“Background:

“For a developing country like India Rural Development is not a new topic, many developing
nations have been promoting and practicing rural development for decades and many of them
have achieved significant success when it comes to the field of education, self-employment
generation, health care , poverty eradication and family welfare, farm management and rural
technologies and so on and so forth.”

“The 4th largest sector in the Indian economy is Fast-moving consumer goods (FMCG) sector.
With Household and Personal Care accounting for 50 per cent of FMCG sales in India. Growing
awareness, easier access and changing lifestyles have been the key growth drivers for the sector.
However, in the last few years, the FMCG market has grown at a faster pace in rural India
compared with urban India. Semi-urban and rural segments are growing at a rapid pace and
FMCG products account for 50 per cent of total rural spending.”

ITC and the Hyper local market

“Cigarettes and hotels account for most of the revenue of ITC. These the areas which are
considered to be premium segments and do not suit the rural India segment. We have seen a
trend which clearly states that the rural segment is growing at a rate that is much higher than that
of the urban segment. So it becomes important for a brand like ITC to jump into the hyper-local
or the rural segment.”

“ITC already hold the database related to the food habits and other requirements that the Indian
customers have and if they can apply the same knowledge and further utilize it by breaking it
down using Sociocultural region segmentation for rural India, they would be able to become the
pioneers in the FMCG sector.”

“According to VL Rajesh, divisional chief executive (foods division) of ITC, the company is looking
at every state town for rural products. “We are working on a few. Over a period, we’ll have specific
products for each state. We may even look at products that would only be relevant for a market
covering an area of just a couple of hundred kilometres. Some of these will become large revenue
contributors in the longer term."

Initiatives:

“ITC’s food division , In 2016, launched a product called Punjab da Kinnow. This was a fruit juice
added under the umbrella of the parent brand called BNatural. The kinnow which is a variant of
orange is grown in Punjab. The target market remains Punjab and other parts of north India,
including Delhi. Bnatural, in these areas has a very limited presence.”
“In Andhra Pradesh and Telangana ITC has launched locally popular spices under the brand of
ITC MasterChef. The primary idea behind this is to focus and get accepted in the local market
and in the subsequent stages become an acquired taste and then expand the business to other
areas in the long run.”

“All these initiatives, definitely have opened a way for ITC to increase its presence in rural
markets and provided ITC with a local market. Though we cannot say if it might have helped in
increasing the revenue as such . But have given ITC a way in the rural and previously
unpenetrated market.”