ITC: Brand and Brand Lifecycle

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ITC is an Indian company incorporated in 1910. It started with tobacco business and later  diversified their business and now have 25 brands in total. It has a market capitalization of US $ 27.90 billion and Gross Sales Value of US $ 10.74 billion

The name of the Company was India Tobacco Company Limited in 1970 and then  changed to I.T.C. Limited in 1974. In recognition of the Company’s multi-business portfolio encompassing a wide range of businesses – Fast Moving Consumer Goods, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology – the full stops in the Company’s name were removed effective September 18, 2001. The Company now stands rechristened ‘ITC Limited‘ where ‘ITC’ is today no longer an acronym or an initialized form.


The factors that helped ITC build itself as a well-known brand were  :


1) Sourcing Capability– ITC has strong sourcing capabilities. With the help of various sources, ITC was able to extend its business in different sectors. They entered into FMCG after establishing a strong base in the agricultural sector. The wheat from the agricultural sector held in establishing a market for the Ashirvaad aata. Similarly, ITC used its various sources very effectively and efficiently.


2) Effective Brand Utilization-After getting recognized in the agricultural & FMCG sector, ITC used its established brand name for entering into the stationary market. They introduced classmate by ITC which helped them in grabbing a good market share.


3) Related Businesses-ITC had very interrelated businesses. This helped them in the in-house production of their raw materials.

For example, ITC used its paperboard business for the packaging of its various products. It reduced the costs & need for outsourcing.

4) Role of Management-Management is the heart and soul of a successful business. Having a leader like YC Deveshwar helped ITC in reaching heights.


5) Focus on Sustainability– ITC focuses on sustainability as its goal. Major projects of ITC are focusing on Sustainability. They have targeted majorly those sectors which are sustainable in the long run, offering more growth.


6) Meeting Corporate Social Responsibility (CSR)– ITC focuses on fulfilling its social responsibility. They started serving the society in Sarapaka, an economically backward area in Andhra Pradesh. ITC contributed to the development in education, environmental protection & community development.

 

Today ITC is known as a top FMCG company which has been flourishing and it’s growth has been expanding in many folds and has reached many milestones .

Sales

ITC’s cigarette business


ITC was established in 1910 as a tobacco company and remained exactly that for nearly six decades before it ventured into printing and packaging solely for cigarette manufacturing. With a wide range of brands, ITC is a market leader for cigarettes with a share of 77 percent. Within the conglomerate, this sector accounted for about 46 percent of its total revenue. The company has five manufacturing plants across the country – in Kolkata, Munger, Saharanpur, Ranjangaon, and Bangalore. Most of the gross revenue for ITC came from its cigarette sector in fiscal year 2019.



 Other FMCG businesses in ITC


 Even though much of the profit comes from cigarettes, ITC retained its title as India’s leading marketer in FMCG businesses. Since foraying into the food business in 2001, it has established over 25 brands, each gaining a significant market standing among Indian consumers. The other prominent product “Classmate” is India’s largest notebook brand. Apart from agri-business, IT, personal care products, the company supports the small and cottage industries through incense stick manufacturing.

 

For the year ended 31st March,2012 (INR in Crores)

For the year ended 31st March,2011 (INR in Crores)

Revenue from operations

 

25173.82

 

21458.98

As we can see that the revenue from 2011 to 2012 have increased for ITC so let’s compare this with its current two years revenue and see in what terms ITC have seen a growth

 

For the year ended 31st March,2019 (INR in Crores)

For the year ended 31st March,2020 (INR in Crores)

Revenue from operations

 

46807.34

 

45784.39


ITC has seen a tremendous amount of growth in its sales and revenue which proved to be beneficial for its current brand lifecycle.

Profit

If we see to its gross profit in its financial year 2019, bifurcating segment wise we can infer that it nearly reported a profit of 154 billion Indian rupees from its cigarette segment in fiscal year 2019 and its Cigarette segment owns a market share of 77 percent all alone in India.

 

Profit in billion Indian rupees

Cigarettes

154.12

Paperboards, paper and packaging

12.39

Agri business

7.93

FMCG/others

3.26

Hotel

1.86


Sources/ References :



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