ITC focuses on premium goods in hunt for margins

livemint.com:

ITC Ltd is rapidly premiumizing its portfolio with an eye on aspirational shoppers, as consumer goods makers pivot to the juicier side of the retail market for higher margins. India has typically been a value market, with more consumers buying low-priced unit packs. However, over the years, rising prosperity have prompted shoppers to increasingly buy differentiated products such as fragrant body washes, value-added hair oils and organic wheat flour.

These evolving preferences have spurred companies such as ITC, Hindustan Unilever Ltd, Dabur India, Marico and Nestle to accelerate the launch of such premium products. “The bottom of the pyramid is already saturated and as the market gets fragmented, and consumers go in for more premium and differentiated offerings, we’re going to go up the value chain. That’s what we are launching more of," B.

Sumant, executive director, ITC, said in an interview. For instance, 37% of ITC’s personal-care portfolio is now what the company calls premium; the number was 26% till two years ago. the company’s personal-care business comprises brands such as Fiama Di Wills, Savlon, Vivel, Engage, and Dermafique, among several others.

Similarly, 35% of all the packaged foods and beverages portfolio is now premium. As much as 35% of the Mangaldeep agarbatti (incense sticks) portfolio is premium. In FY23, packaged food products reported gross revenues of ₹15,768 crore for the company, up from ₹13,199.59 crore in FY22.