December 5, 2021

The World Stock Markets Tips & Targets, News, Views & Updates

The World Stock Markets Tips & Targets, News, Views & Updates

ITC adds breakfast items to its menu

Cigarettes-to-hotels conglomerate Ltd. has forayed into the Indian breakfast segment with a ready-to-cook and ready-to-mix range and staples under its FMCG brand ‘Aashirvaad’, pitching itself against multinationals Kellogg, PepsiCo and Nestle, and Indian companies MTR and Gits Food.

Hemant Malik, ITC’s divisional chief executive for food business, told ET that the company has launched breakfast staples, including rawa, suji and vermicelli, and plans to extend the brand into the adjacent categories of dalia, poha and multi-millet cereals.

The breakfast staples market in India has a potential of over ₹10,000 crore, growing at over 12% every year.

The ready-to-cook, ready-to-mix and staples categories have higher margins compared with packaged commodities, but low penetration from branded players.

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Malik said the company can utilise its existing backend sourcing since most are wheat-based and manufacturing capabilities.

“Aashirvaad has largely been a brand with products for meal occasions, be it atta, salt, pulses or ghee. We are extending the brand into other value-added segments with which one can cook breakfast or snacks,” said Malik. “Some of these categories have huge scope and have the capacity to generate good margins by leveraging our scale, wheat adjacencies and supply chain efficiency.”

He said the per-kilogram price realisation of these products is much more than the regular atta.

ITC has introduced idli sambhar, upma, instant poha, instant suji halwa, idli and dosa instant mixes in the ready-to-cook category. It will also extend ‘Aashirvaad’ into besan. Aashirvaad is ITC’s largest brand in the non-cigarette FMCG segment with a consumer spend (which includes sales, trade commission and taxes) of over ₹6,000 crore. While the brand started with packaged atta–where it has more than 40% share in the ₹13,000-crore market that caters to over 40 million households–it has over the years moved into organic pulses, salts, dairy products, premium flour and spices.

“The category expansion of Aashirvaad will help to premiumise the portfolio. We want the brand to play in the Indian cuisine space in breakfast and not western cereals like oats,” said Malik. “We have launched vermicelli and a ₹20 pack for ready-to-cook options like poha, upma, suji halwa. The institutional sales opportunity for such value-added products is also huge.”

ITC’s foods business is the largest in the non-cigarette FMCG segment with gross revenue of ₹12,241 crore in 2020-21, growing at 18% year-on-year. Last fiscal, it clocked sales of ₹2,467 crore in other categories including personal care, education and stationery products, safety matches and agarbatti. In contrast, ITC’s cigarette business had gross revenue of ₹20,333 crore in FY21. The food business is also profitable for the company.

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