ITC sees fortune in packaged food, eyes ₹65,000 cr by 2030

ITC Ltd, the Kolkatabased cigarette-to-noodles maker, has set an internal target of generating ₹65,000 crore from packaged foods by 2030 to reach its goal of ₹1 lakh-crore arevenue from non-cigarette packaged goods by that time.

“ITC’s Foods Division will be a significant contributor to our goal of achieving ₹1,00,000 crore turnover from the new FMCG businesses by 2030. Our vision is to contribute at least 65% of this turnover,” said Hemant Malik, divisional CEO (foods), ITC.

According to ITC, its branded packaged food business crossed ₹8,000 crore in 2016-17. Now it wants to garner ₹65,000 crore by selling branded packaged food — from ₹1 candies to ₹1,000 chocolate boxes, over the next 13 years.

While the absolute number may seem audacious, ITC’s target may be achievable given its compounded annual growth rate of 17.49% over next 13 years.

Yet the number is almost double of ITC’s revenue from its core cigarette business in the year to March 31, 2017. The company reported its revenue from cigarette at ₹34,001.98 crore and total revenue at ₹55,001.69 crore, according to filings with BSE.

Branded packaged food is a relatively new business for the company. It ventured into the food business in 2001 – 90 years after it started selling tobacco products in India — as part of diversification to slowly reduce dependence on tobacco.

To fast track growth of its branded packaged food business, Malik said, the company will enhance its portfolio in the existing categories, expand into adjacent areas, tap new food categories and try to create new ones. “In two years, we’ll become the largest packaged food company in India,” he added.

According to the company, currently its branded packaged food business is the third largest after Parle Products Pvt Ltd and Britannia Industries Ltd.

The growth in the branded packaged food business will be fuelled by the company’s entry into fruit, vegetables and sea food, adding one new product every quarter. “Besides snacks, which is a huge opportunity, there’s dairy and we’ll also look at impulse segments like mass-market chocolates. We’ll have a wide portfolio in staples as a category, and we are exploring healthbased products,” said Malik.

Earlier this month, ITC CEO Sanjiv Puri had outlined the importance of branded food business the “new ITC” that the current management is creating based on an eight-point strategy.

Among ITC’s existing portfolio of packaged food products, Ashirvaad atta (wheat flour) is the highest revenue earner at ₹3,500 crore, followed by biscuits brand Sunfeast, which crossed ₹3,000 crore.

ACCORDING TO ITC, ITS BRANDED PACKAGED FOOD BIZ CROSSED ₹8,000 CR IN 201617; THIRD LARGEST AFTER PARLE PRODUCTS AND BRITANNIA INDUSTRIES