ITC chalks out strategy to scale up packaging businessThe Economic Times
Apr 08, 2009
WITH packaging increasingly lending character and personality to a brand, ITC Ltd has chalked out a three-pronged strategy to scale up its packaging business. The company proposes to explore innovations and technologies to cater to the distinctive and innovative packaging requirements of the country’s branded packaged foods and personal care segments.
As FMCG products get more and more branded and aspire to become a brand from a mere commodity, packaging will connote more than just a secure receptacle and convenient container. It will convey brand character, personality and contain a wealth of information about the brand, its size, contents and ingredients. It will also help differentiate a product from the others in the same category. Besides embracing foods, personal care items, matchboxes, agarbattis to lifestyle retailing products, packaging is significant even in case of consumer durable and mobile phone industries.
When contacted by ET, ITC Ltd’s corporate management committee member R Srinivasan said: “To cash in on the growing opportunity, ITC’s packaging business has diversified into flexibles and backward integrated into the manufacture of LDPE (low density polyethylene), CPP (cast polypropylene) and extruded poly. The company is also investing in new lines for microfluting and shoulder boxes in a green factory run on renewable wind energy.”
At present, India’s packaging industry across all materials is estimated at Rs 20,000 crore.
ITC’s paperboards, speciality papers & packaging divisions, which collectively contribute about 15% to its total turnover, have innovated packaging in several ways. At the paperboard stage, it is done through ECF pulping, ozone bleaching and sustainable forestry. At the printing stage, it is carried out with striking design combinations and decorative effects and at the packaging stage, the work is completed through innovative styles, formats, shapes, micro-flutes and shoulder boxes.
Elaborating, Mr Srinivasan said: “Our divisions are constantly adopting new technologies. Investments in R&D at the plantations stage have reduced gestation to four years from seven years. This gestation is targeted to reduce further with some excellent scientists and agronomists at work.”
“Slow and steady movement to greater product awareness, branding and better retailing formats follows an evolution from ‘loose’ product sales to branded & packaged products with greater information to consumers about choices, ingredients and precautions. Customers today demand variety and change — sometimes desiring uniformity, sometimes dazzling variety, utilitarian, convenience, or even dual usage etc. All this drives changes in packaging, materials, colours, decorative effects, formats, shapes and sizes,” he added
We are moving in the direction of owning more hotels’ Financial Express
Apr 11, 2009
The turmoil in the global economy has hit the hospitality industry hard. Despite being impacted by the slowdown, ITC’s mid-market brand of hotels, the Fortune chain, is growing as consumers are downgrading from luxury brands. Fortune Park Hotels is on an expansion mode and could also opt to own properties rather than just managing them, says Pawan Verma, senior executive vice-president, hotels, ITC Ltd, in conversation with Surabhi Agarwal of The Financial Express. Excerpts:
Where does the Fortune chain of hotels fit in the hotels division of ITC?
Each segment has its own dynamics. Fortune is primarily a mid-sized brand, and caters to the up-scale and the upper scale segment. Fortune is not competing with luxury brands in our portfolio.
How is this segment performing vis-a-vis your other brands, considering the tough market conditions?
It hasn’t performed as per our expectations, but is doing well. Everybody has suffered due to the downturn. The consumer is downgrading from luxury hotels as they are looking at cheaper options. We see it as an opportunity to grow the Fortune brand.
What has been the impact of the downturn on this segment, as compared to your other brands?
It is very difficult to put a number to it. All I can say is this segment’s revenues and occupancy are still growing, whereas the luxury brands are showing de-growth. The average occupancy at Fortune is around 60%. On the other hand, the luxury brands should have done around 80%, but are finishing at around 55%.
Since the consumer is downgrading, have you seen a shift from your luxury brands to Fortune?
There is a general shift in the market to lower-priced hotels and it is not necessarily from our own brands. But, yes, there is shift as people are downgrading.
Given the changing market dynamics, is there more focus on expansion of the Fortune chain?
With the launch of the Fortune Inn Grazia Hotel in Noida on April 10, we have 26 operating hotels. There are another 26 hotels that are in various stages of development and should be ready in two years. So, by 2011, we will have 52 operating hotels. At the same time, there are new hotels being signed.
However, if we come across a company that has 20 hotels, we will be open to buying it. By 2012-13, we are aiming to have around 100 hotels. That is the long-term vision. In the next two months, we are opening four more hotels and at least two more hotels will come up before the year end--in Goa and Hyderabad.
How keen are you on owning properties instead of managing them?
There are one-two properties that are already with us as they are legacy properties. But, we are looking at more properties. The funds will be provided by ITC. Initially, we will see how the prototype works. We are taking a long-term view. Good times will come, and so will bad times. We have seen bad times in the past also; so, this is not the first for us. It is a passing phase.
Owning a hotel means more profitability. Will this be the way forward for you?
You never know. We would also like to own the topline; right now we only get a service fee. But, there is a risk and reward to it. We are keen on owning properties and we are moving in that direction.