Cigarettes to fast-moving consumer goods and hotels major ITC plans to invest $2 billion over the next few years as it looks to scale up existing capacity and tap new areas for growth.
“It’s a medium-term horizon, which would be a few years and what we are talking about is an investment for capacity gearing. Secondly, we need to upgrade quality time to time, replace and bring in contemporary technology and third is we are talking about new growth areas like plastic substitutes, a super app for farmers…We are talking about scaling up food processing. All of these will have their investment plans,” Sanjiv Puri, chairman and managing director of ITC said on Thursday.
ITC is the largest cigarettes maker in the country. Over the last decade, it has invested a lot in scaling up its FMCG business, which is also among the largest today. In recent years, the company has forayed into branded chocolates, coffee and even dairy. The company has been revitalising the FMCG business to address emerging trends and make it future-ready.
“We would be scaling up the older ones (brands/categories), scaling up the smaller ones that we have launched and some, which we are still piloting and validating and we will see when to take it forward,” said Puri.
For instance, the company is currently expanding its instant coffee product Sunbean, which comes in a beaten coffee form, after it was tested in the Delhi market. In Kerala, it is testing ready to cook chapatis. It has expanded frozen snacks into more than 100 markets after trying it out in a few places. Its fresh dairy operations are currently only in Bihar and Kolkata, and it is still being validated and fine-tuned, before it will be scaled up.
In the hotels business, ITC plans to scale up the WelcomHotels business to around 34-35 properties from 12 currently. Also, it is launching a new boutique hotel brand called ‘The Storii,’ aimed at offering travellers curated nature experiences. It will look to add 4-5 The Storii hotels each year, starting next year.
Elsewhere, its setting up a packaging plant in Gujarat. In agribusiness, it is in the process of setting up a spices facility, which will cater to the domestic market as well as exports, said Puri.
While it is expanding its capacities and looking at organic growth opportunities, ITC is also proactively scanning for acquisition opportunities in the FMCG space.
“We have a fairly wide portfolio. We have identified certain consumer trends and any of that aligns with these areas, and we find that the acquisition is value accretive, we will be able to run it better than it being a separate company today, those are the ones we will take forward,” Puri pointed.
Health, wellness, hygiene, convenience foods, indulgent products are some of the areas the company is looking at when it comes to acquisitions.
In the past year, as the COVID-19 pandemic impacted retail channels and online shopping has picked up in a big way, ITC fast-tracked its e-commerce play. So, it has strengthened ITC e-Store, its direct-to-consumer platform, which comprises 800 products across over 45 categories and has a reach in 11 cities. The company is also introducing more digital-first brands to leverage the growing e-commerce space. Its sales in e-commerce have doubled during the past year.
“There is a multi-dimensional plan as far as digital. Whether, it’s operations or marketing or even products. We are embracing it through and through to give us operating efficiencies. A better engagement with consumers, increase speed to market, all these are benefits that are accruing from it,” Puri said.
ITC will also launch a super app aimed at the farmers, which will offer things like hyperlocal weather updates, progress on crops, personalised advisory using artificial intelligence among other things.
One area where the company has scaled back its business is in lifestyle retailing, a segment that has been impacted across the industry.
“The way the business was progressing was not congruent to our expectation and therefore we have shrunk it. Unless we find a unique value proposition or something that we believe will succeed, we will not take it forward. As of now, it appears very unlikely that we will try to bring it back. But, this is something, in the near future we will have to take a final decision, there are internal discussions on,” said Puri.
Overall, consumer sentiments seem to be improving sequentially in the FMCG space; July was better than the previous month and August has seen further improvement, according to Puri… As we look into the festive quarter of October-December, Puri said, unless there was a spike in subsequent COVID waves, things were looking encouraging.