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ITC smells more growth for its incense business
Business Standard - 08 Mar 2009

Business conglomerate, ITC, is anticipating 30 per cent growth for its agarbatti (incense sticks) division this financial year primarily driven by increasing consumer franchise for its ‘Mangaldeep’ brand, combined with improved distribution reach.

Mangaldeep is already the second-largest national agarbatti brand, riding on the success of two sub-brands, ‘Madhur 100’ and ‘Yantra’. Sector analysts peg the agarbatti market at around Rs 1,800 crore, and growing at 8-10 per cent yearly. It is dominated by unorganised players — some of whom do contract manufacturing for organised players like ITC.

Around 10-11 small firms are engaged in finishing the agarbattis and together they supply about 180-200 million sticks per month to ITC. These are marketed through half a million retail outlets that distribute ITC’s other products. The sticks are available at a price between 8 paise and Re 1, with urban and rural markets contributing equally to the turnover.

“We are currently number 2 in the agarbatti industry with our Mangaldeep brand, second only to the Cycle brand of incense sticks. Our aim is to grow the business by 30 per cent this financial year by keeping our prices as low as 50 paise per stick,” said V M Rajasekharan, chief executive of the agarbatti division.

The company is planning to extend its manufacturing network, which currently employs over 5,000 people. ITC’s trade margins on agarbatti are between 30 per cent and 35 per cent. Other manufacturers offer margins of about 40 per cent, but they say ITC products sell faster and are, therefore, a more profitable proposition. According to analysts, as ITC’s share of the agarbatti market is less than 5 per cent, there is ample scope for growth and promotion of new manufacturing networks.

The company is also planning to launch new products in the ‘air care’ segment, to cater to the growing popularity of aromatherapy and the changing gifting habits in India. It will soon introduce a premium agarbatti brand, priced at Re 1 a stick. It also plans to launch premium candles and other brand extensions, which would also work as a nice gifting option.

“Currently, we have launched some aromatic candles under the brand, Expressions, in select markets as a test launch. We are planning new brand extensions after the success of the launch,” added Rajasekharan. ITC’s premium candles would be priced between Rs 300 and Rs 450.

They also plan brand extensions for Mangaldeep and to launch newer fragrances. “Sandalwood for incense sticks is one fragrance that is accepted nationally. But we will also look at launching fragrance that individual regions have a liking for,” Rajasekharan said.

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