Sunfeast foray into Biscuits

Major players in biscuits who dominated the industry long back were Parle and Britannia. With
that there were smaller brands in various regions. Instead of all this ITC took a bold step to hit on
these biscuit mammoths making 82% of industry (in 2004)

Now the important question at hand is the reason why ITC entered into this product category. Let
me enumerate some reason:

1. Food segment is Rs. 550,000 crores (112 b$)

2. 6% is FMCG (Branded and packaged) – Rs. 33000 crores
3. In developing markets, the above percentage is as high as 95%. So looking into future,
India’s will have more organized and branded food product categories. It will lead to dual
effect: Increase in base of biscuit segment and Increase in % of branded food categories
4. ITC has a great scope to be a branded player
5. Branded Biscuits industry come out to be around Rs. 4000 crores
6. Increasing at the rate of 12 to 14% yoy
7. Synergies with ITC core competencies (value addition to wheat with Aashirwad Atta
brand)
8. Biscuits as a segment positively effects the bottom line

Threats for ITC: Behemoths like HLL tried their hand in this segment but unsuccessful (Max
brand exit in 2005)

Reason for Entry into Biscuits

1. Innovation: Research revealed that the category had gaps which ITC could settle into.
Findings revealed that consumers wished to taste new and innovative products. That was
precisely what the competition had not done in a big way. Glucose was Glucose and same
is the case with Marie. The company decided that this could be its biggest point of attack.
In 2003, ITC launched Sunfeast with six ranges. But it was a calculated risk. ITC stuck to
category favourites like Glucose, Marie and Bourbon cream. Along with that, it also
launched innovations such as orange-flavoured Marie, Marie light and butterscotch-
flavoured cream biscuits. In 2004, Sunfeast followed this up with the launch of Sunfeast
Milky Magic. More recently, it also has launched the Sunfeast Snacky and Sunfeast
Golden Bakes. The biscuits industry had not witnessed any major product innovation in
years. Consumers were just waiting for something new, something fresh, when Sunfeast
happened
2. Distribution: Distribution is the key for FMCG products. In biscuit category, distribution
and visibility is extremely important as it's partly an impulse purchase product. Priya
Gold, which entered the western region in 2000, is struggling to find its feet even five
years later. However, in this regard, Sunfeast did not stumble. The main credit goes
tobacco business – its understanding and deep grasp in distribution. But it was not limited
to just panwaris, but looked at the grocery stores and other retail formats. The company
says the brand is now available in nearly 1.8 million outlets. Britannia claims it has a
superior distribution clout with its presence in nearly 3.3 million outlets. Parle, the
 seasoned player itself, says it is available in 1.5 million outlets. Sunfeast's next step was
to step up its branding and promotion
3. Promotion: In August 2003, a month after its launch, the company undertook a major
sampling exercise to promote the product. For two years then, the brand did all the usual
rounds - riding behind buses, blocking television spots, corner space in newspapers P
4. Pricing: The biscuits industry now has two clear models. Parle products plays the low
price game at all varieties of biscuits from glucose to cream. Parle plays a high volume,
low margin game. But Britannia and Sunfeast look at a two-pronged strategy. High
margins in cream variants and volumes from the Marie and Glucose segments. For
instance, cream biscuits from both Britannia and Sunfeast cost Rs 10 for 100 grams.
Parle, however, only charges Rs 5 for its cream variants. Except for Hide & Seek, all of
Parle's products lie in the price range between Rs 4 and Rs 6 for 100 gram packs. Biscuit
consumer is willing to pay more only when he sees a clearly differentiated product.
Hence companies have little choice in terms of pricing. No wonder all the Glucose and
Marie variants straddle price points of Rs 4-6 (for 100 grams)

Results
1. Volumes: In March 2006

• Britannia's shares have dropped from 35.8 per cent in 2004-05 to 30.5 per cent in May
2006
• Parle's shares have also dropped from 42.2 to 38.4 per cent in the same period
• Priya Gold has seen a minor dip from 6.4 per cent to 5 per cent
• ITC's Sunfeast has been a big gainer with its share increasing from 2.7 to 6.7 per cent

2. Value

• Britannia leads the market with 37 per cent market share

• Parle's 31.3 per cent
• ITC's 6.3 per cent

Definately a long journey for ITC. Lets wait and watch ITC reaching the peak in next set
of years.
 Padma Bhushan for Y C Deveshwar
25 Jan 2011
Y C Deveshwar, Chairman ITC Ltd has been conferred the Padma Bhushan, one of the most prestigious
awards of the Government of India. Mr Deveshwar who became Chairman in 1996 has led ITC to become
one of India’s front ranking and most valuable enterprises. His vision and inspiring leadership has not only
transformed ITC into a diversified multi-business Indian conglomerate but more importantly, into an
organisation with a deep commitment to national priorities of sustainable and inclusive growth. His invaluable
contribution in creating pioneering business models have created sustainable livelihoods for millions of
people, particularly in rural India, and among those who represent the weakest sections of society.

Educated at the Indian Institute of Technology, Delhi, Mr Deveshwar started his career with ITC in 1968, was
inducted to the Board at an early age of 37 and rose to be its current Chairman of the Board in 1996. During
this journey, he was also invited by the Government of India to head Air India as its Chairman and Managing
Director, a tenure that is also highly acknowledged.

Deeply convinced that corporates must look beyond the singular purpose of creating shareholder value alone,
Mr Deveshwar has passionately promoted the imperative need to contribute to the Triple Bottom Line
objectives of creating economic, environmental and social capital for the nation. It is this abiding vision that
has led ITC to become today the only company in the world to be carbon positive, water positive and
waste recycling positive with its businesses contributing to creating more than 5 million sustainable
livelihoods.

A significant contribution to the agrarian economy that Mr. Deveshwar has spearheaded is through the path
breaking ITC e-Choupal initiative that has today empowered over 4 million farmers in 40,000 villages.
ITC’s e-Choupal initiative is the world’s largest rural digital infrastructure, and is a case study at Harvard
Business School, has won several global awards, and has also been mentioned in the World Development
Report of the World Bank in 2008, and Government of India’s Economic Survey 2007. ITC’s afforestation
programme has greened over 110,000 hectares and has provided over 50 million person days of
employment, empowering poor tribals and marginal farmers.