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ITC's food division has made its presence felt across the branded packaged foods segment with several of its brands garnering significant market share. But with veteran rival brands putting up a tough fight and local brands snapping at its heels, the journey ahead may not be as smooth.

When ITC started selling packaged foods products in 2001, few would have thought that the food division would one day become a Rs.4000-crore-plus business. Growing at a rate of 20% annually, today ITC's foods division makes a range of packaged food products, from instant noodles to biscuits to ready-to-eat meals to staples. Its biggest success perhaps has been in the biscuits category. According to market estimates, the overall size of the biscuit category is about Rs. 20,000 crore, and ITC is third in place right after market leaders Britannia and Parle, with about 11% market share. In August this year, ITC became the leader in the cream biscuits category, surpassing players such as Britannia, with 25% market share. The size of the cream biscuit segment is around Rs. 5000-6000 crore. Under the mother brand Sunfeast, the company has a slew of biscuit brands - Sunfeast Milky Magic, Marie Light, Dark Fantasy, Glucose, Dream Cream and many more. In 2010, the company entered the Rs. 2000-3000-crore instant noodles category where Nestle's Maggi had ruled for decades, with its Sunfeast Yippee! brand and soon cornered a 10% share. It has also garnered a foothold in the Rs. 200-crore nascent instant pasta market with its Sunfeast Pasta Treat brand garnering a share of 12.5%.

The division enjoys a strong presence in the ready-to-eat category with its Kitchens-of-India brand and in the staples segment with Aashirvaad atta and multi-grain atta. One of its first launches, Aashirvaad atta, today has a market share of 30% in the Rs. 6000-7000-crore branded staples category. Under the Aashirvaad umbrella, the company has launched a range of instant mixes, ready meals and spices. In the confectionery segment, ITC Foods has Candyman, mint-o, Toffichoo, etc. In the Rs. 5000-crore savoury snack segment, its Bingo! brand with several variants under its belt has managed to get 12% market share within four years of its launch.

Known as the Indian Tobacco Company Limited at the turn of the century, ITC has indeed come a long way. Who would have thought a company popular for manufacturing cigarettes would one day enter the branded packaged food business and turn it into one of its fastest growing divisions? Its initial tryst with the segment turned out to be a dud, and the company sold its edible oil brand Sundrop to Conagra. But soon the tide turned in its favour.

Cajetan Vaz, independent brand consultant, calls ITC's success in the food category, 'a quality ingredient story'. "ITC's hotel Maurya Sheraton's Dumpukht menu had turned out to be very popular amongst foodies. This became a source of inspiration for the company to enter the foods business with its ready-to-eat range based on the Dumpukht menu. From day one it has followed a clear mandate that it will not compete with other companies. Rather, it would create an international benchmark with best quality products. And the fact that it has stuck to its mandate has paved the way to its success."

In 2002, the company took its big leap in the foods business by entering the staples market with the launch of Aarshirvaad atta. According to Chitranjan Dar, divisional chief executive, foods division, ITC Ltd, a major factor which contributed to the growth of the brand was the fact that the company paid attention to the consumer's needs. "We developed the atta as per the demands of every region. Therefore, the Aashirvaad atta sold across the south is different in terms of taste to what is sold in the northern region," explained Dar. The demand for the atta brand further catapulted, with the introduction of multi-grain atta, and the shift in consumer preference to branded flour, especially in urban India.

While there are instances of ITC being the first initiator and virtually developing a category from scratch, at the same time, there have been instances where it has entered a category already full of popular brands, thus requiring a change in strategy. In the second case, it was pertinent that it stayed away from being a 'me-too' brand. This was, in particular, felt by the company in 2010 when it decided to enter the noodles category. Nestle's Maggi had held the fort for the last 50 years with a loyal base of consumers. "When we looked at the market, we realised that there is still space for a second brand, so the next step was to launch a product which would be nothing like the current ones," said Dar.

ITC realised that after having the same kind of instant noodles for so many years, the customer was now looking for multiple choices in the masala segment. She also preferred her instant noodles to be non-sticky, light to eat, etc. Sunfeast Yippee!, therefore, was introduced with the aim to capture the mind of those who were looking for a different product. It was round shaped as opposed to Nestle's square shaped instant noodles brand, and had long strands, which was emphasised in its debut commercials.

In its effort to further promote the campaign, two television commercials have been launched in addition to several on-ground activations and school activations - which specifically targets students. An out-of-home campaign has also been launched, to give the entire campaign a 360-degree look. The high-decibel advertising strategy has worked for the brand. Since its entry, Maggi which still leads the category has seen a reduction its market share to 80%, even as the debut of other brands such as Knorr Soupy Noodles from Hindustan Unilever and Foodles from GlaxoSmithkline have resulted in intense competition in this segment.

At ITC, every product is backed by a strong marketing strategy, so much so that the company has got on board different creative agencies to handle different brands - ensuring that there is no dearth of interesting ideas. The creative duties are divided between five agencies -Ogilvy, Grey, McCann Erickson, Draftfcb Ulka and JWT.

For all the agencies the guidelines are fairly simple to follow - every time the idea is to do something different, which would make its brand stand out from the clutter. The company was particularly successful in creating a space for its savoury snack range Bingo! with its quirky style of advertising. At the time of the launch, the snacks market was dominated by PepsiCo's Lays, hence from day one the directive was to create a buzz.

"Research had earlier revealed that snacking thrives on constant injection of excitement and fun that enhances the brand's image. Hence our brief was clearly defined in this context - overall we needed to build buzz and badge value while establishing the brand name in a manner that was clutter breaking and appealed to the youth," said Joono Simon, executive creative director for Ogilvy's Bangalore office, who has been involved in the creation of the Bingo! ads. "So, whacky advertising that our main competitor had never done seemed the best way to go. It was bound to get us the visibility and salience that was mandated for a brand launch." Bingo! thus was launched with the proposition, 'irresistible combinations'.

While creating clutter breaking advertising continues to be the bottom line, each sub-category works in its own way. In the confectionery category, Draftfcb Ulka relies more on humour; while creation of an emotional bond drives the biscuit segment. Nitin Karkare, chief operating officer, Mumbai and Bangalore, Draftfcb Ulka, said, "As confectionery is an impulse category, here the agenda is to create top-of-mind recall, every time. Also toffees and gums are not the serious kind of brands, so one tends to rely more on humour. However, biscuits fall under the category of considered purchase. Consumption of biscuits is more habit driven. Thus, here over a period of time, by creating an emotional bond between the brand and the customer, each brand tries to convince the consumer how life will be better by eating its biscuits."

This was very much evident from the way ITC positioned its Dark Fantasy biscuit brand. Launched in 2005, the brand in its first campaign played with the ideas of five cardinal sins; soon the brand took a sabbatical from advertising to focus on its retail presence. It returned in 2011, with a new look in terms of packaging and riding on indulgence as its positioning. As the biscuit was launched in the premium category, it toyed with sensuality through indulgence; whereas for ITC's other biscuit brands such as Sunfeast Dream Cream or Sunfeast Kaaju Badam Cookies targeted at the masses, advertising is kept fairly simple.

"A great emphasis is laid on activation, consumer engagement and especially, point-of-purchase. The shelves are designed in such a way that a consumer is easily able to spot our products," noted Dar. Interestingly, this approach comes in handy in the rural areas, where with power cuts the norm, shopkeepers prefer innovative displays at the point of purchase, to draw the consumer's attention. According to Dar, from time-to-time, the company invests on activations such as street plays in the market place or weekly haats, e-Choupal rural health initiative, etc., to remain in the consumer's mind.

When you are in the foods business, the product and its taste is at always a priority. It is here that ITC' foods business has an upper hand, thanks to the kind of support its gets from its hotels division. Dar said, "Because of our large chain of hotels which specialises in gourmet foods, we are constantly able to experiment with products and taste. The brand team and the chefs work towards developing products which are a first in terms of taste, and quality."

However, there have been instances when the actual time taken to bring to market a product since its inception has been as long as to three to four years. And one such example is the biscuit brand - Dark Fantasy. Launched under the brand Sunfeast, it took the company nearly four years to bring the brand to the market. "Before we launch any product, there are several levels of tests it is made to pass through. Quality and taste are of utmost importance. So until and unless we get the exact kind of product that we are looking to launch, the process continues. Dark Fantasy became a hit after it re-launched with better packaging. At the same time we had introduced Dark Fantasy Choco Fills which too has been liked by consumers," said Dar.

The discovery of a good product is not the end of the story, in fact, the real story begins from here. Procurement of raw material, keeping the pricing correct, a strong distribution network, consumer segmentation of the product are various ways of ensuring that your product makes it to the consumer's shopping basket. For ITC, its investment in e-Choupal, which has a network of 4 million-plus farmers, over the years has paid big dividends. Through e-Choupal, it procures all its raw materials from farmers directly, and this has helped ITC in controlling its input costs. "The e-Choupal model has given us a fair amount of advantage when it comes to sourcing raw materials. Besides this, what adds to the strength is how we are able to trace the commodity through identity preserved procurement, which further enables in customised blending to support local taste palettes," said Dar.

Distribution was never really an area of concern for the company, thanks to its vast network which has already been set up for its cigarette brands. "While in urban cities, the system is pretty much set and clear, for any company reaching the last mile consumer in the rural area is a big challenge. The cost of distributing to a local kirana store, which may be the only one shop in a village, is very high unless you carry multiple categories. In our case, the network was already established, so riding on the same supply chain we distributed our products, and shared the cost with other business divisions. This turned out to be a win-win situation," Dar explains. This elaborate network has proved lucky for its confectionery division too.

While most of the products launched by the foods division have tasted success, there are a few which had to bite the dust. Hatke Jhatke, a sub-brand launched under the brand Bingo, and Bischips both flopped in the market and were eventually pulled out. When asked about the number of times ITC has witnessed failure in the market, Dar answered, "We mostly fail internally, not out in the market."

Meanwhile, Kitchens-of-India which comprises ready-to-eat range of products, curry pastes, sauces and chutneys apart from frozen snacks and meals hasn't really took off the way the company expected it to. "The Indian mindset is very different when it comes to food, people still prefer eating fresh food and this is one reason for the range not performing as per expectations," said Dar. Interestingly, the company claims that though the brand is yet to make it big in the Indian market, it is already exporting 7-8 times more to countries such as the USA and Canada. "The demand for the range is very high there and most of the growth is coming from these countries," he added. Dar is hopeful that the Rs. 50-crore category will witness a turnaround soon and then Kitchens-of-India will be one of the most preferred brands. Agreeing with Dar, Jagannadham Thunuguntla, head of research at brokerage firm SMC Global Securities, said, "Demand will increase with more Indians increasingly accepting packaged foods. As more and more families turn nuclear and time becomes a major factor, consumers will turn towards packaged foods."

At the time when ITC entered the foods division, it had a fairly simple strategy - first launch a mass product, then gradually expand the offering with the launch of premium products. But with time, the game plan has changed as the company believes that it has achieved a certain amount of scale and no longer needs to depend on the old blueprint. "Initially, we wanted to achieve scale, therefore we targeted the mass to get a wide coverage. However, now our position in the market allows us to target any segment any day," said Dar.

While in the last 11 years the company has made its presence felt across the branded packaged foods segment with several launches, there is still a lot left to be achieved. According to a market analyst, who did not want to be named, for ITC it is just the beginning. "The company has corned reasonable market share in almost all categories, however, it is yet to take over from Nestle in the instant noodles category where Maggi still rules. Again, in the biscuits segment, it has to beat two veterans Britannia and Parle, who are constantly launching new products, to keep the category buzzing with excitement. At the same time, it faces competition from local products, which makes the game even tougher," he says.

The foods division is now working on various products, including health oriented packaged foods, apart from a chewing gum brand. "The journey has been good and positive so far, and as we continue to bring new products to the market, we remain hopeful that with each new launch, we will write a new success story," said Dar.