ITC's six brands already in the Rs 1,000 crore club, says Sanjiv Puri

ITC chairman Sanjiv Puri on Monday said that the hotels-cigarettes-FMCG major has six brands that have entered the Rs 1,000 crore club and the hotel demerger option is still on the table, but there is no material development to report yet. He also believes consumer categories are going to be omnichannel in the future and ITC is looking to undertake the direct-to-consumer route of its own as well.

"I believe most categories are ultimately going to be omni-channel. So the spaces that are of interest to us like mother and child, we will invest in," Puri told CNBC-TV18.

Puri said ITC has acquired stakes in Mother Sparsh and Mylo.

"We are right now, of course, a financial investor. As and when the founders wish to divest, and there is an opportunity, we have the option of acquiring it. At this point, we are in discussion with another brand in the mother and child space," he said.

Puri said digital and sustainability are going to be the mega trends of the decade and ITC already has ITC MAARS and sustainable packaging in the play, while a third one is in the pipeline.

The ITC Chairman said the principle in the FMCG market is about scaling mega brands, using them to address adjacencies and developing new categories for the future.

"Brands such as Aashirvaad, Sunfeast and Bingo are being scaled up. We already have about six brands that are in the Rs 1,000 crore-plus club. Aashirvaad is Rs 7,500 crore and Sunfeast is Rs 4,500 crore," he said.

The ITC Chairman added that the conglomerate was using scaling mega brands to address adjacencies.

"With the company's portfolio being around Rs 5 lakh crore, as has been estimated by some analysts, the highest in the FMCG space, I would say now there is huge headroom to grow by penetration," Puri said.

ITC is also looking to add a few more brands to the Rs 1,000 crore club.

Two diverging trends — premiumisation and downtrading — are visible in the market, Puri said.

"There is a strong trend of premiumisation, we are also seeing people titrate and go down to lower price packs or really down trade. So both of the trends are visible."

ITC has been experiencing strong growth overall including in the rural areas.

"What we are also seeing is some green shoots of pickup even in rural."

The company is expecting a better performance in the second half of the current calendar year.

Puri said the company has done more belt-tightening than ever in the past due to inflation, and it has been able to more or less sustain through a mix of actions. He said the economy has normalised post-COVID and the demand recovery has been robust.

Puri said the hotels would be demerged, whenever there is further material development. He added that the hotel industry is seeing a never-before demand and international and business travel are recovering too.

ITC has opened 14 properties since the COVID-19 pandemic and managing 11 others. "The target is to open one property a month," he said.

ITC is also looking at exploring options beyond India in the hotel industry and developing new revenue streams in the hotel business.

Puri said that the legal cigarette industry is just 8 percent of tobacco consumed in India. He said there has been clawing back of some share from the illicit trade.

As more and more companies have been adopting environmental, social and governance (ESG) philosophy, Puri said that it is not a new concept and there is a lot of churn with respect to the ESG definition.