BISCUITS, AND MORE BISCUITS FROM ITC - Economic Times
May 06, 2009
Co Keen To Enhance Capacities By 20% To Manage Supply Chain Costs & Improve Profitability
THOUGH ITC is nearly synonymous with tobacco, it has in no way stopped people from munching ITC's biscuits. Small wonder, the company has managed to corner nearly 11% of the national biscuits market.
Since the Rs 9,000-crore biscuits market witnessed a growth of 20% last year and is slated to sustain its growth this fiscal, ITC is looking at enhancing its biscuits manufacturing capacities by at least 15-20% primarily to manage supply chain costs and improve profitability.
''We plan to set up additional capacities in such areas where we have developed a significant front-end scale but are limited by proximate capacities. Attempts are being made to create new biscuit variants in segments that are relevant to the consumer. The positioning of the marketing mix is also being worked upon to drive consumption by creating convenient price points or by differentiating product propositions,'' Mr Chitranjan Dar, chief operating officer, ITC Foods Division, told ET.
For starters, ITC plans to drive growth by vitalising its brand 'Sunfeast' through product innovation, contemporary packaging and targeted brand communication. A huge investment is also being planned for brand building and product development. At the same time, the company is looking at investments in building trade loyalty across channels and markets.
Elaborating further, Mr Dar said: ''While ITC per se has no plans to rationalise its biscuits portfolio, we review the basket from time to time. Additions or deletions take place on the basis of the market feedback and actual sales. The idea is to strengthen the winners and replace the average performers with potential winners from the biscuits stable. As of now, there is no product which does not contribute positively to the overall pool of contributions.''
Incidentally, a large proportion of the growth in the biscuits segment is coming from the mid-price offers growing at 35%. The mid-price offers is the non-glucose segment and includes cookies and sandwich cream products.
''There are clear indications that consumers are upgrading to mid-price offers in line with the growth of packaged foods in the country. Since consumers are ready to pay for good quality and tasty products, we find a growing value for product quality and hygiene. Hence, our capacity additions will partly be in line with these requirements,'' the COO pointed out.
The basic product glucose, however, continues to be largest category in terms of volumes.
