ITC, the ₹70,000-crore company which is into a wide range of businesses, such as foods, FMCG and hotels, is dressing up for the future. Traditional ways of businesses are yielding space to modern approaches. In a chat with the journalists of The Hindu Group of publications here, the company’s Chairman, Sanjiv Puri, gave a disaggregated view of the company’s plans: Excerpts from the conversation:
Our future strategy for growth and competitiveness, encapsulated in ITC Next, was born out of our recognising certain undercurrents that had got accentuated during the pandemic — such as climate emergency, emerging geopolitical dynamic, digitalisation, sustainability, etc. We realised that we must be agile and more consumer-centric. Then, we went about identifying the growth levers for competitiveness. For growth, we identified ‘sustainability’ and ‘digitalisation’ as the megatrends of the decade. On sustainability, to give an example, the world’s first 12 ‘net-zero carbon’ and two ‘net-zero water’ hotels are ITC’s.
As for digitalisation, it all starts with creating a ‘digital-first’ culture, creating a digital-smart architecture — for the entire ecosystem and not just for the enterprise. In our case, this meant 2.5 million retailers, 17,000 stockists, over 2,000 distributors, about 200 factories and 50 warehouses and lots of service providers with whom we work on a daily basis. Creating a next generation data architecture was one of the building blocks of digitalisation.
Then, multiple projects are happening at rapid speed — today, as we speak, we have 25 initiatives on — right from the manner in which we look at consumers, right from in-siting to crafting communications on the go, to quickly engineering products and putting them in the market; how do we do it very fast? Last 3 years, we put 300 products into the market.
Then, the supply chain. Each business is different, we were finding it difficult to leverage the synergies across businesses. ‘ITC One Supply Chain’ initiative has led to better efficiency in logistics.
Digitisation also helped in terms of brand communication and purchase of products. For example, we buy wheat from hundreds of mandis over a number of days. How do we ensure we buy the right quality at the optimum price? For this, we developed an algorithm called Astra.
Our marketing is hyperlocal. Communication is personalised, but products also will be. It is still early days, but we have made a beginning. For example, you can customise a notebook or make your own atta (wheat flour) exactly the way you want by choosing your wheat mix (multi grain, protein mix, millet mix), pisai and your own pack size.
We will grow the core business and use the core to address the adjacencies and also start building new categories for the future. As far as the core is concerned, Aashirwaad, Bingo, and Sunfeast — in the FMCG segment — have been growing. We are using this to address value-add adjacencies. The new categories we are building include frozen snacks and beverages. In paperboards, we are scaling up our core — value-added paperboards and papers. Using the board as the platform, we will focus on sustainable offerings as an adjacent business. We are also investing in categories of the future. This will be a fibre-based platform that will make complex highly-precision engineered shapes.
Small towns, rural areas
At the industry level, rural has been somewhat weak. But we see some signs of improvement now. Overall, the consumption pattern is better in India when compared with other economies. One thing as far as India is concerned to watch out for is anything that is directly indexed to global demand like steel, and in ITC’s case, it is paperboards. However, ‘Bharat’ is now very aspirational and we are now having a lot more focus on activation and reaching out to more people. We are also democratising our premium products. Eg, premium cookies and shower gels.
To bring the benefits of the digital revolution to farmers, ITC launched the app ITCMAARS (Metamarket for Advanced Agriculture & Rural Services) in April 2022. We piloted this platform chili crop value chain in one season in Andhra Pradesh in 2020. As a result, the income of farmers went up by 28 per cent. This will provide the full array of new-age solutions such as AI-powered personalised advisories, e-marketplaces, and digital services. This new platform overcomes all limitations that previous platforms such as e-choupal had. So, we are taking this ITCMAARS forward. Today, it has 5 lakh farmers, 1150 FPOs (farmer producer organisations). Our vision is to reach 10 million farmers and 4000 FPOs.
Millets are something that we are seriously pursuing. We have launched what is called ITC mission millets, which has got 3 pillars. “We are promoting millets as a good-for-you product, educating consumers, and carrying out an awareness on millets for different age groups. We are working with farmers, particularly with farmer-producer organisations (FPOs). We have come out with multi-millet mix atta (flour) with 25 per cent, 50 per cent, and 100 per cent. Some of the products are available in the market, and some are yet to come. We have also introduced millet biscuits, noodles, and pasta. Our hotels also make millet pancakes. We have asked all our hotels to have millet at every meal. Unless the host requests he doesn’t want millet, they have to be there. The company is pushing millets as it finds the nutri-cereal to be a good plant consuming less water, it is rich in fibre and minerals.
This industry is doing well and our hotels are competitively well-positioned. In the last 12 months, we opened a hotel every month. To build on the asset-right strategy, we launched two new brands — Storii, and Momentos. The first Momentos brand hotel was opened in Udaipur and 2 or 3 under Storii were opened. We also refreshed the Welcomhotel preposition to target management contracts, and we are seeing some traction here. Going forward, we will be having a more calibrated approach and following a right balance approach — between owned and managed properties.
We had a decent volume growth last despite challenging market conditions. We expect volume growth to pick up during the second half of this year as inflation eases. In terms of rural demand, there is certainly some silver lining. I think this year’s growth will be more volume driven than price-led.
(With inputs from M Ramesh and MR Subramani)