ITC enters frozen foods market, eyes sauces, condiments
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New Delhi: ITC Ltd, the diversified cigarettes-to-shampoo company that also has a presence in foods—staples, spices, ghee, and ready-to-eat meals—has entered the frozen foods market with frozen prawns as part of its plans to take over Indian kitchens.
Later this year, the company plans to launch frozen vegetables and fruits. Then it will move on to sauces, dips and condiments.
“We have a pipeline ready. From low-sugar potato to dehydrated onions to processed mango pulp that are ‘super safe’. We hope to enter one new category every quarter,” said S. Sivakumar, group head (agri and IT business), ITC. “If a kitchen has all ITC products, we’ll have about two-thirds of the (shelf) space in a kitchen. And, there’s huge scope untapped.”
The expansion is part of ITC’s larger goal of reaching Rs1 trillion in revenue from its cigarettes and consumer packaged goods business by 2030. It has already lined up investments of Rs25,000 crore in 65 projects, including 25 factories for packaged goods, covering an area of 28 million square feet, according to the company’s annual report.
In the year to 31 March 2017, ITC reported gross revenue at Rs55,001.69 crore, up 6.6%, primarily driven by an 8% increase in non-cigarette packaged goods segment and a 10.8% rise in agri business. Its revenue from non-cigarette packaged goods (including food, personal care, lifestyle and stationery) stood at Rs10,511.83 crore, up 8% for the year ended 31 March 2017.
ITC has launched frozen prawns under its brand ITC MasterChef that it created earlier this year to roll out export quality spices in India.
The estimated Rs300-crore packaged frozen prawns market is currently dominated by brands such as IFB, Sumeru, Cambay Tiger. The fresh prawns market in India is estimated at around Rs7,700 crore.
ITC’s frozen prawns, which the company claims have passed 243 quality tests, will be sold in 200-gm packs, priced between Rs185 and Rs350. “We will start with New Delhi and Hyderabad markets and will cover seven metro cities by end of the year. To start with, we’ll cover 200 top retail outlets, including modern retail chains, in each city. These will also be sold through online market places such as BigBasket, and we’ll take care of the delivery if need be,” Sivakumar said.
The choice of prawns is a natural one for a company whose agri-business division has a presence in the space.
The firm has been exporting frozen shrimps for quite a few years to private labels across the world; it exported frozen shrimps and prawn worth Rs400 crore last year.
“The next could be dehydrated onions, and low-sugar potato, and may be some high value-added ready-to-cook options, developed with ITC Hotels, under ITC MasterChef,” Sivakumar added.
While all its processed food, including frozen, will be under the ITC MasterChef brand, ITC may look at creating a new brand for fresh vegetables and fruits which will also include organic products.
ITC will also look at selling its ITC MasterChef frozen products to restaurants and non-ITC hotels over a period.
ITC’s focus on foods is understandable, said a consultant.
“With more working middle class and double income families, people have less time and like it happened in the western economies, people would like more microwavable ready-to-cook and prepared dishes,” said Rajat Wahi, partner (management consulting), Deloitte India. “Companies like ITC, which already has build the trust, will get fast acceptance. Besides the brand, ITC has its advantage of a strong supply chain that connects a wide retail footprint. Also, cold-chain and infrastructure have become far better with more investments unlike earlier.”
On Monday, shares of ITC fell 0.5% to Rs317.50 on the BSE as Sensex rose 0.12% to 31,309.49 points.