Ru(ra)ling over India?

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From procurement to selling, ITC is spreading its wings across rural India... and is doing it really well too!

“My mother will sell gehun (wheat) and mirchi (red chillies) and will give me some money to buy a Candyman. She has even promised a Shah Rukh Khan wala biscuit to me,” says 13-year-old excited Abhishek, of Tilati village in Hathras district of UP. He eagerly waits for his mother, who has gone to sell her agri-products at Choupal Saagar and would return home with the goodies. But little do Abhishek and 3.5 million other rural children-folk know that they form a vital part of a multi-billion-dollar game plan of an Indian conglomerate called ITC! Yes, Y.C. Deveshwar, the Chairman of ITC Limited is steadily sowing ‘ITC seeds’ in the rural soil and unlike the Ambanis or the Bhartis (who have limited their rural strategies to agri-initiatives), is also working towards ‘creating’ a booming market for its FMCG products. With KPMG claiming that rural Indian market accounts for 56% of total FMCG demand, the tobacco major is moving fast to add 31,000 villages to its market – and all by leveraging its web of 6,000 e-Choupals.

ITC Limited also demonstrated a tremendous 26% growth in revenues in its fourth-quarter 2006-07 results. The company further claimed that its non-cigarette FMCG businesses was one of the key drivers for this growth – happy news for its shareholders who have been suffering some sleepless nights after the policy makers initiated some stringent rules on tobacco-selling. Also, apart from aiding the gullible Indian rural farmers tackle business challenges, this initiative is helping create a strong market for ITC, which can be exploited. An ITC spokesperson disclosed to 4Ps B&M, “e-Choupal helps to sell our FMCG products...” Further explaining the benefits of this model to 4Ps B&M, Sumeet Budhraja, FMCG Analyst, Edelweiss Securities, asserted, “ITC has created a brilliant model for selling FMCG in rural India...” So what’s the strategy behind making this model of operation work? Well, the answer’s simple, and only explains the shrewd strategist that Deveshwar is – the model resorts to roping in the most influential locals in villages (known as Choupal Pradhan, who also heads e-Choupal). Moreover, the ads are also designed keeping in mind the rural milieu. And here’s something most interesting – once you find an ITC product in these villages (which are exploited through the e- Choupal mechanism), you’d find no other FMCG brand in the same shop (phew)! Also, the two products – Sunfeast and Ashirvaad – which today contribute to 60% of ITC’s FMCG business find a place in all its rural shop shelves.

Surely, this is just one way in which ITC is leveraging the rural economy. Considering that 70% of Indians reside in rural parts, this indeed is a brilliant strategy that ITC has conjectured... giving the HLLs and the P&Gs sleepless nights! But is it the most colourful feather from ITC’s think-cap yet?! Sure, there’s more to come... and perhaps all in the name of CSR! But if there’s money to be made, who cares...

Edit Bureau: Angshuman Paul

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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