One area that ITC can be do very well but it has not yet came to limelight: Spices
We all know ITC paid about 2100 Cr to takeover Sunrise brands which mainly caters to eastern India. I was a little disappointed with packaging and lack of marketing efforts.
Introduction to Indian Spice Market:
Not surprisingly Indian spice market is one of the biggest in the world. Currently valued at a market size of 65,000 Cr. It was projected that market size will reach 1 Lakh Crore by the year 2025. But this market size is very fragmented and dominated by the regional players. Out of this only 24 % belong to organised sector and rest are smaller regional players. But organised sector has been capturing markets pretty fast after double blow of DeMO, GST and recently covid related stress. Due to this organised sector is set to capture 50 % market size by 2025 thats is almost 50,000 Cr.
Why this market is attractive
This is a high margin business. Ordinaly simple spice has about 30-35 % gross margins while blended spice ( like biriyani masala for example ) has 45-50 % gross margins. Simply by mixing few in correct ratios margins are improved by 20 %.
Who are the dominant players
Only a handful of players dominate organised sectors but only few have true pan Indian presence.
Everest 15 %
MDH 10 %
Sakthi 8 %
Aachi 6 %
Eastern 4 %
Only Everest and MDH had pan india presence and others are trying to expand. Recently MTR took over Eastern. There were articles saying HUL is interested in taking over MDH. I feel ITC can get some market share if they play it well.
To my surprise ( probably I didnt read AR fully last year ), ITC is building a new state-of-the-art spices facility to cater the domestic and international markets. Export markets are pretty attractive as more and more Indian families are living abroad and world is also interested in eating different cuisine.
This was mentioned in 2021 Annual Report its built in Guntur. I did some small search to see the status of this.
On Jan 2021
On Mar 2022
This is the proposed facility
As with ITC philosophy this will be a fully backwards integrated facility with storage capacity. Looks like the facility is close to commissioning. I hope they will do enough marketing, good attractive packaging to gain customers.