We are optimistic about India story, says ITC's Director Hemant Malik

Irrespective of whether we experience tailwinds or headwinds, the market opportunities for our various food categories in India are very large, says Hemant Malik, executive director of ITC

ITC emerged as the country’s largest company in the food space in the nine-month period ended September 2023. Hemant Malik, executive director of ITC and in charge of the foods business, in a video interview with Ishita Ayan Dutt, discusses a wide range of issues – from growth strategy, and climate challenges to aspirations for its largest FMCG brand, Aashirvaad. Edited excerpts:

The FMCG sector faced challenges in FY24, what is the outlook for ITC Foods in FY25?

Our objective is to ensure industry-leading growth and we have put in place a robust multi-pronged strategy to achieve it. This year, we will continue to leverage emerging opportunities across categories and focus on the superior execution of our growth plans and strategies.

Irrespective of whether we experience tailwinds or headwinds, the market opportunities for our various food categories in India are very large. We will ensure that we create differentiated value propositions to expand the market, driven by superior insight, innovation and distribution.

Although we are a large food company, there is still significant headroom for growth in many of our existing categories. In addition, there are many sub-segments that we still don’t operate in. So, there are spaces for us to foray into.

The FY25 scenario is likely to be tougher. The unpredictability with regard to the supply chain is likely to continue and the threat of climate risks is only going to intensify. It is also to be seen how rural consumption picks up. We are very optimistic about the ‘India story’, and our plans are also aligned with the nation’s growth trajectory. While every year presents new challenges, it also provides opportunities for better growth and performance.

ITC emerged as the largest company in the food space. How does it plan to retain its leadership position?

ITC Foods is a 20-year-old, Bangalore-based start-up. We started from zero and have come to this stage, which is quite remarkable. Different facets have made this possible. We were late entrants in the market, which made it even more important for us to craft innovative products, prioritising making product differentiation and superior quality as a crucial vector to capture the mind space of consumers. This is a key strength that we possess and we continue to build on that.

The other competitive institutional strengths are extensive distribution infrastructure at the frontend, agri procurement, manufacturing excellence, R&D, expertise of chefs, strong backend that enables us to expand margins and allows us to invest back in our world-class quality brands.

How many products were launched in FY24?

We launched a range of exciting products across categories – about 90-100 products in the last year.

Are you looking at acquisitions in the foods space, and in which category?

We are constantly evaluating different opportunities. It could be in any of the categories that we operate currently or even new spaces. But the opportunity must add value to us, whether in terms of brands, new technology, or any specific competency or skill sets that it brings.  Only then, we would give it serious consideration.

Your largest FMCG brand, Aashirvaad, has a consumer spending of more than ~8,000 crore. What is the next milestone?

Our aspiration is to double the business in five years. I expect the growth rate to be supported through adjacencies. For example, I expect Aashirvaad besan to witness exponential growth. The approach is to make Aashirvaad a complete kitchen brand from mostly an atta brand today. Aashirvaad stands for trust, quality, has very strong equity and the consumer is very willing to accept it as part of their entire kitchen portfolio offerings. We will foray into categories where we have backend competencies and are able to create differentiation.

We have launched vermicelli, rava, multi-millet mix, chapati, and these are available in certain states. Our most recent foray is into besan, which is getting launched across the country. These adjacencies will help us to strengthen the brand and grow. As far as vectors for growth for atta are concerned, our thrust has been on value addition, premiumisation, and expanding into organic and millet ranges.

Cocoa prices have skyrocketed. How does it impact ITC?

We are witnessing the impact of climate change. The flowering season in places like Ghana in West Africa is October-November. It rained during that period, impacting output. Prices have gone up significantly from $3,000 a tonne to $10,000 a tonne. We are hopeful that the new crop by this October will be better. Our team had been tracking it closely and had taken some hedges. Climate risks are posing challenges, in terms of both supply security and price volatility. We are increasingly using predictive tools and AI to deal with such uncertainties.

Do you see the FTA with the European Free Trade Association (EFTA) impacting Fabelle, which is at the premium end?

There is no reason for us to worry about our premium chocolate business. Fabelle clearly offers the best chocolates in the world. These are of the finest quality and can compete with any global brand. India’s right to win in chocolates is no different from any other country, the source of cocoa being the same for everyone. It’s the craftsmanship that differentiates products. 

The IMD has forecast above-normal heatwave days in April – June. Do you see an impact on the supply chain and consumption?

The last 2-3 years have been quite dramatic for agriculture and, therefore, for the food business. The volatility index is extremely high, given the many vagaries. Wheat exports were banned. This year wheat output should not be a problem, the weather has held and there should be sufficient production.

On the consumption side, the beverage portfolio under the B Natural brand should do better this summer. Last year, there was hardly any summer because of the rains, and the beverages category was adversely impacted.

How is food tech shaping up?

Given the high quality of our offerings, we have become the market leader in the premium Indian foods segment in Bangalore. We are adding more cloud kitchens in Chennai. We will be entering Hyderabad soon.