ITC to launch mass range chocolates and coffee
Diversified conglomerate ITC, which ventured into chocolates and coffee last year with premium offers under the Fabelle and Sunbean brands, is now looking to launch a popular range.
Though the brand architecture for the popular range is yet to be finalised, the launch could happen sometime next year. The popular range would pit ITC against the likes of Cadbury’s and Nestle in the chocolates segment.
The coffee segment is dominated largely by Nestle and Hindustan Unilever and mass range of coffee would put ITC in competition with some of the premium variants of these players.
ITC’s plan is to leverage the equity that it has built with its premium offerings. As Hemant Malik, divisional chief executive, foods division, says, the strategies for chocolates and coffee are fairly similar at one level.
“Make a great product, bring something completely different to the market and create and some credibility for yourself. We are pitted against well entrenched, formidable players and we are relatively new in all the segments that we operate in. But we have been able to leverage the institutional strengths of ITC including agri-sourcing, cuisine expertise of ITC Hotels chefs, packaging and manufacturing excellence, extensive trade marketing and distribution infrastructure among others to craft winning products as well as ensure efficiency in the supply chain."
Pricing, therefore, is not the only point of difference that ITC has brought to the table with Fabelle or Sunbean, though a box of 20 cubes of Fabelle ganache costs Rs 745 and an assortment of five pralines is available at Rs 450, while 100 gm of Sunbean is priced at Rs 400. Fabelle is made from cocoas sourced from the most exotic cocoa-growing regions of the world. Sunbean, on the other hand, combines 25 years of experience in sourcing coffee beans and the culinary expertise of ITC Hotels.
For both chocolates and coffee, ITC is using its chain of luxury hotel chain as a retail channel, but Malik promises that it will be made more accessible. “We will be taking Fabelle out of these hotels into certain stores, may be building some boutiques in malls and if there are synergies, we could look at some Wills stores as well." Coffee, too, would be available in top 100 modern stores.
Accessibility is likely to give ITC a bigger chunk of the Rs 7,500 crore chocolates and Rs 1,500 crore coffee categories. “Excluding the last couple of years when chocolate as a segment grew in single digits, it was growing at 15-20 per cent," Malik said.
Foods as a segment is expanding at a fast pace for ITC and will play a major role in achieving the target of Rs 1,00,000 crore revenues from the non-cigarettes FMCG business by 2030.
“The foods business is a major growth driver for ITC’s FMCG businesses and has a very large share in the FMCG pie. My mission is to ensure that the foods business contributes in a major way to the goal of achieving a turnover of Rs 1,00,000 crore in the new FMCG businesses by 2030, as stated by our chairman," Malik said.
ITC Foods has its own targets, however. “In two years, we should be the number one foods company. In terms of growth rates, we are one of the fastest-growing FMCG companies." Malik said. According to AC Nielsen’s June 2016 report, ITC is number three in the foods space, following Parle and Britannia.
“We are a profitable business though we continue to be in an investment mode, expanding into new categories and new SKUs within existing categories. The idea is also to invest the financial resources generated from the foods business to develop new legs of growth. We are always on the path to profitability due to our scale and growth," he added.