KOLKATA: In a change of strategy to maximise profit growth rather than just chasing volumes, cigarette-biscuit-hotel major ITC will no longer enter any low margin and low growth categories in personal and home care business, a senior company official said.
Analysts said ITC failed to cut much ice in high competition and high volume categories like soaps and shampoos and wants profitable growth in personal care as part of its overall plans to become a market leader in India’s pure play FMCG market.
ITC’s CEO of personal care products business, Sameer Satpathy, said as a strategy all recent launches in this business have been in categories with high margins and high growth rates. “We will launch a new personal care brand or product every month with focus on innovation-led, differentiated, and high utility products which can break the clutter in any category,” he said.
Some of the recent launches, which are even first to market, include compact hand sanitizer in the shape of a pen under Savlon brand and a completely natural floor cleaner Nimyle ,which ITC recently acquired and is now taking national. Others like premium skin care brand Dermafique and pocket perfume Engage ON too are scaling up profitably.
It has also relaunched the Charmis skin care brand it acquired last year. Satpathy said building an engine of innovation has been at the forefront to drive profitable growth in the personal care business.
"Already 20% of the personal care business is driven by new product innovations in categories like fragrances and skincare," he said.
Analysts say pursuing the current strategy will enable ITC to premiumise its personal care portfolio faster so that the per gm or ml price can be more than competition.
“With the new strategy, ITC will also drive instant results since it failed to gain much share by its earlier focus on volumedriven categories like soaps and shampoos where there is hyper competition with companies like HUL and P&G controlling leadership for decades,” said Edelweiss Securities senior VP Abneesh Roy.
Roy added this will also ensure ITC can drive gross margin from personal care in its overall FMCG business which till now was driven by food and stationery. “Herein ITC's strong R&D capabilities will come into play which all new entrants cannot match.”