Exclusive: Pitch BrandTalk– Rohit Dogra, Chief Executive Officer - Matches & Agarbatti Division, ITC

[music] >> Hello and welcome to Pitch Brand Talk. I'm Sunil Subramaniam. I have with me today Mr. Rohit Gupta. He's the CEO of Matches and Agarbatti Division at ITC. Rohit, hi. >> Hello. >> Rohit, it's been a year since you took over and I had the opportunity to interview your predecessor before you took over, Gaurav. And the statement what he told me and what's uh what really stayed with me was that ITC Mangaldeep is the largest agarbatti brand in the country by volume by volume, sorry, and number two by value. How has that changed a year on? What's been the growth like? >> Uh so we're growing almost double uh as compared to the industry. We're maintaining that track. Uh so we've gained shares. Uh we still are the largest brand by volume. Um we are also now the largest brand by value. >> Okay. >> And um and therefore uh the trajectory which was there, it continues. Whatever we had put out in terms of our big bets, they are working fine. And uh whether it is from a premium portfolio perspective or our popular portfolio, all of those are growing very, very well. And uh we are now growing our presence across formats, across fragrance types. So the story has been good. Uh we've kept the pace. It'll continue. >> In terms of your growth in terms of percentage, if you could share something, what are we looking at in the growth of the overall market and the growth that ITC has seen? >> So the market typically grows at about uh 8 to 9%. Uh that's what the value growth has been. Uh uh we see our growth in terms of value to about uh 16, 17%. So that's what we've uh maintained. Um in terms of volume, uh we had a volumes we have had a different pace of growth. We've grown volumes as well ahead of the industry. So, that's the ballpark that's the number. And from a volume as well as volume value as well as volume perspective, we have kept pace in terms of growth. >> You've been a lifter at ITC and you've moved across all the verticals, beat tobacco, foods, and now at agarbatti. So, any learnings that you have gotten from the other category which you've been implemented in this category because at the end of the day, agarbatti in India is associated with spirituality and prayer, right? So, anything that you've been able to get in from the other categories here? >> I think from an FMCG perspective, the the toolkit remains almost similar. >> Similar. >> Uh, there are category nuances, there are category truths, uh, there are discovery of how the consumers interact with the category, why they buy. Uh, there are consumer entry points which have to be discovered and therefore your offers and portfolios crafted accordingly. The toolkit remains the same. So, it's not as if that I will have a learning in one part of the business that I will be able to deploy here very very differentially. We have a 5-year business plan. And there is no discovery which happens every year because we have a continuous plan which is in deployment. Uh, there are interesting things which are happening in other categories in terms of premiumization. That was happening in agarbatti as well and we had this business also had been started that initiative ahead of the industry and that's which is really giving us dividends. Uh, similarly in terms of channel, in terms of your channel deployment, similar experiences in other categories as well which we have also kept pace with. So, just to put it in a nutshell, was there something different that I was able to do here as compared to what I was doing in the other categories? Well, there are certain channel specific objectives which I've been able to drive a little differently, but as I said, we have a five-year plan. We do that very comprehensively and we cover all the points and all the learnings which are coming in the other categories are also given to this business on an ongoing basis. >> Now, you know, you mentioned that there were some bets which have paid off over the last years which you ITC have taken, premium being one of them. So, could you please just elaborate on that? And also now you mentioned, you know, about the channel changes that you have made in kind of redistribution of the channel. Could you just kind of elaborate on that? >> So, e-commerce and quick commerce are key opportunities which are there for the entire industry. While it was very very nascent a few years ago, I think it's it's it's become very very substantial. We are market leaders in e-commerce. And quick commerce as well. And all the major platforms we have commanding shares. What we've seen is that premium has been the first, you know, portfolio which really has been addressed very well by these channels. Because they address a certain type of consumer and mainly they started off being very very urban. Their focus was on urban markets and there was a certain type of consumer who was looking out for specific offers. I think they've done that very well in terms of creating that reach. We have been able to write that reach with our premium products and that has made the difference of from the premium perspective. In terms of what we've been able to do over the last one year is build upon that trend. Build upon the initial work which is there, create more and more offers for the premium consumers. Uh that is giving a that is giving So, what happens is that when a certain channel really goes fast, the overall portfolio mix changes. Uh it changes the uh the uh profile and the whether whether it's the uh you know, profitability pool, whether it's investments, it changes the profile of the uh focus of the business really. So, I think we have been able to do that well and uh that's the difference over the last year that uh we are seeing. But, that's also led by the uh the growth in these channels. Now, having said that, uh even e-commerce and quick commerce are becoming more uh addressing a larger market. So, they are looking at a larger portfolio themselves because in terms of now they are pretty much uh well distributed, they are increasing their reach across the country, going to smaller towns as well. So, we see that now that uh not only premium, there are other offers which are beginning to work from those platform perspective. So, that's Yeah. >> Price points. >> across price points. >> Now, I just want to take this question further and come to your marketing spends, right? How has that been evolved? A lot of money is now going being diverted from or rather redistributed towards digital and e-commerce, quick commerce platform? [clears throat] And what is the role of traditional media then to you? >> Uh first point is that the days of one tentpole communication and one large campaign, those are over. Um uh but there is a rule that for especially agarbattis a very widely penetrated and distributed category. This category has almost 95% penetration uh at an annual level into household. So therefore the role of mass media cannot be negated. >> Correct. >> So what we do now is a good mix of mass media and exploitation or working on the digital platforms. Now it helps us one is in terms of reaching out to the right consumer. In terms of being able to target the right consumer. It's very interesting because it's a multitude of smaller opportunities of reaching your consumer. And what you find is as per the cohort different parts of the media mix works. And that is exactly what we're doing. It's a good mix that we're deploying. So traditional media is there. We do use TV. That's scale. And there are markets where our deployment is quite intensive so far as mass media is concerned. But we supplement that and digital is increasingly becoming a large part of our spend and our clay. And this is not only from marketing from a top level perspective but also from the commerce channels which is on the platforms, on quick commerce platforms. There is because in themselves they are from discovery to purchase. I mean they are channels which fulfill all the parts of the consumer's journey. We find that we are doing a lot of work on those platforms and spending on those platforms as well. >> But if you were to just say like right now say so it's a 40% is going towards digital, 30 towards TV. Is there a way you could just give me an idea about that? >> I would because in terms of when you talk about I would rather break it down by portfolio. So if you talk about portfolio in premium a large chunk of it will be digital. If you were to talk about our mass brands, which are very widely penetrated the large mass brands which are for example Anushri. Uh the most of the spending will be going in mass communication. And so it's a mix which is there. As they say horses for courses, here we will decide basis of the objective what media mixes to be taken. We will also decide basis of a certain city into portfolio. >> Okay. >> What is the mix of media that we'll take, whether it's digital, connected TVs, and your mass communication, print, press, and everything. So it's it's it's it's a nuanced answer. I can't give you a specific number. >> Now even if I were to look at your overall portfolio, if you could just explain to me is mass that continues to be the largest uh uh is in terms of value, is it the largest driver of is the largest uh or is it the premium? Premium would definitely be the largest driver of growth in terms of percentage, but in terms of volume is mass still the biggest driver? >> Mass is still the biggest driver. Uh even in mass there is a lot of interesting things happening in this category. Uh there is a lot of innovation coming into mass as well as mid popular as we call it, popular and mid popular. There is a lot of work which is getting done by us as well as competition in that specific area. Uh yes, premium is over indexed in growth in terms of growth by you can say 4x, 5x in terms of what the growth is of the overall industry. But the critical mass of this industry, which is popular segment and uh the mid popular segment, they're also growing at a very decent clip. >> I just want to confirm the size of the market. The agarbatti market is estimated as we were speaking earlier is 1.4 billion and as per estimates it's supposed to reach 2.2 billion by 2024 and uh the matchbox category is around 300 to 350 million, right? How much of this is still unorganized? >> Mhm, see it depends on state-by-state. It is there is a lot of variation in the unorganized versus >> South will be more organized. >> Correct and more consolidated. The urban markets are more organized, more consolidated. But ballpark figure around 30 to 40% is still unorganized at the national level. 30 35% you can take as an index. Um and in terms of the large national players, the consolidation is different by different markets. As I said, yeah. >> The one reason about the unorganized sector which I would like wanted to ask you is last month there was a notification put out against you know which called for which said that mosquito repellent agarbattis were seen as a health hazard. And then in December of last year the Bureau of Indian Standards uh they had you know come out with new standards for safer product and responsible practices and sustainability as far as this industry is concerned. This is a new initiative taken by the government and BIS. So what are your thoughts on that and what is ITC Mangal Deep doing on this front? >> See I would separate out these two. The on the mosquito batti which are regulated under specific regulations, we are not part of that. We do not have uh the battis which have chemicals which have mosquito repellency and are synthetic or chemical. Um I just as a comment I think it's a good step to regulate that because there in that industry also, which is different from our industry. There are a lot of local players who might not be accessing the right ingredients. But, that is nothing to do with the agarbatti and the incense industry. The agarbatti and incense industry, which is on devotional puja, >> Correct. >> those needs are fragrances, which are traditional fragrances. Largely, there is no issue in terms of the health hazard or what you claim from the mosquito battis and which is there. Uh BIS put up uh it's very welcome step that we BIS taken in terms of uh giving the industry standards. Uh ITC has been following that standards earlier on as well. We have applied those standards to ourselves before this our fragrances in terms of their compliances. Uh when the BIS standards came up, uh we welcomed them and we will ensure that everything in our value chain, while it is already conforming, we will go for certification of BIS and that will be an encouragement to the rest of the industry as well. Uh so, these are welcome standards. Um there are good provisions in terms of from a consumer point of view, giving the best quality to the consumer. I think these are great and we should be as an industry working towards delivering BIS standards. Uh what is envisaged in that into our packaging and into our products. >> Just a while on the matchbox category, where price point has been a big challenge and this is probably one of the few industries which has not seen price points rise since I think the turn of the century. But, ITC had taken a bet and you doubled the price point from one to two, as well as launched a premium matchbox at the price point of 10 with a nice name also, ITC Mangaldeep Dazzle. Really nice, cool name. And I saw the packaging which was also really cool. So, how is this paid for you, and where do you see this industry evolving? Because the one of the as we talk about spirituality, right? You need to use a matchbox to light it. I don't think so we as Indians would use any other thing other than a matchbox to light your joke or your other buddy. >> Yes. >> So, how are you seeing this industry evolve? >> Uh so, we did not just increase the prices to rupees two. What we are offering in our rupees two is a differentiated consumer experience. Ours are one, the quality of the splints that we put into the matchboxes is of a much superior offer which is there versus the rupee one brands which are there. Secondly, what we do is that we offer longer sticks. >> We appreciate the fact that consumer use it not just for ordinary purposes. Somebody would be using to light a diya. Somebody would be using it to light agarbatti or dhup. Then we have given a longer matchstick. >> Okay. >> Which last longer. Second thing, the important point is that it is carbonized. Which means that the stick does not break. And therefore, what we are offering at rupees two is not just double the number of sticks or it's not just same thing at the rupees two. We are offering better quality. With a with a stick experience which is going to be very different as compared to the end. That is being us a significant amount of dividend. Uh the industry is not growing. But what we find is that we have grown almost it's it's high uh uh I mean, I would say that it is double-digit growth that we are seeing so far as the value-added portfolio is concerned, which is really a great uh uh way to go in the industry. It's Industry is stagnant. We have grown on the rupees two price point with the differentiated offer of home lights. Now, so far as Dazzle is concerned, uh we find that there are interesting consumer feedbacks which are coming in terms of how they use matchsticks. >> Okay. >> And in terms of the urban consumers, where they're looking for differentiation in their experiences. And this is true for all categories. In matches, we tried to understand what that is. And for that, we crafted Dazzle. In fact, hopefully this year you should see a lot of interesting things coming from Dazzle. Uh we should really uh push that. And I think that's a very, very interesting uh space that is there. Niche, but going fast. And uh we are encouraged by the feedback from our uh partners in e-commerce as well. So, Dazzle is a platform that we should build upon in the future. >> And similarly, innovations in the other beauty space? >> The innovations are there. Uh see, innovations are there. Uh this is a primary uh fragrance delivery mechanism. So, there are lots of innovations that we are doing in fragrances, um which is one aspect. Two is in terms of the product format. That is something that we have been working on in terms of giving the uh innovations in terms of the product formats. And also from the point of view of usage. On which occasions you use them? And therefore, there could be consumption occasions like gifting, for example. That is an innovation which we are doing. So, it's not just about the So, their format could be a uh innovation. Your fragrance is an innovation. And occasions of consumption is also an innovation that you could uh how you treat it on the channel, or which channel you go to. Your channel choices and what you do on them could also to innovations. Activation is also an innovation vector for us and that is something that we keep on trying to do something different uh where we can get a more relevant and meaningful consumer engagement and that is also a point of innovation for us when it comes to our consumers. >> I'll just come back to the activation but let's talk about sense, right? Your sub-brand sense. How is that doing because that with that you also enter into a new space which combines spirituality, meditation but you're bringing in global fragrances into India. So, how has that fared and plans for that? >> Uh so, it is something that we are highly focused on. Uh it is uh doing very handsome uh much higher than the rest of the portfolio. Uh it gives us uh we had a belief that consumers are looking out for a perfumistic different kind of experiences and that has been uh we are very encouraged by the consumer response to the same insight that we had and it's uh growing uh at a very very fast clip. Um I think the uh if I were to put a number to the overall consumer spends uh on this category, we should be upwards of 160 170 crores only on this. >> Okay. >> And uh and that is something that is growing very very fast. Uh we are continuing to uh Uh so, from a mass and from a popular perspective, there is our mainstay is the clean one. Which is a scent three in one which is doing very very well uh in terms of distribution as well as in terms of repeat from a consumer purchase point of view. Uh we've taken this to our premium offerings as well in scent cones and sticks which are there deployed very successfully so far as quick commerce is concerned and e-commerce. Uh we shall be working in terms of broadbasing this portfolio. Uh I think our uh our brand tagline Dil Se Karo Baat Bhagwan Ke Saath, and which brings in that you know, bit of individuality in my devotion. I think scent is playing that role for us in making that real for the Indian consumers. And Indian consumers are evolving, and that's one bit which is which is encouraging us, and we've kept pace with the Indian consumers through the scent portfolio. >> Aroma Aroma therapy is >> Not there exactly, but yes, from a different experience altogether, scent does it for you. >> So, taking that talking about experience further, 45 years back we had while we had the Kumbh Mela and the Jagannath Puri, brands were not really involved as involved as what we have seen in the last 5 years, right? The number of brands on ground engaging and activations has kind of really increased manifold. In fact, ITC Mangal Deep also won a Gold Effie recently in the category ITC Mangal Deep Ka Mahakumbh campaign where you won it for brand experience. Now, we were speaking on experience, what How do you see the importance of experience and spirituality, and how are you working to build on it? Because I would not, you know, 10 years back also, I would not see this category as a category which is around built around experience. So, how are you going about building it? >> Uh So, see experience because it's a it's a uh experience of fragrance, and therefore, if you were to really, you know, do justice to that as as a as a entity which brings these offers to the consumers. Um, moving beyond traditional, moving beyond the normal rose, mogra, and so on and so forth, into the other territories that we've gone into, and there we are seeing a lot of success. I think experience is a key part, and therefore, that has been the key learning that has been there with us. If we continuously work on consumer experience, how we can improve that, I think we are on the right path as a business. Uh now, coming to these large festivals which are there, these are the I mean, that's the ultimate manifestation of your, you know, devotion that you make the journey. These are mass gatherings. I mean, the way India turns up for these mass gatherings, there is a lot of devotion, and there's a lot of, you know, you are committed to that. Creates that environment where if you have a meaningful idea, the engagement can be of a very different nature. Our objective has always been that it's not just about participation, it's also about how we can create meaning behind that engagement. So, whether it was Kumbh Mela this year, we did the Deepotsav in Ayodhya. >> Okay. >> Our objective is not to just, you know, put up our brand merchandising and all of that. We actually make it relevant. So, the idea was that if you're not in Kumbh, if you're not in Deepotsav, what can you do to be a part of that? And that is something that we understood that there are a whole lot of people who might not be able to go there for whatever reason. But how can you make it accessible? Which is what we did, and therefore, that created that engagement. Obviously, we did a lot of activation in the locations as well to create engagement. That works from creating that brand trust, from creating that, you know, that Mangaldeep stands for devotion. It just helps us reinforce that point in a very culturally context is something very from a brand standing point of view, it works for us in long term. >> Uh what are your plans for the festival season? How are you looking at it? >> So, we have specific offers coming up this season. Uh there are lots of interesting things that the consumers will be seeing. Uh apart from that, we have a very large trade activation which has already been deployed, uh which will see um us take the distribution forward for our portfolio. Um you know, it's always higher, stronger, and better, so we try to do that, and so that that is already in play. Uh in terms of our activations, we have activation ideas so far as this festive season is concerned, which will again uh be brought to bear. And apart from that, with our channel partners, we have specific plans how do we make it big this season. >> Finally, you know, I saw your last campaign, which was six cents campaign, and this is one of the This campaign actually, when I saw it, it brought a smile to my face, which is something which I can't say about a lot of ad campaigns, where you are kind of highlighted the message of, you know, the visually impaired, and how important they are part of your fragrance testing team. Now, I just What was the genesis of this campaign, and uh this I just also want to understand is it part of your marketing initiative, a CSR initiative, and how do you see such initiatives also helping you build brand ITC Mangaldeep? >> Uh for us, it's a a CSR initiative. It It is It's an idea which came about in '21, 2021, when we started. Uh a lot of people only see impairment, but we saw an opportunity there in terms of being able to tap into uh uh capabilities which are often extraordinary nature. >> Correct. >> And that's what the film is actually about. >> Correct. >> We use the lens of friendship to and a simple discovery of that uh you know what we call as a superpower internally, which is being able to discern and I think it's a So, where you see impairment, we see an opportunity to use a capability which is of a different nature. Now, that has uh what we wanted to show was that since 2021, that has been the mainstay in terms of our being able to offer newer better and winning fragrances to the Indian consumers. The the film was just to tell that story that you know, we felt it is a compelling story that we want to share with the Indian consumers. Uh where these 200 Now, there are about 200 of these evaluators who are there with us. These uh folk are really making the difference for us in the market. It's It's something to inspire everybody else as well that if you do this I mean, go beyond and look for interesting capabilities which are there. You might find a new vector of innovation, which we have in six sense. And that has worked very well for us in in terms of being a part of the business. In terms of giving us insights on a regular basis. Uh discovery of new things which is there, being there to evaluate, you know, uh how we stand versus competition, what new we are offering, whether it works or not. I think it's been a key capability that we've built over the last few years. Uh while it is from a CSR perspective, but for us it is giving value of a different nature. So, far as the business is concerned, we just wanted to share that story. >> One last question because you just said competition. Um one of your competitors, big competitors, they've been very aggressive when it comes to marketing and they've also gone in the uh sports direction. They've had the former MS Dhoni as their ambassador. They've tied up with an IPL team also and sponsors for some of the cricket tournaments. Would you also be looking at that kind of route? Not just not talking cricket, I'm talking about sports sponsorship overall or any big ticket say sponsorship on TV, OTT, such anything like that? >> Mangaldeep has a certain set of consumers. We have a certain we believe that we are who we connect to and how we connect with them. Our audiences are obviously while this is the overall incense industry, Mangaldeep also caters to a certain audience. Certain type of people like Mangaldeep for whatever it offers and there is a profile of consumers which we cater to. We typically do our associations. We typically work in terms of sponsorships or whether it is media presence. Looking at those guys in mind in terms of who are we catering to and therefore how do we build this brand? We have an an insight and there is a certain direction that we want the brand to take. There is a direction that the competitor that you were spoke speaking about has taken. We find that our activations, our associations are of a different nature because of the brand that we are. So we don't rule out anything. I mean from a reach perspective, from you know, connect with the consumer. Our objective is always to be contextually to find the best connect. Our brand is about Dil Se Karo Baat Bhagwan Ke Saath. We are about being a partner in your spiritual journey. being a partner in your spiritual journey. We are being a part of your prayer. >> Thank you Rohit for your time with >> Thank you. Thank you so much.