Parle Agro looks to penetrate home consumption market for LMN

Press Trust of India / New Delhi June 4, 2009, 15:33 IST

Encouraged by the response to its newly launched non-carbonated lemon drink 'LMN', beverages player Parle Agro plan to introduce the product in format of one litre and above to attract the home
consumption market.     

The company, which launched LMN in March this year, is aiming to garner a bigger slice of the estimated Rs 2,000 crore Indian organised fruit-based drink market and would focus on larger pack formats
of one litre and above as part of the strategy.     

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"We are planning to increase our portfolio under different packages in the next few months. Our main target would be the home consumer segment and we would go for larger pack formats," Parle Agro
Joint Managing Director Nadia Chauhan told PTI.     

She, however, refused to share details regarding the exact grammage size being planned for introduction.     

"The existing portfolio have helped us get a very good response, specially among the on-the-go consumers. We are now looking in penetrating the home consumption market and the larger pack format
would help us in this," Chauhan said.     

Parle Agro launched LMN in March this year in three different package sizes — 110 ml Tetra, 200 ml Tetra and 500 ml.     

The company is hoping to repeat the success of its mango-based drink 'Frooti' through LMN in the lemon segment.

Speaking about the potential market for the product, Chauhan said: "Nimbu paani (lemon water) is a huge segment and it is difficult for anyone to guess the exact market size. However, this provides us an
opportunity to place the product in same league as our flagship brand Frooti."     

She added that the estimated Rs 2,000 crore organised fruit drink market is growing at a fast rate and forms only a small portion of the total market.       Parle Agro is also planning a major marketing
initiative with main emphasis on ground-level (below the line) activities to promote the product.     

"Among the major initiatives are product sampling at destinations including retail outlets and hangouts, besides visibility and advertising campaigns," Chauhan added.

Parle Agro, better known for its mango drink Frooti, is now betting big on its packaged water, Bailley and lemon drink, LMN, as high revenue grossers in the future. The
company has chalked out strategies to ramp up production facilities, strengthen distribution network and alter pack sizes to tap a
larger pie of the market in these two categories.

At present, the company has 40 water packaging factories of Bailley across the country and it plans to add 15 more by December.

“Our plan is to have more number of water packaging factories that may be lower in capacity but nearer to the retail outlets,” said Nadia Chauhan, joint managing
director and chief marketing officer, Parle Agro. “A Bailley water plant nearer to the destination will mean that our response time for stock refurbishment is faster than
others.”

It is difficult for any retail outlet to stock a large quantum of water bottles, she said.

In fact, the strategy seems to be paying off as company’s water business is growing at an annual rate of around 130 per cent. Industry players estimate the domestic
bottled water market in India at around Rs 2,000 crore that is growing at an annual rate of 40 per cent.

On lemon drink LMN, Nadia said, “We have introduced LMN in pack sizes ranging from 100 ml that caters to individual consumption and 1 litre for bulk consumption at
home.”

The total market size in the lemon drinks category is about Rs 100 crore that is growing annually at around 35 per cent.

Battle over Nimbu paani

BS Reporter /  January 25, 2010, 0:38 IST

Coca-Cola, the latest to add a dash of lemon to the cola war, is playing the pricing game to catch up with Pepsi’s Nimbooz and Parle’s LMN.

The cola war is passé; it’s time now for the battle over nimbu paani. A year after its arch rival Pepsi launched and made a huge success of Nimbooz, a lemon-based drink, Coca Cola has finally got into the
act.

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Coke’s Nimbu Fresh, launched last week under the Minute Maid brand, will be initially available in 35,000 outlets in Tamil Nadu and will be rolled out nationally later this year. The plan is to reach 90,000
outlets this year itself.
The lemon juice content in Minute Maid Nimbu Fresh brand is 5.7 per cent. For the moment, Coke will import the juice from Israel and the concentrate will be made at the company’s plant in Pune. It will
then be sent to the company’s plants at Gangaikondan in Tamil Nadu and Chittoor in Andhra Pradesh.

Coca-Cola in India currently enjoys market leadership in the juice drink segment with brand Maaza and Minute Maid Pulpy Orange and the company hopes Nimbu Fresh will further extend its leadership in
this fast growing segment.

Analysts, however, say Coke’s delay in entering the lime-based drink market is surprising (even Parle Agro has got a headstart with LMN — a name derived from the SMS version of the name Lemon) as
lemon is the most popular flavour with a share of 49 per cent of the total juice-based drink market. Of the total packaged juice market of 90 million cases (one case is around 5.6 litres of beverage), juice-
based drinks account for about 90 per cent.

However, Ricardo Fort, Coca-Cola India’s Vice-President (Marketing), says the company is not in a race with its competitors and is rather interested in launching the best product. But the cola major was
obviously conscious of the fact that it’s a late entrant and had to do something to make up for lost time.

That explains its move to price Nimbu Fresh aggressively. While Nimbooz is available in 200 ml and 350 ml plastic bottles at Rs 10 and Rs 15 respectively, a 400 ml Nimbu Fresh will cost Rs 15. There will
also be a one-litre bottle for Rs 40.

The positioning of the lemon-based drinks by all the three players is almost similar: They are looking at making a dent in the large unorganised segment with each claiming that their products taste closest
to made-in-home lemonade: While Pepsi is marketing Nimbooz with the promise that it tastes as good as the original nimbu paani, Coke is playing on the theme —‘Bilkul Ghar Jaisa’ (just like home).

All the three players say the main aim is to convert consumers, who are presently being served by the unorganised market, to branded product consumers.

Both Coke and PepsiCo have lime offerings already — Limca, Sprite, 7 Up etc. But company executives say these are carbonated beverages and would not compete with the nimbu paani offerings.

Although a nascent category, the packaged nimbu paani was largely an untapped market. Most consumers are either used to drinking nimbu paani at home or pick up non-branded products. Earlier,
beverage companies stayed away from the category because they would have no USP. Though the earlier examples of trying to introduce packaged drinks like tender coconut etc have not succeeded,
Pepsi and Parle have already hit the jackpot with Nimbooz and LMN with sales much above their own expectations. Technology had played a big role to play in this. For example, while nimbu paani made
at home doesn’t have much shelf life, Pepsi has used a technology called ‘hot fill’ that increases the shelf life of Nimbooz to as much as four months.

And everyone is clear about the growth path. Industry experts estimate the nimbu paani market to be at least around a billion cases by volume in 2010. The non-carbonated beverage segment is growing
at double the rate of carbonated one in the Rs 7,000-crore domestic beverages industry. The juice and juice drinks market is pegged yearly at Rs 1,500 crore or 500 million cases by volume.

Experts believe that the ready-to-drink packs, along with the price points, will support the growth of the segment. “Ninety per cent of consumption of packaged juice and juice drinks is out of home, giving
companies a great opportunity to grow,” an industry expert said.