ITC is increasingly focussing on its non-cigarette FMCG business, which is now on the path of profitability, with healthy growth rates. It is already growing at a faster clip than the cigarette major’s core business area. The company plans to double its turnover from this business segment within five years.
Stating this, ITC’s director-in-charge of non-cigarette FMCG business, Kurush Grant, told The Hindu that the share between the cigarette and the non-cigarette business is 58:42 per cent in terms of top line. “Non-cigarette business is growing at a faster clip,” he said adding that new launches were in the pipeline but he was unable to share details.
ITC’s non-cigarette business includes branded packaged foods, personal care, lifestyle apparel, education and stationery, incense sticks and safety matches. The brands include Aashirvaad, Sunfeast, Bingo, Candyman, Kithchens of India, Vivel, Wills Lifestyle and Bingo. Mr Grant said that all of the brands were now available pan-India.
To a question whether this segment was recession-proof, he said that “These are items that everybody uses in small amounts but the base is very broad since lots of people use the items on a daily basis”.
Pointing out that this new FMCG segment was targeting a turnover of Rs.15,000 crore by 2017-18 against Rs.7,000 crore in 2012-13, Mr. Grant said that the branded packaged food business was fairly big and ITC enjoyed a few advantages. These include sourcing raw materials from the farmers through the e-choupal network, getting the recipes and expertise from the chefs at its hotels “who know how to bring out the best taste … these are natural advantages which we leverage to get the right quality and deliver differentiated offerings to the customer..”
Non-FMCG segment
ITC estimates the Indian FMCG industry at Rs.2.5-lakh crore with a compounded annual growth rate (CAGR) of 17 per cent over the last five years. “We have bettered industry growth rate,” he said. The company said that in 2012-13, its non-FMCG segment revenues grew by 26.5 per cent with a positive swing of Rs.114 crore at the PBIT (profit before interest and tax) level.
In terms of annualised consumer spend, Aashirvaad and Sunfeast are over Rs.1,000 crore each, Classmate (a stationery product) is Rs.1,000 crore while Bingo, Candyman and Vivel are Rs.500 crores each.
On the lifestyle sector, Mr. Grant admitted that there was a great discretionary factor at play in this segment.
“We are still in the growth phase, we have quite a few brands and overall we are doing well”.
