ITC charts strategy for bigger slice in FMCG pie

Powered by mega brands such as Aashirvaad, Sunfeast, Bingo!, Classmate, and Savlon, FMCG major ITC is set to drive into a commanding position in what some analysts have estimated to be a Rs5 lakh crore addressable FMCG industry market segment by 2035, with Chairman Sanjiv Puri putting in motion a carefully crafted 'ITC Next' strategy.

This re-crafted strategy, built around portfolio revitalisation, rapid platform-based innovation, aggressive digitisation, deeper synergies with other group businesses, structural leverages and a sharper focus on margins.

As an FMCG major, ITC is the only company that is dominant across a range of product categories from branded atta to biscuits; snacks to spices; noodles to dairy; chocolates to coffee; juices to frozen snacks and vegetables; deodorants to hand and body wash; sanitizers and masks to floor cleaners; and from notebooks to agarbatti, that none of the other Indian or multinational brands can claim to be present in.

Puri's 'ITC Next' strategy pivots around a multi-pronged approach to revitalize the company's current FMCG portfolio by fortifying and scaling up its proven megabrands, leveraging adjacencies through horizontal brand extensions, and nurturing new platforms with innovative products that will scale up to be leaders in their respective categories.

Mega brands and adjacencies

ITC has a plethora of megabrands such as Aashirvaad, Sunfeast, Bingo! and Classmate that already command leadership positions in the market.

The strategy of creating value added adjacencies could be best illustrated by the new Aashirvaad portfolio including Aashirvaad Nature's Super Foods range comprising ragi flour, multi-millet mix, gluten free flour, organic atta and pulses as well as chapatis, instant meals and the Aashirvaad Svasti dairy range.

ITC is also fostering new platforms and strengthening its new brands including Fabelle chocolates, Sunbean coffee, B Natural juices, Nimyle home cleaners, Savlon hygiene products and so on. The overarching strategy for new platforms of innovative products is to first validate the concept and business model in select beachheads. Having gained a dominant market penetration, these new lines of products and brands will gain strength to occupy adjacent markets with different opportunities, building a larger brand with each new product, creating new and steady vectors of growth for the future.

ITC under Puri is unwavering in its resolve to build a formidable FMCG business. With innovation as the new lifeblood, the company today is one of the largest incubators of world-class Indian brands. The Company's wide range of FMCG portfolio has demonstrable headroom to expand rapidly in the FMCG industry overall addressable market segment of Rs 5 lakh crore.

For instance, the total size of the packaged snacksmarket for the overall industry is set to vault 4.5 times from about Rs 32,000 crore to an estimated Rs 1.43 lakh crore by 2035. The market for overall spices industry is projected to grow from about Rs 22,000 crore currently to Rs 1.1 lakh crore in 15 years, a growth of five times. Similar industry growths are expected in other categories such as biscuits, branded atta, noodles, deodorants, personal care products and the cleaners categories.

Most of ITC's FMCG products occupy the first or the second positions in their respective categories giving them unique opportunity to corner most of these segment growths. Aashirvaad, India's number one branded packaged atta, itself has a consumer spend of over Rs 6,000 crore.

Digital, consumer-centric and future-ready

Puri's strategy to make ITC future-ready manifests in his focus on driving the three megatrends emerging out of the pandemic – innovation, digitalisation and sustainability. The Company's R& D Centre, the ITC Life Sciences and Technology Centre (LSTC) in Bengaluru helped ITC to launch 120 differentiated products amid the pandemic to meet emerging preferences. To further support this goal, the company has set up 9 state-of-the-art integrated consumer goods manufacturing facilities (ICML) to create structural advantages.