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Industrial Products India, Industrial Manufacturers & Suppliers
 




 
   
 
 
 

ITC pips Hindustan Unilever to

ITC pips Hindustan Unilever to become India's leading branded food and beverages company
 
 ITCBSE 1.28 % has overtaken Hindustan UnileverBSE -0.09 % in branded food and beverages sales a decade after it entered the business, giving a shot in the arm to YC Deveshwar's ambition of making the cigarette maker India's largestFMCG firm.
ITC, the maker of Sunfeast biscuits and Bingo chips, has posted branded food sales of over 4,600 crore in 2012-13, a 24% growth over the previous year, said a person with direct knowledge of the development. The number will be disclosed officially in its annual report, to be released next month. When contacted, an ITC spokesperson refused comment.

In comparison, HUL, which owns Knorr soup and Lipton tea, reported sales of 4,480 crore from its food and beverages business for 2012-13 while declaring its annual results a fortnight ago.

HUL Ahead in Other Segments

In 2011-12, HUL's food and beverages sales at 3,977 crore were more than ITC's 3,712 crore from this segment. However, HUL remains streets ahead of competitors in the total non-cigarettes FMCG market. Its total revenues of 25,810 crore during 2012-13 were more than three times ITC's sales of 6,982 crore from its pure-play FMCG portfolio consisting of packaged food, personal care, lifestyle retail, safety matches and agarbatti.

HUL controls nearly 12.5% of the 2-lakh-crore FMCG market, with its revenue topping the combined sales of rivals such as Procter & Gamble, NestleBSE -0.50 %, Colgate and Reckitt Benckiser. Deveshwar, the long-serving chairman of ITC, has set his sights on wresting the top spot in India's FMCG market, even though he acknowledges this is a long-term target.

"We are the fastest-growing FMCG company in the country. I want to make ITC the No.1 FMCG company in the country. This won't happen in my life, but I want to set it on that course," the 65-year-old told ET in an interview a few months ago.


 
ITC competes with HUL in only two segments within the foods space - atta and noodles - and in both these categories it enjoys a higher share. Analysts say that while the former is focusing on foods, the latter appears to find the high-margin personal products segment more attractive.

"The stickiness to focus on foods is higher in ITC in terms of operations and management. HUL seems to be gravitating more towards personal products, which earn higher profits," said Amin Babwani, anindependent consultant who has spent three decades with HUL.

Nitin Mathurconsumer research analyst at Espirito Santo Securities, said unlike HUL, ITC could make disproportionate investments in the food business. "The biggest advantage ITC has is that it has been able to plough back profits from the cigarettes business, where it enjoys monopoly, to fund growth of its foods segment. HUL can't really shift its earnings derived from personal products or home care to fuel its foods portfolio as each business is competitive and needs investment," he said.

An HUL spokesperson said the processed food market was at an inflexion point and would continue to grow strongly for the company. "Considering our positions in various categories, global experience and knowledge, we are confident that we are well-placed to leverage this opportunity. We play in both established and new-age categories where we are investing ahead of the curve to develop the market and are seeing strong results," he said.

Within the food segment, ITC has achieved leadership in both the atta and cream biscuits categories with Aashirvaad atta and Sunfeast biscuits becoming 1,000 crore-plus brands. In the noodles segment, where over half the market is controlled by Nestle's Maggi, ITC's Yippie at 12% share has overtaken HUL's Knorr despite being a late entrant.

Since last year, ITC has upped its focus on high-margin premium food by launching newer variants such as kaju badam cookies, coffee, choco-fill and butterscotch biscuits, sugar-free mint under the 'Mint-o' brand, as well as Bingo Tangles, apart from revamping its instant pasta range.

Retailers say ITC offers higher margins than competitors in premium products.
 

 
     
 
   
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