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'We'll dominate agarbattis industry soon' - 30 Sep 2004

By Our Correspondent

ITC's incense sticks business, launched as part of its strategic initiative to create multiple drivers of growth in the FMCG sector, leverages the core strengths of ITC in marketing and distribution, brand building, supply chain management and paperboard & packaging to offer Indian consumers high-quality agarbattis.

It has already launched brands like 'Spriha' and 'Mangaldeep' across a range of fragrances like rose, jasmine, bouquet, sandalwood, madhur, sambrani and nagchampa. Packaged quite attractively, these brands appeal to a cross-section of consumers at various price segments. These agarbattis are available in 'fragrance-locked' packets. 'Fragrance-locking' is a unique concept of packaging which helps to retain the fragrance for a longer period.

Through its participation in the business, ITC aims to enhance the competitiveness of the small- and medium-scale sectors through its complementary R&D based product development and marketing strengths, especially the breadth and depth of the company's trade marketing and distribution.

"ITC's philosophy," V M Rajasekharan, Chief Executive of Agarbattis SBU, ITC, says "is to go beyond driving each of its businesses towards international competitiveness." Excerpts from an interview:

What is the rationale behind ITC entering the agarbattis business?

ITC's strategy for business growth has been to creatively and synergistically blend its proven core competencies in its established businesses to create multiple drivers of growth in the FMCG sector. It is as a part of this strategy that ITC commenced marketing agarbattis sourced from the small-scale and cottage sectors. This business of marketing agarbattis manufactured by small and medium enterprises (SMEs), and continuously enhancing their quality, leverages ITC's core strengths in brand building, marketing and nation-wide distribution, supply chain management, paperboard manufacture and the provision of creative packaging solutions.

Of late, ITC has been aggressively launching and marketing a bouquet of agarbatti brands. What has been the response from the market?

The response has been very good. ITC has started the process of rolling out its agarbatti brands, manufactured by small-scale and cottage units, across the country.

Agarbattis is a cottage industry. What are the advantages ITC as a corporate can leverage in this business?

ITC's philosophy, as succinctly expounded by Chairman Y C Deveshwar, is to go beyond driving each of its businesses towards international competitiveness. ITC also consciously contributes to enhance the competitiveness of the larger economic value chain in India of which each of its businesses is a part. In line with this corporate philosophy, ITC helps the small and medium enterprises manufacturing agarbattis continuously improve their quality and productivity, besides enhancing the efficiency of their processes.

Coming to R&D and development of new fragrances, how has it helped in product development? Can you give us examples.

ITC develops and selects fragrances for its agarbattis through detailed consumer panel tests. This process helps the company in appropriately customising baskets of products for different regions. In fact, ITC has now completed a detailed fragrance-mapping exercise across the country. The survey has provided the company with interesting insights into the fragrance choices that consumers in different regions of the country naturally prefer. One of the interesting findings of the study is that the sandalwood fragrance is the most preferred throughout the country.

ITC's Integrated Research and Development Centre in Bangalore (IRDC) meticulously evaluates the fragrances to create the right mix for the agarbattis. Various fragrances are mapped and subjected to thorough chromatographic tests before a final selection is made. ITC's in-house laboratory carries out continuous fragrance checks to continuously improve the quality of ITC’s range of incense sticks.

ITC's agarbattis now come in eight fragrances. A few more floral variations are in the pipeline. The plan is to create a dynamic portfolio mix through special fragrances.

What is the size of the market and where will ITC be in terms of market share in the next couple of years?

The size of the incense stick industry in India about Rs 1000 crores a year. ITC aims to achieve a leadership position in the agarbatti industry in the next couple of years.

Being a price sensitive segment, what is ITC's strategy?

ITC's product development strategy will always closely dovetail into consumer needs. One recent example is the launch of 'Mangaldeep-Madhur' priced at Rs two for 10 sticks. This offering is already evincing an enthusiastic market response.

There have been reports in the media regarding ITC's unique agarbatti community participation programme? Can you throw some light on it? What has been ITC's experience in this regard?

ITC is in the process of working with NGOs to roll out unperfumed agarbattis. These products are sourced by the company's vendors who add the fragrance to the incense sticks, package the sticks and supply the finished product to the agarbatti business. This initiative helps impart agarbatti-rolling skills to rural women, with a buyback assurance. This, therefore, provides invaluable livelihood opportunities to rural women. The agarbatti project with the 'Art of Living' establishment in Bangalore has particularly taken off very well.

Are you looking at export markets?

Certainly yes. We are seriously looking at the export market. We have already made a small beginning this year.

Give us an overview of the quality systems and vendor management policies that help ITC in maintaining standardisation and quality across products.

The quality systems are broadly divided into two parts.

Quality checks: This is done by ITC's vendors based on set parameters developed in accordance with consumer needs.

Quality monitoring: Samples that are drawn from the market are checked at a central location and evaluated every month, vis-a-vis competition.

What innovative and unique strategies will ITC be adopting in marketing this unique product, which is linked to faith, prayer and beliefs of people?

One of the unmatched features of ITC's agarbattis is that the entire range of incense sticks marketed by the company is available in a unique 'Fragrance-Locked' packaging. This feature helps in keeping the pristine pure and sacrosanct fragrance absolutely intact till the consumer uses the agarbatti. This unique 'fragrance locking' feature is highlighted in all product-related communication that ITC puts out. The company has also launched a mass media campaign on its brands of agarbattis backed by large-scale sampling through vernacular magazines.