ITC may gain from its strategy to boost food portfolio

ITC Ltd., with a renewed focus on packaged foods' business is using novel sales strategies to boost profits. ITC will now be launching new relevant products in particular areas (town, state or community). The products in the mass market segment with potential to grow nationwide over time,will be first tested in local markets. Company aims to identify popular mass segment products that are available only in select markets. Once the product clicks in a particular market , ITC will attempt a nationwide presence for the same product. The products that are initially launched in local areas could well become large revenue contributors in the long run.

This exercise may work as the company will launch the product nationwide only when it clicks in a particular market. This could be a gem of a strategy as the company will not be developing a product from scratch and then trying to sell it nationwide with obvious risks of not being liked or accepted.

Another key shift in strategy for the company will be to launch several premium food products targeting Euro Zone markets. These products will have to meet the European Union's (EU's) standards in the health and wellness category. This move may add to profitability of the company depending upon the execution of strategy. In another fresh move the company may enter the fruits and vegetables segment for which a team has already been hired, according to media reports.

ITC has been attempting to cut its dependence on cigarettes and hence has been focusing on packaged foods' business for new growth opportunities.

ITC is trading firm on Friday inching up by almost 1.45 per cent at Rs. 359.85 per share on an intra-day basis. Over a 1 year period the stock is up by almost 21 per cent. 

Broader market Sensex is up by almost 96 points at 26623 at the time of filing this report.