ITC's foray into foods is poised for expansion. From being present across four broad product categories of staples, confectionary, biscuits and ready-to-eat products, the company says it is working on a host of additions including snacks, ketchups and jams, spices, pulses, rice, more confectionary and a lot of new RTE products.
"We are working on all these product categories to see what fits into our portfolio. The snack business, for example, is particularly attractive since it holds a large potential. But we are in no hurry... all these products are on the horizon but will not be launched immediately," says the ITC Foods Division Chief Executive, Mr Ravi Naware.
But isn't expansion a function of economies of scale? Has ITC Foods reached a scale where large-scale expansion is the way to go? While acknowledging that the division has not been profitable for its first two years, Mr Naware says the goal is very clear.
"We are targeting Rs 500-crore sales turnover within the next three years. Profitability will also come at around the same time. And this can be achieved better and faster if we can manage to get economies of scale".
At present, the company sells wheat flour (atta) and salt under brand name `Aashirwad'; confectionary under two brands Candyman and Minto; biscuits under Sunfeast and ready-to-eat again under two brands `Kitchens of India' and `Aashirwad'.
Last year, ITC Foods did try to get into snack foods with wheat-based chips called Bischips but withdrew the product within months of its launch since the market response was not up to expectations. "But we will get into this product category again; we're working out the dynamics".
On whether ITC Foods plans to make further brand acquisitions in order to grow, Mr Naware said the company was open to the idea of acquiring brands provided they make "economic sense" but did not elaborate further.
On the ready-to-eat market, Mr Naware conceded that while the market was growing at a healthy 35-40 per cent, it will take some time for this product segment to begin making money. Growth impediments in this segment include consumer concerns on freshness, inadequate product sampling and a general lack of consumer awareness.
"We are working on these issues with a particular emphasis on educating consumers. The RTE market will see a lot of action. ITC plans to come out with at least three new products every three months," he said. Two months back, the company has entered into ready-to-cook pastes under both, Aashirwad and Kitchens of India.