In these challenging times, ITC is focused on enhancing capacity of essential products and collaborations to meet consumer needs
In the backdrop of the COVID-19 outbreak in India, cigarettes to hospitality company ITC said that the macro-economic environment was challenging as it was marked by deceleration in economic activity, accentuated by a sharp decline in consumption, especially in rural areas.
In these challenging times, ITC is focused on enhancing capacity of essential products and collaborations to meet consumer needs. Like several other FMCG companies, ITC developed direct-to-home distribution models like 'ITC on wheels' and partnerships with food aggregators to boost availability of products.
Having launched over 60 new products during FY20 and several more hygiene products during the lockdown, ITC said that its brands represented annual consumer spends of over Rs 19,700 crore. Its packaged food brands like Aashirvaad clocked Rs 6,000 crore in terms of consumer spends. Brands like Sunfeast clocked over Rs 4,000 crore and Bingo clocked Rs 2,700 crore in terms of consumer spends.
However, with the outbreak of COVID-19, "FMCG industry growth decelerated sharply during the year due to sluggish demand conditions, tight market liquidity and delayed monsoons. Rural growth stood at 0.8 times of urban markets in FY20 compared to 1.4 times in FY19," ITC said in its latest annual report.
The company too faced challenges in its education and stationery products businesses as it coincided with the peak season.
The revival of growth momentum in the FMCG industry is dependent on restoration of normalcy and improvement in consumer sentiment.
While essential items, health and hygiene related products are expected to sustain the recent buoyancy in demand, out-of-home consumption categories are likely to experience a more gradual recovery, said ITC.
Persistent weakness in the demand environment coupled with growth in illicit cigarette trade weighed on performance of the cigarettes business.
All cigarette manufacturing facilities as well as the contract-manufacturers of cigarettes had to shut down operations during the last week of March 2020. However, ITC said that all factories are now operational. The hotels business too faced severe challenges owing to drop in tourism amid the Coronavirus outbreak.
Going forward there are a large number of challenges that the economy continues to face. "There is heightened uncertainty around the timing and shape of the recovery trajectory. The Indian economy is expected to face multi-dimensional challenges like health crises, job losses, labour force displacement, lower productivity," said ITC
There is also likely to be pressure on spending and this could weigh on consumption expenditure in the short to medium-term. "Further measures may be warranted going forward to improve demand, drive consumption and revive the Indian economy," ITC said.