ITC to invest Rs 1,000 crore into dairy, juice business
ITC Ltd will invest Rs 1,000 crore for its ambitious foray into dairy and juice businesses which it plans to roll out in the January-March quarter, two people aware of the development said.
The Kolkata-based cigarette-to-FMCG-hospitality conglomerate will make the proposed investment in the short term on manufacturing capacity, marketing, brand building and distribution expenses, two senior industry executives told ET.
ITC has already undertaken over Rs 250-crore investments on these two businesses. Early this year ITC acquired Bengaluru-based B Natural juice brand for about Rs 50-60 crore, which is now being modernised both in terms of formulation and packaging.
ITC's expansion into dairy is done organically and involves setting up processing plants in Munger (Bihar), Punjab, Uttar Pradesh, Maharashtra, Telangana and Andhra Pradesh. Trial production in Munger will start this month, the executives quoted above said.
The company wants to have a local production footprint to overcome distribution hassles of dairy products and also to suit the palette of consumers in each region since milk quality differs.
When contacted, ITC Ltd divisional chief executive (foods) Chitranjan Dar refused to confirm investment figure and expansion plans, citing confidentiality reason.
Dar, however, said ITC will soon roll out juices across the country, whereas the entry into dairy business will be late next quarter. "We plan to regionalise both juices and dairy products since the taste would vary," he said.
He said ITC will roll out both 100% juices and nectars with 7-8 variants, while in dairy it is yet to decide the full portfolio.
"In dairy, there will be both B2B and B2C products such as milk powder and ghee to start with. However, our aim is to launch a wide variety of dairy products which we will evolve in phases," Dar said.
Industry executives quoted above said since ITC looks to launch innovative products in both segments as it eyes market leadership.
For instance, in juices, it is experimenting with traditional flavours and variants which are still not in the market. In dairy it will roll out value-added products, including chocolates. While Amul will be the biggest competitors in dairy business, ITC will fight Dabur's Real and PepsiCo's Tropicana brands in the Rs 2,000 crore packaged juice market.
When asked about competition, Dar said ITC will aim for product superiority, use the group's synergies in back-end agri and dairy sourcing, and use its wide panel of chefs in the hotel business to finetune its offering. "For instance, we have done a lot of juice trails in our hotels with chefs, right from getting the right taste to the juice thickness," he said.
ITC is expanding its agri-commodity sourcing to grow fruits and pulps for its juices business, while for the dairy business it has set up 261 cattle development centres across seven states and its milk procurement network in Munger includes 194 milk producer groups with average daily procurement of 13,729 litres per day.