Monday, 4 July 2016

‘Food business is a sunrise industry with head space for everyone’

VL RAJESH, Divisional Chief Executive, ITC Foods
ITC Foods is perhaps one of the youngest multi-brand food companies in the domestic FMCG space. ITC as a group expects a major chunk of its 1 lakh crore target from its non-tobacco business to come from its foods’ business by 2030. In an interview with BusinessLine, VL Rajesh, Divisional Chief Executive, shares his growth strategy as well as his views on the controversies surrounding the industry and about Patanjali.
Which products in your portfolio will see maximum growth?
Our growth will come from two places: the bulk of the growth will come from the core. We have 13 different product verticals and 10 brands. We have about 200 products which we plan to increase it to 300 by 2020. The rest will come from the new variants, new products which we are launching now. The last 14 months have seen three new launches. We also have region- specific brands which we will nationalise. Last financial year, we crossed $1-billion-mark though we would have liked to grow at a faster clip. Right now, we are growing at low double digit rate which for us is not good, but for most others in the industry it will be quite acceptable.
Will at some point of time, ITC Foods get into milk and bread categories?
Well, you see we are not going to say no to anything but not in the immediate future. We can get into every food product. We have a responsibility towards our stakeholders. We will get into large categories which has the potential to grow at a later stage.
Patanjali has been making quite a splash in the industry. How big a threat is it for players like you?
See, the impact is not much. We are not present in certain categories they are in like toothpaste and they have a range of ayurvedic products. So, their positioning is different. But like ours, it is a home-grown brand and we will be happy if they grow too. The foods space is a sunrise industry for a long time to come. Everything is getting branded. There is enormous head space for everyone.
It is over a year now since the Maggi Noodles controversy broke out. As a competitor, how have you fared since then?
The controversy hit the industry very hard. The industry actually collapsed. As per certain industry reports, a ₹320-crore per month market fell to ₹56 crore per month. But since then, we have come back fast because of the unique campaign we ran which allowed any consumer to ask any questions regarding the issue and we answered each one of them. Our share, which was at about 15 per cent, is now growing at 25 per cent. But the industry is still to recover. It is as per independent industry reports now at ₹240 crore per month.
Looking back what exactly went wrong?
The interpretation changed but the law did not change. But, since then, there has been a great clarity from the regulatory side and lot of work has been done to streamline the process. We kept ourselves completely open to scrutiny. One must understand that MSG (monosodium glutamate) is there even in mother’s milk. This is what makes the child drink milk. Most do not add MSG. When you do lab tests, it cannot differentiate between naturally occurring MSG and what has been added. It is important to verify the tests and you have to do it repeatedly to get the right results.
If you look at the controversies surrounding the foods business, right from noodles to bread, you wonder whether branding has really helped.

In the food business, unlike any other businesses, we can do all the right stuff, but the moment you put it in your mouth, you get to know whether you want to have another helping or not. It is a very harsh business. As far as our quality is concerned, our research centre is perhaps the best kept secret. We have over 80 PhDs working in the centre, which is over 2.5 lakh sq ft. They deliver cutting edge products as well as test our products. So, what we claim is what you get. We must realise that when a consumer buys a food product, there is implicit assumption that it is safe and that should not be violated because of the unregulated industry. If the branded industry grows, it is good for the consumer and for the government as well as more of them to get into the tax net.

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