While most businesses, apart from hotels and education and stationery products, are witnessing “progressive normalisation”, the spate of local lockdowns is impacting recovery momentum, said Sanjiv Puri, Chairman and Managing Director, ITC Ltd.

According to him, although consumer trends remain uncertain, the company will respond with agility to strengthen its market standing. Corporates will have to gear up for the ‘next normal’. Some of the existing consumer trends will remain at an elevated level; certain segments are witnessing a recovery: while new opportunities and industry dynamics will get constantly redefined, he said.

“Other than the hotels segment and education and stationery products, progressive normalisation was witnessed in the later part of the first quarter (April-June) across all operating segments. However, the current spate of localised lockdowns is impacting recovery momentum,” Puri told shareholders at the company’s 109th AGM.

Gross revenue and PBT (before exceptional items) for FY20 stood at ₹46,300 crore and ₹19,300 crore (apprx), respectively. Non-cigarette segment revenues rose to ₹31,000 crore (60 per cent of total revenues). Consumer spends across its FMCG brands was ₹19700 crore.

Differentiated products and services that “can move from the drawing board to the market in record speed”, building and nurturing trusted brands, and supply chains that are “re-aligned to react swiftly to disruptions” are key focuses, said Puri.

Consumer buying patterns

Puri pointed out that demand for essential products in the food and hygiene segments saw a surge. There is growing preference for organic, naturals and fresh products. Consumers are also seeking indulgence, comfort eating and even ‘revenge’ consumption. Frozen food and ready to eat/cook meals score high on convenience, he added.

Similarly, discretionary spends are down, and there’s evidence of “value-seeking behaviour”. Shift to larger value packs with infrequent shopping frequency and surge in digital shopping are witnessed. Neighbourhood grocery stores have “emerged as the lifeline for essential supplies”, said Puri.

First-to-market products

ITC “rapidly introduced” over 40 first-to-market products, and fast-tracked design, development and go-to-market strategies, said the ITC chief.

The Savlon portfolio was augmented (to include disinfectant sprays, advanced Hexa sanitisers, soaps, bodywash, germ protection wipes, etc); Nimwash for washing vegetables and fruits was introduced; B Natural Plus immunity beverages were launched. The Bingo! snacks range was ramped up, along with similar actions in other categories like Master Chef (frozen foods) and Farmland (frozen vegetables).

“The surge in demand for ITC’s portfolio of food and hygiene products required a substantive scale-up in capacity contributing to the robust performance evident in the Q1 results,” Puri said. “The FMCG-Others (segment) delivered a revenue growth of 19 per cent.” This was driven by revenue growth of 34 per cent in staples, convenience foods and health and hygiene products (that represent 75 per cent of the portfolio).

Innovative products are also being developed for a healthier lifestyle and the company is working on “multiple value propositions” in areas of functional foods and nutrition. These include developing products with lower sodium and sugar, and fortifying offerings with value-added nutrients like probiotics, prebiotics, fibres, nuts and seeds.

Agri investment

According to Puri, ITC is one of India's largest integrated agri business enterprises with a segment revenue of over ₹10,200 crore. It sources over 3 million tonnes of agri-products from 225 districts in 22 States and is the largest private procurer of wheat.

Farmer engagement is being stepped-up in wheat, potato, chillies and fruits and vegetables (through the crop value chain cluster model).

The company’s increasing engagement across the perishables value-chain, including value-added products in frozen, purees and dehydrated formats, will also spur investments in climate controlled infrastructure and food processing space, said Puri.

“The transformative agri reforms will also open up new opportunities…and accelerate the journey towards future-ready value-added agri products portfolio catering to both the B2B and B2C channels,” he added.

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