Will ITC Foods make its first Profit?

After the initial struggle, ITC Foods is finally making its presence felt through its parent’s distribution muscle.

ITC Foods, which entered the market in 2001, is the smallest business in the Rs 23,000 crore ITC Group. But the conglomerate’s eight-year-old child is finally making its presence felt amid the growing buzz that ITC Foods is on course to make its maiden profit this year. For a business, which analysts say, was losing close to Rs 60 crore annually till sometime ago, the turnaround is phenomenal.

The company expects the foods business, with brands such as Bingo, Sunfeast and Aashirwad covering 200 product lines, to report revenues of over Rs 2,200 crore this year — up 25 per cent over the previous year. Sunfeast, the biscuit brand, already has a market share of 12 per cent, while Aashirwad accounts for 45 per cent of the branded atta market. Snacks (Bingo), confectionery and basic spices are also making fast progress.

Analysts agree its well-leveraged distribution muscle remains the key to the success of ITC Foods. For example, look at the meticulous planning while launching Bingo, the snacks brand which has given the market leader Frito-Lay a run for its money. Apart from keeping procurement costs low, ITC Foods distributed more than 400,000 large racks to display the brand at all points of sale. The racks created so much impact that even Frito-Lay introduced its own version of wafer racks.

The importance of Bingo is evident from the fact that potato-based snacks are the largest product segment (85 per cent share) in the Indian snacks market, followed by snack nuts, chickpeas and other pulse-based savoury snacks.