ITC, the cigarette-to-hotels major, is aiming big — to be India’s largest FMCG (fast-moving consumer goods) player, a business it entered only a decade back.
Not an easy goal, considering the sector’s big daddy, Hindustan Unilever, is deeply entrenched at the top.
While ITC debuted with ready-made garments and paper stationery, its new FMCG businesses consist of personal care and toiletries.
To be sure, ITC is climbing fast. With FMCG revenues of Rs 7,000 crore in 2012-13, it has already nosed ahead of Nestle, as dna recently pointed out.
There’s yet another reason: “A recent Nielsen report has highlighted that ITC’s new FMCG businesses are the fastest-growing among the top consumer goods companies operating in India,” the company crowed in its annual report to shareholders.
ITC’s non-cigarette FMCG business grew 26.4% during last fiscal, while net overall revenue reported a growth of 19.4% at Rs 29,605.58 crore.
Apart from an impressive growth track, ITC likes to take pride in the Indianness of all the brands that it has developed in recent times.
“ITC takes justifiable pride that, along with generating economic value, these celebrated Indian brands also drive the creation of larger societal capital,” ITC said.
Unlike ITC or Emami, Nestle and Unilever have always played safe, preferring to import brands from their global portfolio rather than developing desi brands.
“Within a relatively short span of time, the company has established several vibrant consumer brands such as Aashirvaad, Sunfeast, Bingo!, Yippee!, Candyman, mint-o, Kitchens of India Essenza Di Wills, Fiama Di Wills, Vivel and Superia, Classmate Paperkraft Wills Lifestyle and John Players,” ITC said.
The size of the Indian FMCG industry is estimated at around Rs 2.5 lakh crore, representing nearly 2.5% of the country’s gross domestic product, or GDP.
The industry has tripled in size over the last 10 years and has grown at an approximately 17% compounded annual growth rate in the last five years.
ITC sees growth tapering a bit to a little over 15% over the medium term.
However, rising income levels, urbanisation, strong rural demand and favourable demographic trends, coupled with the low levels of penetration and per capita usage in India, are expected to act as key growth-drivers.
Beyond FMCG, ITC has been nurturing a wish to emerge as the largest player in the hospitality segment, now that it is the second-largest hotel chain in India with 93 properties at 64 locations in the country, operating under brands like ITC Hotel, WelcomHotel, Fortune and WelcomHeritage.
Once these two milestones — emerging as the leader in both FMCG and hospitality industries — are achieved, maybe ITC’s secret wish to be referred no more as a cigarette-maker would be fulfilled.
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