ITC: "Focusing on premiumisation of products" - Campaign India Magazine
May 22, 2012
Ramu Ramanathan catches up with Hemant Malik, chief executive officer, trade marketing and distribution, ITC. The agenda was the Kolkata-headquartered tobacco-to-hospitality behemoth's FMCG business. And how, with no confusion, the company leverages learnings from the combination of categories in its portfolio.
ITC is head-quartered in Kolkata - the city of Rabindranath Tagore and Satyajit Ray. What are the challenges and opportunities the city offers media and creative agencies, especially when you're planning a pan-India campaign?
Hemant Malik (HM): We are a national company with presence all across the country. Our business operations are pan-India and hence we do not restrict ourselves in partnering with agencies from any specific region. We engage with agencies and institutions all across the country, leveraging their strengths and competencies based on our requirements. We carry out extensive market research all across the country as our products are consumer-centric and form the bedrock for all innovations that we foster.
CI: Your financial results show that the non-cigarette FMCG segment is registering significant revenue growth. How would you view ITC's growth in this space?
HM: ITC has been rapidly scaling up its new FMCG businesses comprising branded packaged foods with leading brands including Sunfeast, Aashirvaad, Bingo and Yippee. Segment revenues in these new FMCG businesses have been growing at a compounded annual growth rate of 35 per cent over the last five years. What gives us immense satisfaction is that we have been able to establish several strong home-grown Indian brands with a well-defined brand architecture in the Indian FMCG market.
CI: Your journey of more than 20 years at ITC has seen you traverse through tobacco to lifestyle to the ITC Foods division. How have you understood and leveraged consumer insights across segments, especially in a huge market like India with specialised regional preferences?
HM: ITC has leveraged synergies that exist internally to enhance the competitiveness of its businesses. Aashirvaad atta (wheat flour), which is today a leader in its segment, is an example. For Aashirvaad, we tailored two different sets of campaigns for South India and North India based on the rice and roti consumption in these parts. ITC's pioneering rural initiative, the e-Choupal network, enables cost effective sourcing of wheat but more importantly lends a competitive strength given the traceability of the commodity through identity-preserved procurement. This enables customised blending (which again is a strength honed from the practice of tobacco blending over the years) to support local tastes and preferences.
CI: Many of ITC's competitors in India are global players. ITC has had to formulate and develop each of its FMCG brands from ground zero, without the support of international best practices and past experience. What is your method to develop a brand?
HM: All ITC brands have been able to establish themselves within a short span of time and delight consumers with their differentiated value propositions. We have been able to leverage our internal competencies including branding, trade marketing and distribution backed by our world class manufacturing capabilities. As I have mentioned earlier, these strengths have enabled the creation of synergies that have helped us to build some of the best brands in the country.
CI: What is the kind of consumer franchise Sunfeast enjoys in the biscuit market?
HM: Sunfeast biscuits' sales growth has been higher than that of the industry. ITC is attempting to create propositions in each segment in the biscuits space that are relevant to the consumer. Each element of the mix in the Sunfeast portfolio is being worked upon to drive consumption, for example convenient price points, SKUs, product rooted propositions, etc. Our innovations in the premium cookies space with Dark Fantasy Choco Fills have received encouraging response.
CI: There's so much of clutter in the market (and indeed within your group) with a multitude of messages. How do you make a difference with your communication message?
HM: With opportunities increasing as a result of the growth of the Indian economy, there is an increasing number of brands that are crowding the marketplace. While each marketer is making efforts to segment the consumer and address their needs and aspirations, ITC has successfully crafted unique value propositions for all consumer segments through extensive consumer insights. We have been able to develop distinctive messages for all our brands, thereby effectively communicating the special attributes of our products. We have also innovated in media usage and have leveraged various media platforms to break the clutter. ITC has also carried out special interventions to break the clutter in the marketplace through increased visibility in various premium outlets, focusing on modern trade and so on. The other distinctive innovation has been high quality packaging which also goes a long way in breaking the clutter.
CI: Your colleagues in ITC who handle FMCG products mentioned that a lot of brand development and product placement transpires through personal observation, focus groups, and face-to-face interviews. How critical is insight mining?
HM: Given that the consumer is always at the core of all our innovations and products, we have invested resources in techniques like ethnographic studies, neurosciences and many others that deliver valuable consumer insights. As a large marketing organisation, we have been focusing heavily on R&D and product innovation based on strong consumer insights.
CI: Is there a conscious decision to engage the younger luxury buyer? If yes, how?
HM: ITC is focusing on premiumisation of products and has developed a large portfolio of products including Fiama Di Wills, Choco Fills Dark Fantasy, Paperkraft notebooks and a host of other offerings for the luxury buyer. While we have a portfolio of products for every segment of consumers, we have created some winning propositions in the premium space.
CI: One of the things ITC has highlighted through its e-choupal or rural outreach is, 'rural is not reached'. Have marketers not been able to create customised solutions at affordable price points?
HM: This can be a separate subject of discussion as 70 per cent of the population resides in rural India. Rural India is confronted with a host of challenges that limit market access. The cost of reaching rural markets is very high and is also constrained by lack of infrastructure. ITC has been a pioneer in reaching out to rural India through its e-Choupal network which covers 40,000 villages. What also needs to be kept in mind is that rural India and poor people are not synonymous - just like urban India and rich people are not.
CI: What is the one thing that is quintessentially Kolkata - and should remain so?
HM: The people, their friendliness and their approach to life ... Also Kolkata is clearly the best place in the country to play golf.
Hemant Malik - At a glance
How do you plan your day?
Squash over weekdays and golf over weekends are two very important activities to start my day and keep me going through the week.
One thing you hope to achieve during a pitch?
To be able to assess the commitment towards building my business by the agency as well as the agency's efforts towards understanding my organisation and our ethos.
Favourite campaign
No Confusion, Great Combination - Bingo by Ogilvy
Favourite on-ground activation
Wills Lifestyle India Fashion Week.
Favourite print campaign
Fiama Di Wills Face Wash.
Your mantra for life
Focus on your own efforts and be true to yourself.
ITC - FMCG -At a glance
Branded Packaged Foods - Sunfeast, Aashirvaad, Bingo, Yippee
Personal Care Products - Essenza Di wills, Fiama Di Wills, Vivel, Superia
Educational and Stationery Products - Classmate, Paperkraft, Colour Crew
Lifestyle Retailing - Wills Lifestyle, John Players
Agarbattis - Mangaldeep
Safety matches - Ikno, Aim
