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On A Fast Track
Economic Times - 12 May 2010

Kurush Grant, Executive Director, ITC, tells Rajiv Banerjee what it took to make ITC more than a tobacco company and what will it take to sustain its growth across the FMCG segment.

Keeping the pressures on tobacco business in mind, what is the vision for ITC say 5 or 10 years from now? Do you see an ITC that will be known more for its FMCG businesses like foods, personal care, lifestyle retailing in the time to come?

If you ask a consumer in Delhi what he or she associates with ITC, they would immediately refer to the ITC Hotel Maurya. A consumer in Hyderabad will associate it with agri business or the paper industry. Even perhaps social forestry. A consumer in Chennai would recall our packaging business. The company’s diverse businesses therefore already have a public face. It is also increasingly being recognised by consumers as a diversified entity. Cigarettes are consumed by less than 3% of India’s population since bulk of the tobacco consumption is in other forms of tobacco. Our FMCG products are perhaps a part of every Indian consumer’s life. While every Indian uses the packaged products, it is our FMCG products and our hotels which are most prominent in the consumer’s mind.
Going forward, it is our strategic intent to continue to create multiple drivers of growth based on strong internal competencies. In the foreseeable future, we can certainly expect a growing contribution from our new businesses to the overall growth story.

How challenging has it been to create an independent brand identity for the products which stays clear of the company’s mainline business i.e. tobacco? For example, Wills Lifestyle had a strong association with the Wills cigarette brand.

The company has a long heritage of building brands based on strong consumer insights, R&D and sustainable quality. Therefore, we have been able to create a distinct brand architecture in all the new categories to reflect the value propositions in each category.

How would you assess the progress across the FMCG segment from the time the company announced its foray?

The journey so far has been encouraging. Consumers have accepted our value propositions. As you would have seen from the company’s Q3 results, the other FMCG segment has recorded a sales growth of 20%. This is on account of a combination of factors including quality, product innovation across all our FMCG products, innovative marketing and expanded distribution of our products. We have made steady progress in our other FMCG products and are continuously strengthening brands for longer term success.

Can you elaborate on the opportunities the company has capitalised on in its FMCG foray? What are the challenges it needs to overcome to further entrench itself?

Given the opportunities that an emerging economy like India had to offer, we decided to create multiple drivers of growth by investing in the products and services of tomorrow. We leveraged our internal competencies that were aligned to these opportunities and this realignment was given shape through significant investments in technology, processes, innovation and brands. We are happy that we have been able to foray into various new categories, which have gained market standing over the past few years. ITC has created several new Indian brands in the FMCG space that are pitted against international brands that have had a long presence in the Indian market. We have leveraged our capabilities in brand building, trade marketing, distribution, hospitality, packaging and agri sourcing to build these new categories. This rapid scaling up and expansion of the FMCG portfolio requires efficient multiple distribution channels across multiple locations. Therefore, the challenge is to create an efficient supply chain together with the enhancement of logistics infrastructure to grow new categories. The challenge is not only in optimising the supply chain but also in customising the supply chain to every type of product that we are in.

The company has been successful in connecting with the rural markets through e-Choupal. How has ITC harnessed the strengths from the online rural foray for its FMCG business?

The company has always played a full portfolio strategy in all the product and service categories it operates in. All relevant segments, be they price, taste type, demographic or psychographic are covered. The term “Rural Market” as per Census of India definitions, reflects predominance of agriculture as source of livelihood. The company has a full portfolio approach reflecting the diverse socio-economic spread of rural India. This is not a new strategy for us, but it’s reach in rural India has grown exponentially with the expansion of it’s agri businesses including, but not restricted to, the e-Choupal network.