Wednesday, July 13, 2016

ITC goes hyperlocal to boost its food portfolio

ITC Ltd, using its wide distribution network, is working on two sales strategies with an aim to expand its packaged food business.
In a bid to widen its product offerings in the mass-market segment, the tobacco-to-hotels conglomerate is launching products that are relevant to a particular town, state or community with a potential to grow it nationwide over time. 
Last month, ITC’s food division launched Punjab da Kinnow, a fruit juice under its BNatural brand. The kinnow is a variant of orange grown in Punjab. The target market is Punjab and parts of north India, including Delhi, where BNatural has a very limited presence. 
In the past few months, ITC has also launched locally popular spices under the ITC MasterChef brand in Andhra Pradesh and Telangana. “The idea is simple. Identify popular mass-segment products that are only available in a particular market. Develop those into a packaged product under the ITC brand to be sold in that particular market,” said V.L. Rajesh, divisional chief executive (foods division).
Once the product is well accepted in a particular market, the firm will try to expand it nationally. “Some would work, some may not. But over a period we’ll have a larger kitty,” Rajesh added.
According to Rajesh, ITC is looking at every state town for such products. “We are working on a few. Over a period, we’ll have specific products for each state. We may even look at products that would only be relevant for a market covering an area of just a couple of hundreds kilometres. Some of these will become large revenue contributors in the longer term.”
Picking up products that are doing well in a particular market and then enhancing quality and safety standards makes more business sense than developing a product from scratch that consumers may not like, said Rajesh, declining to put a number on how many such products ITC is planning to launch over the next couple of years.
ITC’s second sales strategy involves launching more premium food products that adhere to European Union (EU) standards in the health and wellness category to boost its profits.
On 7 June, the company launched the Sunfeast Farmlite Digestive—a biscuit that has “no maida and added sugar”. The company has replaced maida (refined flour) with atta (whole-wheat flour). 
“Indian consumers are increasingly becoming health conscious and digestive biscuits are being consumed for healthy digestion and a balanced lifestyle. Consumers genuinely believe digestive biscuits are made from healthy ingredients,” the company had said in a statement after the launch.
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