June 6, 2021
According to ITC Ltd the annual consumer spends of all its FMCG brands together has exceeded Rs. 22,000 crore in 2020-21 after the pandemic pushed the sales of staples, convenience foods, health and hygiene products, as per the company’s latest investor presentation. In contrast, the annual consumer spends of the FMCG brands in 2019-20 was Rs. 19,700 crore whereby it grew by over 11% in FY21.
Annual consumer spends is the sum total of what the consumer spends on buying the goods of the company. This is the net sales turnover of the brands along with channel margins and taxes – an indicator of the performance of the business.
ITC said categories like staples, convenience foods, health and hygiene products grew sales by over 20% last fiscal while discretionary and out-of-home consumption portfolio grew by just 2% driven by positive sales growth in the third and fourth quarters.
ITC has reported 14.7% growth in the FMCG business gross sales at Rs. 14,728.21 crore.
ITC attributed the margin expansion in FMCG business to higher operating leverage, enhanced operational efficiencies, product mix enrichment, delayering of operations and reduced distance-to-market. This is despite incremental operating costs due to Covid-19 and gestation costs pertaining to new categories and manufacturing facilities. In the FMCG business, sales of education and stationery products were badly hit due to continued closure of educational institutions, while the company has significantly downsized the lifestyle retail business.
In the food business, ITC forayed into organic range of atta and pulses, new variants for salt, traditional snacks such as aloo bhujia, nut crackers, cocktail mix and pulses mix. In instant noodles, ITC premiumised the portfolio with a new launch while in frozen snacks the range was extended to 100 new markets during the last fiscal.
Limited functioning of the convenience channels and prolonged closure of schools also exacerbated the situation, even though the category witnessed progressive recovery in the second half of the year with easing of restrictions, ITC reported. ITC is the market leader in packaged atta, cream biscuits, bridges snacks, notebooks and the second largest in instant noodles and agarbatti. In some categories, the company enjoys regional leadership.