- July 3, 2018 / 5 min readHowever, ITC will only acquire brands that can be scaled up using its own distribution network as it would be easier to break even.
Kolkata-based conglomerate ITC plans will explore every possible consumer category and launch 30-40 new products each year in its effort to become the country's biggest fast-moving consumer goods (FMCG) company, a company executive said.
“To achieve our revenue target of Rs 1 lakh crore by 2030 from the new FMCG businesses, we are strengthening our existing categories and venturing into newer ones,” B Sumant, president of the FMCG business, told ET in an interview at ITC’s Virginia House headquarters in Kolkata. “A lot of resources are being invested in product development with a strong R&D team.”
ITC’s FMCG business includes cigarettes, packaged food, personal care, stationery, safety matches and agarbattis. The company will launch more products in the packaged food space since it’s the largest FMCG business for ITC. Last fiscal, it launched 30 products, next only to the rapidly expanding Patanjali Ayurved.
The maker of Sunfeast biscuit, Aashirvaad atta and Engage deodorant is also actively scouting for acquisitions to plug portfolio gaps. However, ITC will only acquire brands that can be scaled up using its own distribution network as it would be easier to break even.
Hence there’s unlikely to be any big-ticket deal, said Sumant. ITC in the past few years have acquired brands such as B Natural, Savlon, Shower to Shower and, Charmis. Last month, it ventured into the herbal floor cleaner space by acquiring Nimyle. Sumant said the company has already grown brands such as B Natural and Savlon exponentially.
The company recently ventured into the premium skincare market with the Dermafique range of products, centre-filled snacks under Mad Angles, Bounce Mini biscuit, Dark Fantasy Jelifills cake and chicken instant noodles under Yippee. While Sumant refused to divulge details on categories ITC would enter in the future, analysts said it’s likely to expand in food besides beauty and homecare, having acquired the Nimyle brand.
To be sure, ITC has some way to go before it can dislodge Hindustan Unilever from its longtime perch as India’s biggest consumer goods company. In FY18, ITC's non-cigarette FMCG business clocked sales of Rs 11,328.60 crore driven by the packaged food business at Rs 8,668.72 crore. In contrast, HUL's consolidated total income was over three times more than that of ITC at Rs 36,622 crore in FY18. On the other hand, Patanjali Ayurved is fast gaining ground despite a late start.
“Going by ITC's track record, it should expand its play in food since it is either number one or two in almost all categories,” said Edelweiss Securities senior VP Abneesh Roy. “It has strong sourcing capabilities and understands local taste which several MNCs have failed to crack. In personal care and home, it will have to face a lot more competition from strong MNCs and hence things would be tough. Which is why it is yet to gain a sizeable share in soaps and shampoos.”
The cigarette-FMCG hospitality giant will indeed have 60-65% of the new launches in the packaged food segment which contributes over 22% to its net revenue, next only to the cigarette business, which contributes 46%.
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