Home / Companies / News /  ITC to enter branded rice segment by end this year: S. Sivakumar

New Delhi: ITC Ltd, the maker of Aashirvaad atta, Sunfeast biscuits and BNatural juices, plans to launch branded packaged rice this year, entering a segment vacated by Hindustan Unilever Ltd two years ago.

The Kolkata-based company will sell both basmati and non-basmati rice and, in future, introduce ready-to-make versions of rice-based dishes.

“(Branded) rice will be launched by end of this year," S. Sivakumar, group head (agriculture and information technology business), ITC, said in an interview.

This marks the entry of the firm into one more low-margin commodity market after atta (wheat flour), which is already crowded with more than 100 brands.

Rice, however, is not an entirely new business for ITC. The agri-business division of ITC already exports both basmati and non-basmati rice to Africa and the Middle East. The company’s agri business unit has a nationwide network for procurement and logistics connecting rice millers, brand owners and traders, according to the company’s website.

ITC’s decision to enter the branded packaged rice segment comes about two years after yoga guru Baba Ramdev’s Patanjali Ayurved Ltd entered the market. On the other hand, HUL, India’s largest packaged goods maker, decided to exit the business as part of its strategy to divest non-core businesses.

The company sold its rice exports business, carried out primarily under Gold Seal Indus Valley, a premium brand, and Rozana branded basmati rice in the mid segment, to New Delhi-based LT Foods Ltd that sells rice under Daawat brand, Mint reported on 18 March 2016. HUL, which entered the rice market in 1985, was exporting to 21 countries including the Middle East and Europe at the time of divestment. In 2013, HUL launched Gold Seal Indus Valley branded rice in select Indian cities across modern trade with a plan to scale up later, The Economic Times reported on 19 December 2013.

ITC is yet to finalize the brand for packaged rice. The company may, however, leverage Aashirvaad, a brand created in May 2002 to sell atta and later expanded to include spices, salt, ghee, milk, instant mixes and ready-to-eat meals. Aashirvaad sales have now touched Rs4,200 crore. The company already sells premium ready-to-make biryani under the Kitchens of India brand across US, Canada and India.

India is among the top exporters of rice and analysts expect it to increase. Indian rice export is projected to account for 29% of the global rice trade in marketing year 2017-18, up from 26.7% in marketing year 2016-17, research firm India Ratings and Research said in a report on 4 January.

The domestic branded packaged rice market was valued at Rs22,000 crore in 2016 and the market is expected to grow at a compounded annual rate of 11% till 2020, according to market researcher Euromonitor International.

In India, New Delhi-based KRBL Ltd is the largest rice company with around 30% share in the domestic market and about 25% share in export, according to a report by equities research firm HDFC Securities.

KRBL’s basmati rice brand India Gate is the largest rice brand in India. Gurugram-based LT Foods is the second largest rice company in India.

ITC’s entry into the volume-led rice market is part of the company’s plan to generate around Rs65,000 crore from packaged foods by 2030 to reach its target of Rs1 trillion revenue from non-cigarette packaged goods by that time, Mint reported on 21 September 2017.

Shares of ITC rose 4.09% to Rs270 on BSE on Monday, while the benchmark Sensex gained 1.83% to 33,917.94 points.

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