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ITC to step up focus on frozen food to drive non-cigarette sales

The FMCG giant is backing frozen food in its chase of Rs 1 lakh crore non-tobacco FMCG sales by 2030.

, ET Bureau|
Updated: Dec 12, 2019, 11.14 AM IST
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The non-cigarette FMCG business grew 4% in gross revenue at Rs 3,288.31 crore, riding on foods categories such as potato chips, biscuits and personal care.
NEW DELHI: ITC is extending its nascent frozen foods business to a range of new products and smaller towns and cities to compete with more established rivals such as McCain Foods and Godrej Yummiez, even as it chases an ambitious target of Rs 1 lakh crore non-tobacco FMCG sales by 2030.

“Our focus is on expanding category penetration to retail and food services, including in tier II and III markets, through products and competitive pricing,” said Sachid Madan, chief executive (frozen snacks) at the Kolkata-based conglomerate.

The company has rolled out a range of vegetarian and non-veg frozen snacks under its ITC Master Chef franchise to add to its frozen prawns. The products are targeted at both retail consumers and to supply to restaurants and hotels.

“We are leveraging the backend, and the category ecosystem will also benefit farmers through better prices and lower wastage,” Madan said.

The frozen food category, estimated at Rs 7,400 crore, is growing 15-17% a year in the country, riding on convenience, taste and pricing, even though on a much a smaller base than mature packaged foods categories such as biscuits and noodles that are growing in mid-single digits.

The frozen snacks segment accounts for a meagre 2.5% of the overall packaged foods market. But the category has a growth potential of 20 times in five years, Madan said. The market dynamics are being driven by retail (Rs 1,400 crore), food services (Rs 2,400 crore), and export (Rs 3,600 crore), he said.

For the quarter ended September 30, ITC’s gross revenue grew 5.9% year-on-year at Rs 11,750.2 crore, driven mainly by paperboards, hotels and the non-cigarette FMCG business comprising packaged food, personal care, stationary products, agarbatti and safety matches.

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The non-cigarette FMCG business grew 4% in gross revenue at Rs 3,288.31 crore, riding on foods categories such as potato chips, biscuits and personal care.

The Indian food processing industry is expected to expand at a compounded annual growth rate of 11.5% for five years from 2017-18 to reach a value of Rs 15,97,000 crore by FY23, according to a report by global market research store Research & Markets.

Key growth drivers for the industry include breakfast cereals, dairy food, bakery, organic food, confectionary, ready meals, naturally healthy beverages, pet food, ingredients, and savoury snacks, the report said. Breakfast cereals and savoury snacks are the fastest-growing segments and are expected to expand at 19.2% and 33.6%, respectively, in the period between 2018 to 2023.

The report listed high costs of transportation and trader margins at various levels of the distribution network as key growth hurdles.

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