Return to Previous Page

ITC's Foray into Dairy and Beverages

CASE FLYER, MARKETING MANAGEMENT
ET Cases, 5 pages
AUTHOR(S) : Syed Abdul Samad and Dr. Nagendra V Chowdary

Case Preview

ITC's Foray into Dairy and Beverages

 

Expected Learning Outcomes

• Overview of ITC’s business landscape and understand its business segments, the brands and their contributions to the Indian conglomerate
• Competitive landscape of the Indian food and beverage business segment and analysis of ITC’s relative strengths and weaknesses
• Using the Ansoff ’s Product-Market matrix to critically examine ITC’s foray into dairy and beverages segments of the food business

................................................

.................................................

I. ITC’s Business Landscape

1) What according to you are the three major segments of FMCG industry in India?

2) Match the following (Exhibit I): ...........................

3) Over the years, non-cigarette business sales have been increasing for ITC. What does this mean for ITC? Is this a part of deliberate strategy or accidental?.......

II. Indian Food and Beverages Segment and ITC’s Competitive Position

1) What according to you are the different categories within food and beverages segment? What are the brands that ITC has in each of these categories?

2) Complete the following table (Exhibit II) for ITC’s food and beverage categories and answer the questions given thereof:

.................

III. ITC’s Foray into Dairy and Beverages Business

1) ITC is firming up plans to foray into non-carbonated beverages and dairy businesses to establish itself as one of the largest food companies in the country. Who do you think, given its past record, its potential and the strengths, can it aspire to be in the top-3 Indian food companies?

2) ITC has never been known either as a category creator or a category killer and largely its foray into FMCG sector has been that of late entrant but had an entrenching presence. Do you think it would have sufficient scale in non-carbonated beverages and dairy businesses to compete effectively with the seasoned  players?

3) Presently, ITC focuses on a new category – functional foods (addressing various metabolic disorders such as blood pressure, diabetes and nutritional deficiency). Do you think it has the potential to become a category killer?

4) ........................

Exhibits

Exhibit I: ITC’s Brands and Product Lines

Exhibit II: ITC’s Food and Beverage Categories

Teaching Note Preview

ITC's Foray into Dairy and Beverages

 

Synopsis

The India Tobacco Company or ITC Limited (ITC) was established in 1910. For a very long time it had been associated with tobacco business. However, in January 1964, a committee of selected doctors in US released a report Smoking and Health: Report of the Advisory Committee to the Surgeon General that highlighted the ill-effects of tobacco usage. Since then there was a sharp decline in the official support to the tobacco industry in India despite its enormous contribution to the agricultural, fiscal, manufacturing and exporting sectors of the economy. Therefore, from 1970s, the company began foraying into the non-tobacco industries like hotel industry/hospitality business (1975), paperboard industry (1979), International Business division for export of agri-commodities (1992) by leveraging on its agri-sourcing competencies, FMCG (2000), ITC Infotech (2000) and lifestyle apparels (2001). The company had established its mark in all the industries that it forayed into and during the last decade, ITC has also been making strides in the Indian FMCG sector as well. The company had built popular brands across all the segments within the FMCG industry. In 2014, ITC intends to foray into non-carbonated beverages and dairy categories. The case flyer tries to critically analyze ITC’s foray in these categories and would it be able to carve a niche for itself.

Before the Classroom Discussion/Prerequisite Conceptual Understanding (PCUs)

This case flyer presupposes a conceptual understanding of the following. A working knowledge along with the business implications of the following concepts/information would enable an effective discussion leading to more practical solutions than a mere intellectual exercise. The participants were asked to come prepared about the following concepts/information:

  • a) Igor Ansoff ’s Product-Market matrix
  • b) ITC’s business portfolio and its competitor analysis especially in food and beverages segment

 

Expected Learning Outcomes

  • • Overview of ITC’s business landscape and understand its business segments, the brands and their contributions to the Indian conglomerate
  • • Competitive landscape of the Indian food and beverage business segment and analysis of ITC’s relative strengths and weaknesses
  • • Using the Ansoff’s Product-Market matrix to critically examine ITC’s foray into dairy and beverages segments of the food business

 

Suggested Orchestration

During the Case Flyer Discussion in the Classroom

The classroom discussion and analysis for this case flyer was facilitated under three broad sections as explained below..........

Case Flyer Analysis

I. ITC’s House of Brands

• The FMCG industry in India comprises of three major segments [Exhibit (TN)-I]...........

• ITC, as of early 2014, has its presence only in two segments of the FMCG sector – personal care and food and beverages. The following table presents an overview of ITC’s product range across these two segments, though it does not represent an exhaustive list of the company’s product range [Exhibit (TN)-II]............

• ITC since its establishment in 1910 is associated with tobacco business. But since 1964, due to the rising awareness of the ill-effects of tobacco products in India and government’s drive to discourage cigarette consumption and increased campaigns against cigarette consumption, ITC had to rethink augmenting its business portfolio. Mandate statutory warning and continuous increase of taxes too were hurting its business prospects. ITC introduced a nicotine chewing gum, Kwiknic (in October 2013), which was set to compete with J&J’s Nicorette.

• It is because of the above reasons that ITC began concentrating on the FMCG industry since 2000 and grew to be among the top companies of the sector. However, the growth of ITC could be considered as accidental because the changing business environment forced the company to enter into the FMCG sector. However, thereafter, the company strategically grew to be one among the top players in the country.

• With the low-margin products like safety matches and incense sticks, the company had been able to get a strong foothold in the Indian market through its sales and distribution efficiencies which made it easier for its other product lines to reach the consumers thereby achieving Economies of Scale and Economies of Scope.

• The reason for the success of the company’s FMCG products was the differentiated proposition the company offered through its products and the customer marketing skills.

• While ITC entered the FMCG sector, many were sceptical of its success because of its image of a cigarette company. But ITC branded its FMCG product categories in such a way that the image of being a cigarette company never rubbed on its FMCG products and created a different image altogether. Though some of its products like Fiama Di Wills and Wills Lifestyle uses the brand name of a cigarette it is considered secondary and the complete brand name gives a different brand image (that of a personal care and a fashion brand) altogether and not influenced by the cigarette brand.

This analysis gave students an overview of ITC’s business portfolio and its foray into FMCG industry.

................................

Exhibits

Exhibit (TN)-I: FMCG: Segments

Exhibit I: ITC’s Brands and Product Lines

Exhibit (TN)-III: ITC’s Food and Beverage Categories

Exhibit (TN)-IV: ITC’s Unique Strategies

Exhibit (TN)-V: Ansoff ’s Product-Market Matrix

$3.66
Rs 0
Product code: MKTG-4-0025, MKTG-4-0025A

Abstract

This case flyer, prepared based on an article1 from The Economic Times, can be used for understanding the application of Ansoff's Product-Market matrix in the light of ITC's decision to foray into beverages and dairy segments. The Indian business conglomerate, the 100-year old ITC Limited (ITC) has been stamping its authority in the Indian FMCG sector, firstly and largely with cigarettes and over the last decade with other segments of the FMCG sector - personal care, food and beverages, lifestyle apparels and hospitality. Having built 50 energetic and popular brands across these categories over the last few years, ITC intends to foray into non-carbonated beverages and dairy businesses. Would it be able to carve a niche for itself? Would its existing business architecture support the proposed business line extensions?



Pedagogical Objectives

  • To have an overview of ITC's business landscape and understand its business segments, the brands and their contributions to the Indian conglomerate
  • To understand the competitive landscape of the Indian food and beverage business segment and analyze ITC's relative strengths and weaknesses
  • To critically examine ITC's foray into dairy and beverages segments of the food business with the help of Ansoff's Product-Market matrix


1 Writankar Mukherjee, 'ITC May Juice Up Foods Biz with Dairy, Beverages Foray', The Economic Times, February 20th 2014



This Case Pack Includes:
- Abstract
- Case Flyer
- Analysis


** If you need to make copies, you must purchase the corresponding number of permissions based on the number of participants. Electronic downloadable links (PDFs, PPTs, Supplements etc.) are available immediately after purchase. Single copy can be used only for evaluation purpose. Unauthorized distribution of these files is prohibited pursuant to term of use of this website.

No. of Copies
$3.66
Rs 0

Related products




Request for an Inspection Copy

(Strictly for Review Purpose, Not to be Used for Classroom Discussion/Trainings)