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ITC Foods slugs it out for market pie
The Times of India - 04 Apr 2005

For once the Goliath is the David. Foods business is among toughest market to crack in a country where unorganised sector rules. Yet ITC's foods business is fighting it out in a fierce battle for the market pie. Prashanth Hebbar talks to ITC Foods chief, Ravi Naware on the company's options in a tight market.

What is it like to be an underdog in the biscuit market that is dominated by big players?

There are two entrenched players in the biscuits market. Parle and Britannia have 85% of the market. It's very tough o break them. The way we have designed the product recipe is superior. We check with the consumer in a survey done by either IMRB or Nielsen. We are leveraging the distribution capability (of ITC). We are coming out with novel differentiated products.

Given your parent group size and the fact that you are at the bottom of the pyramid of your market, what's been your game plan?

Nobody has attempted our kind of broad spread in products. We have 70 products in the market. We have been in existence for 32 months. We will continue this pace (of product introduction) for the next 6-7 months with staples, confectionery and ready-to-eats. We draw synergies from our group. We buy wheat from e-choupals. We would like to construct a vertically specialised grid and then integrate horizontally.

You see, Ashirvaad atta has taken over the leadership with 35% market share (ahead of Shaktibhog, Annapurna, Pillsbury). Candyman brand is the No. 4 brand in the country (behind are Perfetti, Nutrine and Parry). Mint-O is among the top 5 brands.

Are you biting off more than you can chew?

No. We have provided sufficient resources for each activity and as a result, we have been managing the operations successfully.

Where do you position yourself? What about profitability?

Foods business in India is not a high-margin business. In India, there is a huge unorganised sector. Biscuits market on an average grew at 8% per annum in the last five years. They (competitors) are also growing. I am looking at the 15% market share and the 8% natural growth. Our immediate goal is 13-14 per cent in the biscuit industry by July 2006.

Profitability-wise, we should be there by 2007. We will pump Rs 13 crore into product development. Manufacturing is out-sourced to 25 different manufacturers in India. A day will come when we look at our own factories. It depends on achieving scale.

Can an elephant run faster than a gazelle? How fast can you react to market realities?

The proof the pudding-successful entry into 10 categories, creation of five new brands, development and introduction of 70 new products and an all-India presence in just 3 years.

Do you face internal pressure to grow faster given the fact that you are part of a bigger conglomerate?

You can call it a healthy pressure and urgency to grow. We are backed by the strength of the group, we can draw upon ITC's capabilities in marketing, distribution, manufacturing e-choupals, hotels, packaging and printing to grow quickly and establish the foods business.