Dairy and beverages maker ITC Foods is gearing up for volume-led growth in FY25 on the back of commodity pricing stabilising, an expanded summer portfolio, and enhanced reach in smaller geographies, COO Sanjay Singal told FE. “In the last few months, prices of milk have come down after going up by at least Rs 10 per litre. The retail prices won’t go up any further since raw material prices have stabilised now,” he said.
According to NielsenIQ, the volume growth in the food sector during the October-December quarter stood at 5.3%, down from 8.7% in the July-September quarter of 2023.
Although categories, including dairy and beverages faced inflationary headwinds last fiscal, Singal pointed out that there have hardly been any price increases. “We will focus on volumes this year. At the same time, managing our supply chain cost, we try to drive volume growth by going deeper into geographies,” he said. For instance, in Bihar, the company was earlier present in all 29 districts but through district headquarters, and it is now trying to penetrate 10,000 population markets in the state.
The dairy and beverages cluster of ITC Foods has two parts in its summer portfolio, including the ambient portfolio which operates smoothies, natural juices, and coconut water, sold nationally across online commerce, modern trade, and general trade through 1.5 million outlets. Then there is a separate summer portfolio for east India — Bihar, West Bengal and Jharkhand, under the brand Aashirvaad Svasti (dairy brand), which includes lassi.
“Given the last year was not a great year for beverages in north or east India, this year we have tried to start very early in terms of manufacturing, launching new products as well of having the supply chain ready for distribution,” Singal said.
The array of its recently launched products includes an extended range of smoothies (has added berry smoothie) at a premium, a smaller SKU of its packaged premium coconut water (under the brand B Natural) at Rs 25 targeted towards the north of India, A2 cow milk-based milkshake in Tamil Nadu and lastly, new variants of lassi — rose and mango, and a premium variant of lassi — shahi lassi at Rs 12 —for the east.
The company expects to grow faster than each of the categories it operates in and gain a share. Singal said: “Last year, Q1 was a disaster, though given an extended summer this year, we should be able to grow in double digits.”
With the general election around the corner and expectedly hotter summers, the company is also planning to put up stalls for lassi and juices near the polling booths.
Further highlighting how smaller SKUs are helping certain businesses of the company like juices to expand, Singal pointed out that the entire category of fruit juices is sitting at some 10% penetration right now and it is largely 80%-85% urban and only 15% or 20% rural.
To enhance accessibility and availability and tackle the price point issues in smaller regions, the company is now looking at targeting rural geographies with a 5,000 or 10,000 population (where normally the beverage is a cola) through 25ml fruit juices (under B Natural) SKUs at Rs 10 and has expanded its reach in the rural markets of UP, Andhra Pradesh, and Rajasthan, among others.
