The tobacco giant ITC is unleashing a flurry of new activities and tapping new opportunities by leveraging its diverse skills and stupendous distribution channel.ITC is coming out of the smoke with a new face. Till date, more than 80 percent of the company's sales come from cigarettes and tobacco. But it won't continue, as ITC wants to change that proportion and generate as much as 40 percent of its sales from non-tobacco businesses. Nearly a dozen new projects are incubating at ITC. Enumerating some new non-tobacco businesses, which are confectionery, lifestyle retail business, which it recently started with the Wills Sport brand of relaxed wear, the Expressions greeting cards and gifts business, and ready-to-eat packaged foods business.
Because of the stagnancy in present businesses, ITC has erupted with bunch of diversified new businesses and many are there in the pipeline waiting for the right time and opportunity to emerge. Hitherto ITC has been sacrificing volumes over margins to earn profits but the threat of a huge shift of consumers away from the smoking habit is bound to take its toll. Viewing the overall industry, the cigarette and tobacco players are facing increasing protests from anti-tobacco and health organizations. Globally as well as in India, the anti-smoking compaign has been gaining ground. The cigarette industry faces immense pressure with declining volumes and increasing government regulations and taxation. Profitability of most players has been affected. Players like ITC with strong brand equity and pricing power have been able to maintain margins. The industry has received some relief in the form of excise exemption for manufacturing in North Eastern states, and most companies have commenced manufacture in that region to avail of the excise exemption. |
