Companies

Consumption uptick likely during festival season: ITC chief

Abhishek Law Kolkata | Updated on September 07, 2020

Sanjiv Puri, Chairman and Managing Director, ITC Ltd

An uptick in consumption is expected during the festival season, driven by categories like gifting. Moreover, discretionary spends are witnessing “some recovery”, albeit at low levels, said Sanjiv Puri, Chairman, ITC Ltd.

While rural growth and recovery continue to outpace urban markets for ITC, demand across segments such as health and hygiene or essentials remains at “elevated levels”. There is a distinct preference for large packs. But in rural areas, small packs are driving consumption. Although the trend was evident pre-Covid, it has now “accelerated a bit”.

“Economic activities are improving and this should boost consumption. Yes, Covid numbers are still high. But overall, we should see an uptick in the festive season, which will vary across categories,” he said during a virtual interaction.

According to Puri, consumers continue to prefer trusted brands and the gifting segment such aschocolates, biscuits, desserts and juices is likely to drive consumption. In discretionary spending, items such as deodorants, perfumes, cosmetics and confectionaries are picking up but at “much lower levels”.

“We don’t intend to exit any categories (like cosmetics). They have relevance and there will be recovery,” he added.

Long-term trends

Even as ITC gears up for the next normal, Puri admits that over a long term, an unprecedented surge may not remain across all offerings, including those under its health and hygiene portfolio. But demand will continue at elevated levels.

For instance, sanitisers may not see the same high off-take witnessed currently, but vegetable and fruit wash (Nimwash brand) could see continued adoption with a new category being created.

Some of the consumer trends such as beaten coffee, increased preference for ready-to-cook and frozen foods continue. “Surges may not continue at this degree and people will buy alternatives. But (demand) in most of the categories, including essentials, will continue to be at an elevated level still,” he said.

Lifestyle retail and hotels

Meanwhile, ITC is scaling down its lifestyle retail business (apparels). Very few of the stores are open at present, and “unless there is a specific idea”, the company may not grow it. “Rather, it may shrink further,” said Puri. Apparels were amongthe first non-cigarette categories that ITC had forayed into as a part of its diversification strategy.

The company will grow its footprint in hotels with an asset right strategy, focussing on managed properties. Over the next one year, 4,000 keys (rooms) are expected to be added to its existing portfolio of 10,000 keys. Nearly 3,000 of these new keys will be through managed properties.

Investments have not been shelved, and capacity expansion, re-purposing of facilities and addition to existing ones continue. Two integrated consumer goods manufacturing and logistics facilities – one at Hyderabad and another at Cuttack – are expected to come up soon.

“We will relook at investments wherever necessary. And will try to conserve cash. However, Covid has not dramatically altered our investment plans,” he added.

Published on September 07, 2020

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