocolates are also being made widely available on several leading online platforms.
Will ITC be eyeing a pan-India presence in each and every category? Or, in the short-run, will it be happy with strong presence in metro cities for some categories?
In the long run, all our big brands are rolled out across the country. However, for some of our new brands, we would like to grow the portfolio in key markets and attain the full potential in that region before rolling out the products pan-India. For example, we have launched Aashirvaad Svasti pouched milk, curd and paneer in select markets of Bihar and Kolkata. We will consider a pan-India roll out of these products after we gain optimum traction in these markets. Also, with the 20 ICMLs getting commissioned across the country, we will be able to produce more and more products close to the market and ensure freshness of products.