Saturday, December 3, 2011

Liquid




Gaurav Ralhan, Payal Bangar, Sunil Mishra | IIMS

FEELING THE SQUEEZE


'Indian summer' is colloquially used to describe the hottest times of the year but the summer is going to get even hotter with the raging brand war in the non-alcoholic beverages sector. With the trend shifting towards healthier thirst quenchers the non-alcoholic non-carbonated beverages segment is flourishing in India. The global leaders in the carbonated drinks sector are losing the “share of stomach” to the bottled water, juices, energy drinks and Ready to drink teas and coffee. Brands like PepsiCo and Coca Cola look to expand their presence in the non-carbonated beverages segment, which has been growing in the face of lacklustre carbonated drinks sales. The companies are constantly working on widening its product offering to consumers to satisfy their diverse lifestyles and desires. In this cover story we’ll be analysing the non-carbonated packaged beverages sector of India including the juices, packaged milk and mineral water sector. The new health conscious customers are ready to buy premium quality products and thereby providing an opportunity to various Indian and foreign brands to enter the attractive Indian beverages market.

Mineral Water

With the increasing amount of population in the urban areas, more health conscious people, water scarcity and lack of time, bottled water industry is one of the most booming sectors of the country. India is ranked in the top 10 among the largest bottled water consumers of the world. The per capita consumption of bottled water is around 5 litres comparatively lower than the global average of 24 litres. Bottled water industry in India is one of the fastest growing sectors in the food and beverages industry. It is currently worth around Rs. 4000 to Rs. 5000 crore and is growing at an astounding rate of around 40% annually.

According to Cygnus business research of Febuary 2011 there are around 200 bottled water brands in India among which almost 80% are local or regional. At the national level, Bisleri, Parle Agro, Coca Cola and PepsiCo are the major players with players like Tata’s Himalayan Water and Kingfisher are making their presence felt recently. With Rail Neer, Indian Railways is also increasingly becoming a national level competitor.

Bisleri is the market leader in this sector with almost 60% market share. It was one of the first Indian companies to introduce bottled water and thus has gained the first mover’s advantage. It tried to venture into the premium water product “Natural Mountain water” whose plants were set up in states of Uttaranchal and the product was said to be emanated from natural springs of Uttaranchal. But Bisleri has since then discontinued the product and has launched a new product named Vedica Natural Mountain Water. Vedica markets itself as the purest water and compares the chemical properties of various other water sources with it to prove its worthiness. Bisleri has also launched a 12 hour call centre and water helpline to reach customers who want to order water from homes and offices. It also relies upon providing many sized bottles to the consumers so that there is variety in the product. For example, it has specially sized bottles (250 ml) to be used at social and professional meetings and products with special cricket labels trying to cater to the cricket and IPL crazy Indian population.

PepsiCo with its flagship brand Aquafina has the second largest market share at 15 %.It has introduced newer brands like Flavor Splash and Sparkling to catch up to Bisleri though it is still the leader in the southern and eastern section of the country. It has also invested in capacity enhancement, packaging initiatives and below-the-line activities to compete in the market. It is targeting the rural segment of the population with smaller packets priced at Rs. 5.

Coca Cola’s Kinley has recently strengthened their distribution network in order to cater to a larger population as distribution costs is one of the major concerns in the bottled water industry and it consumes most of the bottom line of each of the companies. They repackaged their primary product Kinley and are currently offering the product in easy to hold shape and transparent label. But considering the fact that Bisleri is already available in a large number of packages, it will be difficult for Kinley to market their product through these measures. Parle Agro’s Bailey, another major product in the category has also in for increasing their distribution chain by around 30%. They have also started small packages at Rs. 5 and have increased their number of plants by 35 in the past year alone.

Packaged Milk Products

With so many years after the Operation Flood which saw the country awash in milk, this industry is seeing another revolution in making - the marketing and distribution of packaged plain and flavoured milk. This is one sector which is ready to boil over with the entry of so many players. With so many players in this segment the war is slowly starting to hot up as all in conquest for the bigger share of the same pie. India boasts of the status of being the highest milk producer in the world. With such a strong supply of milk, the surge in the entry by so many players is a pragmatic decision as the supply is backed by the increase in the demand. The demand is substantiated with the rising number of working couples, increase in the number of nuclear families, need for longer shelf life and changing lifestyles. All these factors make the packaged milk segment attractive to the companies.
The dairy products market is estimated at over 1179 billion tons. With so much untapped potential this is one big fat cow waiting to be milked. All the Indian big players like Amul and Gowardhan and even foreign brands from Nestle to Danone are aggressively looking for new strategies to break into the new market that was till now the comfortable stable of regional players.

The ordinary plastic bags started the trend for packaged milk but companies are now shifting to ultra-high temperature packs as they have longer self-life thereby helping the distribution channel in providing the product to far off places hence providing higher profits to the company. The sales of ultra-high temperature pack are increasing in double digits. The positioning of most of the companies is based on promoting the product as a lifestyle product as the trend for health conscious products is increasing. The success mantra for the companies is to give this perishable product a longer shelf life, introduce variety of flavours to make it an anytime drink, generate buzz with creative advertising and increase sales through competitive pricing.

The milk business, which was once considered insignificant, has now become an important source of revenue for many companies in this sector. Nestle has many varieties of packaged milk ranging from plain toned milk to Slim milk for the health conscious people. Nestle also has premium priced Pro-Heart milk with almost zero cholesterol for people trying to keep cholesterol under control.

On the other hand Amul has more to it strategy then just plain milk. With its strong distribution channel and presence across different segments it is using flavours to add muscle to its packaged milk strategy, leveraging the strong brand it has created in the Indian dairy product market. They have unique positioning as the strategy is to promote the product as a thirst quencher, a drink for all times of day. So, Amul Kool was launched in variety of flavours chocolate, coffee and strawberry. With other big players like Verka and Mother Dairy in northern Indian and Gowardhan in western and southern India increasing their presence the tussle between various brands in the packaged milk sector is going to get more aggressive in the days to come.

Milk, a sector which was once an ordinary product dominated by regional players has suddenly developed into a full-fledged brand war with so many players in the market. But the war is not that easy to win. To win the battle for market share in this segment each company has to focus on competitive pricing, health, a longer shelf life and packaging. The packaged milk industry is not matured enough and the transition from ordinary milkman to packaged milk is slowly but steadily taking place. Who will emerge as a leader in this brand war is still a mystery which the time will unfold.

The Juice Market

In this rush hour and growing cocktail culture, when people don’t have enough time to have breakfasts or take care of their health but are still health conscious, non-carbonated beverages like juice come to our rescue. Manufacturers have been experimenting with our taste buds by adding flavours and a tinge of herbs and vitamins to it. This segment of beverage industry has been directed towards the light, healthy and low calorie drinks. The 500 crore fruit juice category is growing at 35%. In this we have a clear demarcation with fruit juices, fruit drinks and nectars.

To begin with Parle Agro expanded its target segment to teenagers, youth and all members in the family extending from the children consumer base of Frooti by introducing nectar drink, Appy. This created multiple occasions for consumption. With Appy the PET stock keeping was introduced and it enjoys the first mover’s advantage in this regard. It also launched an unbranded nimboo paani with the name of LMN to make it catchy sounding like SMS. Close on the heels, tough fight given was by Pepsico’s new entrant Nimbooz. Both had price wars at Rs. 10 for 200 ml. But Parle Agro made it more affordable to consumers by introducing Rs. 5 for 110 ml. Plans of tying up with airline industry still is up on both the companies line up. Saint juice was their third category added with orange, grape and mixed fruit variants by importing the fruits from the finest orchards of the world. There was stiff competition from Pepsico’s Tropicana and Dabur’s Real fruit juice. PepsiCo India and Coca-Cola India both are becoming aggressive in the non-cola drinks with Dabur India Ltd. and Parle Agro fiercely scavenging the multinational competition in fruit juice industry.

This battle was also joined by Del Monte, a Phillipines based food and beverage brand. FieldFresh Foods Ltd. sells Del Monte’s canned juices which started in mango flavour and extended with pineapple, apple and mixed fruit flavours. Flavour being the same, the differentiator they use is aluminium cans instead of tetra packs.
Fruit juices, due to intense competition have been concentrating a lot on packaging. It is this catchy packing which actually differentiates some similar juice brands. Real and Tropicana both lay emphasis on their packaging to make the consumers feel the freshness of the juice packs. Tropicana is more of a youth drink though whereas Real, with natural herbal products, makes sure it gets the health conscious mums have its tetra packs in their refrigerators for their growing children.

Fruit drink category has Parle’s Frooti, Godrej’s Jumpin, Coca-Cola’s Maaza and Pepsi’s Slice as the major brands, though, Frooti is the clear market leader with 85% share. It started the trendy convention of tetra packs in India. The launching strategy of tetra pack has been one of the most attractive ones with a girl called Froo who is good at studies and a guy called Ti who is very naughty who keeps running after Froo to get his homework done. It came out with “5 ka 2” offer(2 packs for Rs. 5). Inspite of being the market leader, the brand has kind of become stagnant, to combat which PET bottles were introduced. Maaza just used the comfortable bottles and its name to draw customers but eventually this strategy could not retain them. Jumpin always struggled for a small share of the pie.

Snapple has been a popular US juice brand since 1972. It changed several brands over the years but managed to maintain its popularity over the years. Despite its strong fan following, Snapple was unable to become a leading beverage brand. It had orangeade, raspberry peach, apple, mango and lemonade flavours covered under its brand. It has an alliance with CCD and has captured the young minds well by making this move.

This juice industry which is growing at a rapid pace is expected to reach sales of around US$ 1150 million by 2015. With such a tremendous rise, the markets growing, the future seems green but the competitors need to play their moves well ahead and keep mixing matching consumers flavours to add colour to the growing industry.

This battle is going to pan out right in front of us and we are sure it will be a closely contested one. Surely, the winners are the customers who are going to be treated with a diverse range of beverages of their choice. There will be some drinks who will make a mark and some who will fade away. The summer is upon us. Let the games begin….

Friday, December 2, 2011

Markathon November 2011




Dear Readers,

Today’s world is cluttered with marketing messages which reach out to us no matter what we are doing. Media impacts us in more ways than we even realise at times. The Socio-cultural impact of Media has only been expounded by the rise of technology. Today, media is more powerful and far reaching than it was a decade or so ago.
Public voices are more prominent in the newer media forms and revolutions have taken shape using these platforms of communication. The scope of these media is wide and since they are immensely powerful, regulation is paramount.

Media and specifically the Press have always served as the Fourth Estate keeping a watchful eye over the functioning of the states. Media regulation has come into the picture because of the growing use of media in an often derogatory manner and also to further ulterior motives. The eternal question remains “Quis custodiet ipsos custodies?” the Latin phrase which translates to “Who will watch the watchmen?”

Our cover story for the month on “Media Regulation” aims to answer just that. We look at some forms of the media, and how they are regulated. The story also charts out how the need arose for such regulations in media and how the regulations differ across the different media platforms right from television to the Internet. The regulations also address false claims which companies make about products in their marketing communications. We hope you enjoy the story.

Our Vartalaap for this month is a tete-a-tete with Mr.Atul Sobti, who gave up a corporate career as the CEO & MD of Ranbaxy Laboratories and ventured into the world of Media. Mr.Atul Sobti founded Friday Gurgaon – weekly newspaper serving up local news for the residents of Gurgaon. We’re grateful to Mr.Sobti for his wonderful interview. Our academic Vartalaap for this month has Mr.Sudhir Voleti who is an Assistant Professor in the Marketing Department at the Indian School of Business. He talks to use about his work in the world of branding and Market Research.
We also have a refreshing article which talks about the sensation of this season “Why This Kolaveri Di”, which is arguably the biggest viral hit ever on Indian Media. The number of views this video has amassed keeps growing exponentially every second.

Team Markathon has dissected its success from a marketing point of view and analysed what the song and the video got right. We are sure you will enjoy this article a lot. Team Markathon is also proud to welcome on board the magazine team for 2011-2013 comprising of G S N Aditya, Piyush Agarwal, Mayur Jain, Sowmya R, Swati Nidiganti and Umang Kulshreshtha. In the design team, we have Priya Agrawal and Rushika Sabnis. We are sure they will ensure the magazine keeps scaling new heights.

Sit back and enjoy this edition!
Jitesh