The news is that ITC has crossed the first hump in terms of volume, market share and profits. Its food business is over Rs 2,500 crore in size. If beverages are excluded, investment analysts reckon, this should put ITC amongst the top three food companies in the country after Nestlé and Hindustan Unilever. ITC Foods Chief Executive Chitranjan Dar runs 40 food factories across the country and a product development centre in Bangalore. It is the market leader in one category — flour —, and is second in confectionery, salt and packaged snack, and third in biscuits. It has in its portfolio six brands (Aashirvaad, Sunfeast, Bingo, Kitchens of India, Minto and Candyman).
The company was also quick to realise that the foods business in India requires sound knowledge of local tastes and preferences. Food habits in the country change after every hundred miles. So, this is a business in which local companies stand a better chance of success. It is an entry barrier for multinational corporations, though the two largest food companies in the country are foreign-owned. “Food is a very personalised category. It’s not like soap. You can get some space if you can create differentiation,” says Dar, a veteran of 25 years at ITC. “Brands will need to be fragmented to cater to local tastes and preferences. So there can be no omnibus product which can be a national hit.”
Aashirvaad is ITC’s brand for staples. Branded flour sales in the country are around Rs 4,000 crore, which is just 4 per cent of the market — rest is all sold loose. (Conversion to packaged flour is happening at about 8 per cent per annum.) Out of this, national brands like Aashirvaad, Shaktibhog, Annapurna and Pilsbury sell around Rs 1,700 crore. Aashirvaad’s share of the market is above 50 per cent, market analysts say. This perhaps is the reason why the brand is not heavily advertised in mass media. “Somebody has to pay for it. In the South we do advertise, because it a nascent concept there. In the North, we work at the points of purchase,” says Dar. Aashirvaad is available in outlets that sell 80 per cent of the packaged flour in the country. The product is tweaked, claims Dar, for different markets. The one sold in Delhi, for instance, is a blend of four flours. The mix is changed right through the year to give the same quality to consumers, says he.
ITC’s most audacious move in foods so far has been Bingo, its ready-to-eat snack, which took on the might of Frito Lays (market share: 60 per cent; brands: Lays, Kurkure, Aliva and Uncle Chipps.) Bingo has grown through some innovative products and kickass promotion. Its share of the Rs 3,000-crore market is 10 to 12 per cent. Frito Lays has hit back with its new range of Indian snacks. Parle too has entered the market with aggression. Sector experts point out another challenge: Bingo’s positioning is such that it needs to come out with new flavours and advertisements all the time. “It’s a dangerous game,” says a Mumbai-based analyst. “Customers can lose interest if we do not innovate continuously,” Dar admits, “So you need to look at new textures, flavours and shapes regularly. In terms of flavours, our target is one or two launches a year. In texture and shape, there should be one new product in two years. There are eight to ten flavours always in the pipeline in various stages of development.”