ITC has emerged as the leading fast-moving consumer goods, (FMCG) manufacturer in the food sector, surpassing competitors like Adani Wilmar, Britannia, and Parle Products.
According to the latest data from market tracker NielsenIQ, shared by three industry executives, ITC secured this position based on domestic sales in the nine months leading up to September.
In this period, ITC achieved food FMCG sales amounting to ₹17,100 crore, outpacing Britannia at ₹16,700 crore, Adani Wilmar at ₹15,900 crore, Parle Products at ₹14,800 crore, Mondelez at ₹13,800 crore, and Hindustan Unilever Ltd (HUL) at ₹12,200 crore, as per NielsenIQ data.
This marks a significant shift for ITC, which ascended from the fourth position the previous year when Adani Wilmar was the market leader.
In the January-September period of the preceding year, Adani Wilmar’s sales were ₹16,100 crore, Britannia’s were ₹14,900 crore, Parle’s were ₹14,800 crore, and ITC’s were ₹13,900 crore, according to NielsenIQ data.
Industry executives attribute ITC’s rise to the top to a notable decrease in edible oil prices. The fall in prices impacted the revenue of Adani Wilmar, the country’s largest edible oil company.
Edible oil prices dropped to less than $1,000 per tonne in September from a peak of $2,000 per tonne in April-May 2022.
At the same time, ITC benefited from an increase in atta prices, with its Aashirvaad brand of packaged atta being the primary revenue contributor to its food business.
Moreover, ITC’s broad product portfolio is experiencing growth across various categories. The company consistently launches over 100 new food FMCG products each year.
ITC Ltd Executive Director Hemant Malik highlighted that every product category within the company’s food business has contributed to growth in the current fiscal year.
ITC’s portfolio includes high-growth segments such as biscuits, witnessing an 11% growth this calendar year, and salty snacks, experiencing a market growth of over 20%, according to Malik, who oversees the foods business for ITC.
He spotlighted that current market trends, coupled with the surge in atta prices, have played a crucial role in enhancing revenue growth for the company.
The Lucrative FMCG Sector
In the second quarter of 2023, the Fast-Moving Consumer Goods (FMCG) industry in India witnessed a significant improvement in consumption growth, reaching 7.5% for the entire country.
This marks the highest growth in the past eight quarters, surpassing the rate of price growth in the country.
The second quarter of 2023 stands out as the best quarter in a year and a half, with the FMCG industry achieving a remarkable value growth of 12.2%.
This growth is 2% higher than the preceding quarter and 1.3% higher than the corresponding period last year.
According to NIQ’s Q2 2023 FMCG Snapshot, the industry’s growth is attributed to increased consumption as inflationary rates ease, coupled with a reduction in price hikes.
The decline in overall price growth has positively impacted consumers, particularly in the food categories, a trend expected to continue into the festive season.
Both rural and urban markets are witnessing positive growth trends.
Rural growth, though staggered, reached a 4% growth rate compared to the previous year, while urban markets doubled their growth from 5.3% in Q1 of 2023 to 10.2% in Q2.
The Retail Space
Examining the retail space, modern trade sustained double-digit consumption growth at 21.2%, while traditional trade showed improvement from 1.9% in the first quarter to 6.2% in Q2 of 2023.
This growth is propelled by unit growth across urban, rural, modern trade, and traditional trade, with smaller pack sizes playing a significant role.
Despite an upward trend in average pack size growth, it remains negative across markets, except for urban markets – hence, brands that offer the right assortment and pack sizes for their products would have better response.
The Consumption Trend
Food categories remain a driving force in consumption growth for all of India, reaching a rate of 8.5% compared to a year ago, up from 4.3% in the first quarter of 2023.
Staples and impulse categories are leading the overall growth in the food sector, with consumers returning to habit-forming categories in cities and metros.
Non-food categories also exhibited improved consumption growth at a rate of 5.4% in Q2 2023 compared to a year ago (up from 0.2% in Q1 2023).
This improvement is attributed to rural consumption, which grew by 1.4% in Q2 2023 (up from -3.9% in Q1 2023).
Home care categories drove this growth, while personal care experienced a decline in rural markets. In urban markets, non-food consumption growth reached 8.9% in Q2 2023.
At the FMCG level, on the whole, small manufacturers are steering both value and volume growth, particularly in rural markets.
However, in urban markets, volume growth is comparable for both large and small manufacturers.
Small manufacturers are outpacing their larger counterparts in non-food categories, while large players are propelling consumption growth in the food sector.
With both urban and rural markets showing positive growth indicators and a decline in India’s inflationary rate, it is anticipated to bring more positive momentum going forward.
Consumers are gaining confidence in their spending; however, as opportunities unfold, it is crucial for brands to rely on trusted data and implement optimized strategies for sustained growth.
The Last Bit, India’s FMCG industry witnessed a remarkable transformation in the second quarter of 2023, with ITC emerging as the leading player in the food sector.
Surpassing competitors such as Adani Wilmar, Britannia, and Parle Products, ITC’s strategic manoeuvres, including capitalizing on favourable market trends, helming shifts in commodity prices, and maintaining a diversified product portfolio, played vital roles in this triumph.
As a whole, the industry experienced a surge in consumption, with rural and urban markets contributing to the overall growth.
The quarter’s positive momentum, reflected in a 12.2% value growth for the FMCG sector, positions the industry for a promising start in the first quarter of 2024.
As consumers regain confidence in spending, brands are urged to leverage data-driven strategies for sustained growth in this dynamic and competitive market.