How ITC illuminated brands other than cigarettes
Late entry into FMCG and packaged foods, ITC has challenged national and multinational companies, following a clear vision from its legendary former chairman Yogi C Deveshwar, to rapidly expand the non-cigarette business of the business.
How does a business create impact in an industry dominated by multinationals? ITC has stuck with the classic textbook approach to grow the FMCG business, which today boasts a brand portfolio of over Rs 1,000 crore, with Aashirvaad being the largest with a figure business over 4,000 crore rupees.
“ITC has done in food, what HUL (Hindustan Unilever) has done in personal care,” said an FMCG industry expert. Because food is largely a local topic, ITC has managed to create a larger disruption in foods where consumption trials are high, something HUL hasn’t been able to do for decades. ITC tapped into categories where the unorganized market share was high, such as attack, where there was a need for branding for consumers. “ITC mastered this art in food. In personal care, however, there is less unorganized play and brand loyalty is a big factor. It has been a challenge for ITC, ”said the expert.
Devendra Chawla, another FMCG expert who runs Spencer’s Retail, said: “It can take years to build a distribution network in towns and villages. Learning to source properly from food takes time, and not everyone gets the right information about consumers. On all these points, ITC has excelled. It is this very understanding of consumers that has helped ITC to develop its food business based on local tastes. In food, a local business has a better understanding of consumer behavior. A true farm-to-fork strategy with recent acquisitions has helped ITC develop emerging categories by leveraging these strengths. When ITC entered the food industry in 2002 with the launch of the Kitchens of India ready-to-eat product line, followed by Aashirvaad Atta, the industry was deprived of major technological disruption. . ITC made a concerted effort to create every category it fell into while checking every box in the marketing book.
Marico CEO and Managing Director Saugata Gupta said, “ITC has done everything right because they believe in doing everything the classic notebook way. They have invested in backrooms, supply chain and innovation. They managed to create a breakthrough with quality products created in India, which were then quickly developed. ”
Each year was marked by a major brand / category launch, leading to a non-cigarette FMCG business of Rs 11,000 crore today. The company has set a target of achieving Rs 1 lakh crore in FMCG and cigarette-free food sales by 2030. ITC has not shied away from leveraging the capacities of its existing activities. She used her network of hotels and, based on the ideas of the chefs, came up with the right flavors to appeal to consumers. Its agro-sourcing and e-choupal network have made it possible to build an end-to-end network. It has also surpassed other FMCG companies in advertising, according to Abneesh Roy, senior vice president, Edelweiss Financial Services. “ITC had the ability to leverage the profits it was making from other companies like cigarettes in growing the FMCG / foods portfolios. Whereas previously they focused on mass segments, over the past 5-6 years there has been a clear break with this strategy of focusing on the mid to high end segment of the market in order to generate higher gross margins. For about 5-6 years, they didn’t make a profit in FMCG. Now they are making decent margins. This strategy was important to face players already well established in the market.
Whether it’s Dark Fantasy Choco Fills cookies or innovations like a pocket deodorant in Engage, investing in product innovation has helped ITC capture a significant share of certain categories. ITC is a market leader in attack, stationery, cream cookies, bridges and the second largest player in deodorants, shower gels, noodles and agarbatti.
In different categories, ITC competes with PepsiCo, Nestlé, HUL, Britannia and Parle, among others.