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Rural Demand Growing Faster Than Urban For ITC, Says Sanjiv Puri

Demand for discretionary products like deodorants and confectionaries has started to revive but is still soft, Sanjiv Puri says.

ITC Chairman Sanjiv Puri. (Photo: BloombergQuint)
ITC Chairman Sanjiv Puri. (Photo: BloombergQuint)

Rural consumption has exceeded demand from urban areas for ITC Ltd. as the pandemic disrupted economic activity.

Demand for convenience goods—like ready-to-cook and ready-to-eat foods, and hygiene and health products—rose during the coronavirus lockdown, and ITC expects it to taper off post the pandemic, Sanjiv Puri, chairman of ITC, told reporters at a press conference on Monday. "But it will still settle at elevated levels."

Consumers are opting for larger packs as they want to reduce the number of times they venture out of the house to buy groceries, while demand for smaller packs continues to gain traction in rural parts of the country, he said.

At ITC's annual general meeting last week, Puri said he expects consumer spending to shrink in the ongoing financial year as the economic disruptions caused by the Covid-19 pandemic hit livelihoods across India. Asia's third-largest economy contracted the most among large peers in the quarter ended June, and GDP is likely to see an annual contraction for the first time in decades.

Demand, however, is likely to improve in the upcoming festive season as consumers may opt for more packaged foods—chocolates, desserts, specific biscuits, etc.—compared with earlier years, Puri said. Demand for discretionary products like deodorants and confectionaries has also started to revive but is still soft, he said.

The maker of Aashirvaad atta now sees contribution of e-commerce to its revenue at 4.2% compared to 2.3% last year as online sales spiked during the pandemic. ITC had tied up with companies such as Domino’s Pizza, Swiggy, Zomato and Dunzo for delivery.

On lifestyle retailing business, Puri said it has not scaled up in line with expectations, and ITC has restructured the business. Very few stores are open at present and the company does not have any plans to expand it. There is be a possibility that this business could shrink further, he said.

On Monday, ITC shares roser 1.42% to Rs 189.30 apiece on the BSE while the Sensex ended the day 0.16% higher at 38,417.23 points.