ITC diversifies biz, to make and export nicotine items

Forays into boutique lifestyle hotel segment with new brand Storii

ITC is diversifying its tobacco business to manufacture and export nicotine and nicotine-derivative products to capture the growing demand for oral and vaping products in the US and EU markets.

The company’s annual report for FY21 has mentioned that it has set up a wholly-owned subsidiary, Indivision, and has obtained necessary regulatory approvals for setting up a facility near Mysuru, Karnataka.

The facility — which will manufacture nicotine and nicotine salts — will conform to stringent US and EU pharmacopoeia standards that define purity levels at 99.2 per cent for nicotine meant for pharmaceutical products. ITC will leverage the institutional capabilities of its century-old leaf tobacco business for this. ITC’S cigarettes business saw disruptions across the value chain with the onset of the Covid-19 pandemic. The company mentioned in its annual report that with easing of restrictions and improvement in mobility from September 2020, business recovered progressively over the remainder of the year to reach nearly pre-covid levels towards the close of the year.

Cigarettes, however, was not ITC’S only business to be impacted by the pandemic. Much like the rest of the hospitality industry, ITC’S hotels business, too, was affected. The second wave triggered a fresh round of restrictions and the company believes that the near-term outlook for the hospitality industry will depend largely on the return of confidence in business and leisure travel.

With people gravitating towards experiential holidays, ITC has launched a new brand, ‘The Storii’, which is a collection of boutique lifestyle properties. The brand will grow under ITC’S “asset right” model. In the early part of 2000, ITC had started growing its hotels business by an investment-led strategy, but in the last 23 years, it adopted the “asset right” model and will add a large part of the rooms through management contracts.

‘The Storii’ expects to open its first set of hotels soon while the Welcomhotel portfolio will scale up further.

The non-cigarettes FMCG business grew 15.8 per cent (on a comparable basis) in FY21. Growth in the first half of the year was driven by a surge in demand for staples and convenience foods and

hygiene products; sequential recovery in demand in the discretionary/out of home categories such as snacks, juices, confectionery, body wash and fragrances reflected in the second half performance, the annual report mentioned.

Annual consumer spend from the non-cigarettes FMCG segment in FY21 was over ~22,000 crore compared to ~19,700 crore in FY20. The company launched a record number of 120 products during the year.