ITC Foods Growth and Future Prospects

ITC Ltd. is a well known company. This company is expanding at a very fast pace. Initially ITC was in Cigarettes and Tobacco business but was under pressure because of government bans on advertising cigarettes and on smoking in public places, hikes in excise duty for cigarettes and antitobacco campaigns and all these factors explain The Legal Environment of Macro-environment. The legal Environment is like rules and regulations of government for industry, ITC diversify its business. In early 2000, when company was diversifying its business, there was increase in demand of categories of food. This explains the Economic Environment like rapid urbanization, increase in literacy levels, greater media exposure and rising per capita income and thats why company entered into food industry. Like Ready-to-eat, Confectionary, Staples, Biscuits

STRATEGIES IN FOOD BUSINESS In 2001, ITC launched KOI brand of ready-to-cook gourmet dishes. The Preservatives-free were used to increase the shelf life to 12 months. ITC also launched the website for KOI brand www.kitchensofindia.com to provide product information and to facilitate online buying. As now people are very busy in their life, so their needs and wants changes accordingly thats why they prefer readyto-eat products which consume less time to prepare.

Not to dilute its KOI brand, it extended its Aashirvaad brand and was growing at 30% per annum reason would be Competitive pricing which widen the market by including middle class. ITC have wide distribution network which they used to distribute their products all over the country and this gives edge to the company over its competitors. ITC entered the Confectionery market by acquiring Mint-O. In 2003, ITC launched Candyman in banana, mango and orange flavor. Mint-O was positioned as a youthful cool product. In 2005, ITC launched Cofitino, a coffee-flavored toffee, and helps to increase product line in confectionery. Again company used their Cigarette distribution network for confectionery sales to cover more than 1.5 million outlets. ITC entered the Staples market in 2002 with wheat flour under the Aashirvaad brand. ITC used health and hygiene to position its brand. And ITC got success on two factors Quality and Effective Distribution Network. Also ITC initiated E-Choupal to establish strong agricultural product supply chain and enjoyed cost advantages. ITC entered into Biscuit market with Sunfeast in 2003, with a large variety to capture Demographic environment means glucose biscuits for children and their mothers, Sunfeast Orange marie and Marie Light for housewives/families. It was estimated that Indian biscuit industry was growing at a rate of 13% so, ITC increased its product line to increase its market share and for this they signed Shah Rukh Khan as a Brand Ambassador for Sunfeast, organized promotional activities like The Sunfeast Open 2005, a womens tennis event, Environmental awareness program Sunfeast Hara Banao Campaign to publicize its brand. Basically after the company got an idea of how much there was growth in biscuit industry, company entered into it and used its active promotional activities to penetrate into the market.

CHALLENGES Unorganized Players were the challenge for the company, as they were taking the benefit of brand image of ITC and also use low cost ingredients to lower down the production cost. ITC faced competition Tasty Bites and MTR in Ready-To-Eat segment. Lower consumption of biscuits of ITC than in developed countries. ITC have major competitors Parle G and Britania in Biscuit Industry. Production cost increases as the wheat cost increases, so people prefer to buy loose Atta rather than to buy Aashirvaad brand. Initially ITC was known for Tobacco company, so it was very hard for the company to change its Brand Image. FUTURE PROSPECTS Planning to expand its reach over the rural market with the help of opening 30 Choupal Sagars. ITC also tries to strong up its distribution and procurement networks. Planning to get into newer product categories like packaged fruit pulps and organically grown branded fruits. ITC can also introduce or enter into Healthcare Products.