About ITC
History: UK-based global tobacco company British American Tobacco (BAT) set up the Peninsular Tobacco Company (Peninsular) in India. Peninsular was involved in cigarette manufacturing, tobacco procurement and processing. It set up a full-fledged sales organization named the Imperial Tobacco Company of India Limited (Imperial) in 1910. ITC Limited (ITC) was a parent company of British American Tobacco (BAT).
Growth
To procure the necessary raw material (tobacco leaf), a new company, called the Indian Leaf Tobacco Company (ILTC), was incorporated in July 1912. By 1919, BAT had transferred its holdings in the Peninsular and ILTC to Imperial. Following this, Imperial replaced Peninsular as BAT's main subsidiary in India.
Indian MARKET
Of the 58% of adult Indian males who consume tobacco, barely 15%
Bidi : Cigarettes ratio = 10 : 1 Annual per capita adult cigarette consumption in India is appx. one tenth world average : 141 Future growth depends on relative rates of growth of per capita income and moderation in taxes.
India Consumption???
Per Capita Adult Cigarette Consumption (Sticks)
1662 1753
1190
561
488 141
USA
China
Pakistan
Nepal
India
World Avg.
Political Environment
Independence movement:
The
Independence
movement
damaged
the
companys
distribution network.
Political Environment
Pressure on multinational companies:
By the late 1960s, the Government Of India began putting pressure on multinational companies to reduce their holdings. Imperial divested its equity in 1969 through a public offer.
Political Environment
Regulations on tobacco product advertising:
In February 2001, the Government of India announced a ban on advertising by cigarette companies and restrictions on the sale and consumption of tobacco products. Bill 2001 prohibits smoking in public places. Sale of tobacco products to people under the age of 18. No tobacco related business would be allowed to advertise in any type of media. Even advertising like sponsoring sports and cultural events, by such companies was to be banned.
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Political Environment
Taxation policy: The increase in excise duties over the years , which got reflected in higher prices. Though volume of filter cigarette sales increased between 1998 and 2001. Due to Competition of non-filter cigarettes & beedis after 2001 the sale declined. Competition with smuggled cigarettes: According to industry sources during early 1990s sales of the smuggled cigarettes was over 25 percent.
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Decline stage
The demand for cigarettes, which was at its peak at 105 billion sticks in 1998 The share of cigarettes in the total consumption of tobacco was declining steadily due to Government ban, high taxes, anti tobacco campaigns all together reduced the consumption sharply. In 2002, volumes fell to 87.8 billion sticks . Though ITC clearly dominated the cigarette business, it soon realized that making only a single product, especially one that was considered injurious to health, could become a problem...
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Industry environment
ITC ranks among India's top 10 `Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times.
ITC is one of the country's biggest foreign exchange earners US $ 3.2 billion in the last decade ITC employs over 24,000 people at more than 60 locations across India. ITC have more than 3,83,000 shareholders
ITCs has greened 77,000 hectares of area ITC Can store twice the amount of CO2 than the company actual emits.
ICT has 4 times more Rainwater Harvesting potential than ITCs net consumption.
Close to zero solid waste discharge status. ITCs Watershed Development covering over 30,000 hectares brings water to dry-lands.
Growth plan..
ITC enjoyed the status of the numero uno of Indias cigarette industry. Yet it decided to change its image as the company which is socially responsible to created a better brand value and higher customer response. It decided to tkae bold decisions looking at future challenges.
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Diversification?
Growing cigarette market, but Political Environment To reduce its dependence on its cigarette business. Diversify into non tobacco businesses.
Sportswear Retailing & merchandising Paper printing, Paper Board, Greeting cards (2000) Ready to serve packaged foods, Packaging FMCG Hospitality
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Diversification?
Cigarette business contributes around 50 % to its revenue. While other diversified businesses contribute 50 %. Achieved good success even after late entrant in high competition market.
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Diversification
Competitors: ITC - Market leader in cigarette business :
Market share 78 %
Market share 10 %
Vazir Sultan Tobacco (VST) Targeted low end market with small size cigarette (< 60 mm length): Market share 9 %
Charms, Charminar
(Filter)
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Diversification
Competitors: Hotel
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ITC decided to venture into little explored rural market realizing that 60 % of countrys private consumption comes from 6.4 lc villages. E-Choupal redefines choupal, a village square informal public meetings are held for discussion and information dissemination. e stands for use of electronic media indicating connectivity with computers and internet. It offers five distinct services such as 1) information 2) knowledge 3) purchase 4) sale 5) development work
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HOTEL BUSINESS
In 2001 ITC-Welcomegroup entered in collabration with Star-Wood Hotels & Resorts bringing in its premium brand THE LUXURY COLLECTION to India. The 7 hotels which are 1) ITC Maurya in Delhi 2) ITC Maratha in Mumbai 3) ITC Sonar in Kolkatta 4) ITC Grand Central in Mumbai 5) ITC Katatiya on Hyderabad 6) ITC Mughul In agra 7) ITC Woindsor in Bengaluru Acheivements :ITC Sonar Bangla, Kolkata has become the first hotel in the world to obtain Certified Emission Reductions (CERs) issued under the aegis of the United Nations Framework on Climate Change Convention. Joint ventures with Srinivasa Resorts Ltd Fortune Park Ltd Bay Islands Resorts Ltd Maharaja Heritage Hotels Ltd
FOODS
Foods
Staples
Confectionery
Snack Foods
Confectionary
ITC currently has two brands in the confectionery segment 'mint-o' and 'Candyman'. mint-o' was acquired by ITC from Candico in March 2002 www.mycandymanclub.com was launched in July 2004 and now has a loyal, young user-base. Targeted at young children, the website is populated with games, quizzes, downloads and other fun activities. ITCs Mint-O Fresh brand has captured a 17% share of the segment, as opposed to Perfetti Van Melles Chlormint which logged a 14.3% share
Snack Foods
Sunfeast Range of Biscuits i.e Sunfeast Marie, Sunfeast Dream Cream, Sunfeast Fantasy etc Sunfeast extended the biscuits portfolio to the nutritional segment with the launch Sunfeast Sachin's Fit Kit a range of healthy products co-created with Sachin Tendulkar. As part of the plans ITC Foods will bring to Kolkata the Sunfeast Open, the biggest women's tennis event in South Asia, for the next four years i.e. till 2009. The launch of Bingo! in March 2007 marked ITC's foray into the fast growing branded snack foods segment. Bingos portfolio includes an array of products in both Potato Chips & Finger Snacks segment. Bingo! is positioned as a youthful and innovative snack, offering the consumers with choice in terms of both formats and flavors carrying a very famous logo No confusion great combinations
Personal Care
In September 2007, ITC launched Fiama Di Wills, a premium range of personal care products comprising shampoos, conditioner, shower gels and soap. Between February and June 2008, ITC expanded its personal care portfolio with the launch of Vivel Di Wills and Vivel brands. Vivel Di Wills, a range of soaps, and Vivel, a range of soaps and shampoos, cater to the specific needs of a wide range of consumers In the popular segment, ITC has launched a range of soaps and shampoos under the brand name Superia.
In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire value chain found yet another expression in the Safety Matches initiative. ITC now markets popular safety matches brands like iKno, Mangaldeep, Aim, Aim Mega and Aim Metro. ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its partnership with the cottage sector. ITC's popular agarbattis brands include Spriha and Mangaldeep
Retail Business
ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusive stores later expanded its range to include Wills Classic formal wear (2002) and Wills Clublife evening wear (2003). ITC also initiated a foray into the popular segment with its men's wear brand, John Players. In 2007, the Company introduced 'Miss Players'- a fashion brand in the popular segment for the young woman
ITCs greeting card and gifting business has been re-branded as the education and stationery business to reflect its new focus. The 9000 Crore stationery market comprises of notebooks which is an 3000 Crore market. TC has two brands of notebooks, Classmate and Paperkraft, aimed at students and executives, respectively. In fact, most of its products for students are called Classmate and while its printer and copier paper is branded Paperkraft.
Hotels
Paper Board
Observations:
Though being a market leader in cigarette manufacturing, ITC realized very early that business environment is changing not in its favour. It realized that it needs to change the brand image of the company which is crucial for its survival and growth. It diversified successfully in non tobacco industry such as hospitality, retail, food, etc It changed its brand image successfully as a company which created knowledge leadership and promotes sustainable development
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