ITC Foods aims for growth in north and west India, shifts to branded products

The Kolkata-based fast-moving consumer goods (FMCG) company, which operates in categories such as staples, snacks, nutraceuticals, dairy and beverages, is also open to acquisitions to strengthen its brand portfolio and drive growth, hinting at the following: Transactions are quick.

Acquisitions and Food Portfolio

ITC has ramped up its food product portfolio over the past few years as it expanded its footprint into more categories in dairy, spices and adult nutrition. $17,000-crore food portfolio.

Hemant Malik, executive director of ITC Ltd and head of the company’s food business, said more consumers switching from unbranded food to branded food will help drive the company’s growth.

“The packaged food category accounts for only 18% of the total food volume. With our experience in the staples business, we understand the drivers of this shift across multiple categories. This is a major vehicle for growth in the business. We have a strong presence in the Aashirvaad staples portfolio Many peripheral products have been added, including rava, besan, vermicelli, organic food, etc.,” he told Mint.

Malik said a large population in northern and western India is entering the consumer class – these markets offer potential for increased penetration of branded products.

“The second vector is to capture the growth in what we call emerging markets, particularly states like Uttar Pradesh, Bihar, Jharkhand, Madhya Pradesh and Rajasthan. Until a few years ago, due to per capita spending power Growth is mainly driven by the southern region due to higher levels of industrialization, etc. However, penetration in the southern region has now reached saturation levels and now mainly offers opportunities for further premiumisation,” he added.

The Hotels to Packaged Goods company said it has significant scope for growth by 2022 across its FMCG range, which includes packaged flour, chips, biscuits and soaps, with the total addressable market potential expected to be $It will reach 50 trillion rupees by 2030.

This means that ITC will explore categories and markets in the personal care, home care and packaged food sectors to help it expand its business.

The company’s fast-moving consumer goods business revenue is $According to the company’s annual report, revenue for fiscal 2024 was Rs 20,967 crore, up 9.6% from the previous year.

ITC has outlined plans to “strengthen and expand” its large food brands such as Aashirvaad (staples), Sunfeast (biscuits), Bingo (salty snacks) and Yippee (noodles), exploring adjacent categories and future-focused investments.

Recent product launches include Aashirvaad soy nuggets, Sunfeast egg and milk biscuits, Yippee Korean noodles and the Right Shift portfolio of adult nutrition products (oats, biscuits, flours, etc.).

The company launches 60-70 new food products every year.

growth strategy

Malik said that in addition to launching more premium products, the company is also open to acquiring brands.

In 2020, company expenditures $Acquired spices manufacturer Sunrise Foods Private Ltd for Rs 2,150 crore. In 2023, the company also acquired health food company Sproutlife Foods Private Ltd, which sells products under the Yoga Bar brand. “Acquisition opportunities remain a key part of our growth strategy; after Sunrise and Yoga Bar, few other opportunities are being evaluated,” he said.

In terms of premiumization (the strategy of selling more expensive, better-quality products), the company will continue to create more “niche markets” to tap the needs of high-end people. “Their FMCG spending is almost 2.5 times that of the average household. That’s where you have to create more products and more value propositions,” he added. Premium products accounted for 22% of the company’s food business in the September quarter.

The move comes as more FMCG companies are aggressively launching new products, especially in the premium segment.

A report released by TeamLease Services earlier this year showed that the Indian consumer packaged goods market is expected to grow from US$167 billion in 2023 to US$192 billion by the end of 2024, and further increase to US$220 billion in 2025.

In addition, post-epidemic consumer goods manufacturers such as ITC Ltd, Dabur India, Hindustan Unilever Ltd and Tata Consumer Products have been spending money to acquire spice manufacturers, health brands and organic food companies to expand into new areas.

ITC, which competes with Hindustan Unilever, Nestle India and Tata Consumer Products in India, aims to take an inorganic approach to build missing capabilities within the company.

“While evaluating acquisition opportunities, on one hand we focus on the categories in which we currently operate; we are also assessing emerging/developing white spaces in the market. We remain open to various structural mechanisms to ensure flexibility,” Malik said. “Our priority is value-add acquisitions and we evaluate opportunities based on business size and strategic fit. We generally avoid companies that are too small and focus instead on when acquisitions add value to our business or bring expertise we do not possess When knowledge is available, we make acquisitions.”