Our ability to penetrate markets far better than most: B Sumant

B Sumant, president of the fast moving consumer goods (FMCG) businesses at conglomerate ITC, is busy. The target is growing the non-cigarettes FMCG business to Rs 1,00,000 crore annual revenue by 2030. In an interview with Ishita Ayan Dutt, he says the company aims to be a full services player. Edited excerpts:

When will non-cigarettes FMCG return to double-digit (annual) growth?

We are very bullish about the FMCG segment. We believe demand will now start to pick up, as the monsoons have been good, the pay revisions are being implemented and other measures by the government. We will see a good uptake in the second quarter. ITC is growing faster than (the) industry (average). When monthly incomes increase,  there is an initial spurt in demand for consumer durables, after which purchases of daily consumption items increase. We will certainly witness a growth momentum in the mid to premium offerings.

How important is the rural market in your scheme?

Rural distribution has always been a big focus for us. Our ability to penetrate markets is far better than most in the industry. Our rural handler base has expanded. In addition, we now have more than 1,000 vans that serve select rural markets, with dedicated salesmen for order capture. So, any life in the rural market will benefit us.

What is in the works for fruit and vegetables?

The agri-business division, with several decades of sourcing expertise, is working on a plan here. We are exploring several options, including frozen, dehydrated and perishables. This will address the country’s colossal food wastage. Dehydrated and frozen will be primarily B2B (business to  business); fresh will be B2C (business to consumer).

Are you looking to enter any new categories?

We have a 450,000-sq ft ITC Life Sciences and Technology Centre, with 350 scientists. Every category has dedicated a pilot plant, where there is constant testing.

What is the potential of the health and wellness segment?

We are working on multiple areas of health, nutrition and wellness. We are exploring possibilities in products that address widespread concerns about maladies relating to diabetes, cognition, gut and cardiovascular health. We are evaluating solutions for ageing, for improving cognition, gluten intolerance and others.

The idea is to introduce natural ingredients in products that are effective against disease and achieve a blend of health and taste.  (Our) Aashirvaad Sugar Release Control Atta has a low glycaemic index, clinically tested. The next two years will see the introduction of several differentiated offerings, with functional benefits.

Will you look at setting up Fabelle chocolate boutiques outside your hotels?

We have introduced Fabelle in our luxury hotels to be able to socialise the product and establish the brand. These are very premium offerings and introducing it in the luxury hotels gives us the opportunity to engage with high-end consumers and get their response. We are currently working on increasing the range of offerings here and, over time, will look at selling the product in high-end malls. Fabelle is now available in ITC Gardenia, ITC Sonar, ITC Grand Chola and ITC Maurya and will soon be in the other ITC Hotels.

What cost savings are possible with the manufacturing hubs in the pipeline?

We are investing in state-of-the-art integrated factories. These will ensure freshness, reduce handling of products, reduce freight costs -- logistics costs will go down by a third or two-third. We are increasing the number of in-house facilities and investing in our own multi-product facilities. These units will be highly automated and will also see a decline in labour costs.

You have Bingo! at one end and Fabelle at the other end of price points. What is ITC's positioning in the non-cigarette FMCG business?

We will be a full services player and our products will straddle all price points, from Rs 100 a kg to Rs 4,000 a kg. In the dairy sector, the team is experimenting with several products. We are also looking at new variants in B Natural juices. We have launched a large number of products in the past few quarters.

We are constantly expanding distribution, improving penetration, focusing on increased coverage. Our multi-product approach is a distinct advantage and leads to supply chain efficiencies.

How has the 85 per cent pictorial warning in cigarette packs affected your sales?

Cigarette consumption has been impacted and we are seeing a surge in illegal and smuggled cigarettes. One of five cigarettes in India are illegal or smuggled; more than 100 countries do not have pictorial warnings. The US has a text warning only and on the side.

Will GST (national goods and services tax) be good for the cigarette industry?

Uniform taxation under GST will be beneficial. A revenue-neutral rate has to be put in place.

When will profitability of the non-cigarette FMCG business show a significant upside?

It is a conscious strategy to drive growth and so we are in an investment mode. We are strengthening our existing portfolio and also foraying into several new categories. However, we ensure all businesses are fully benchmarked against the industry and  completely competitive.