Kremmer Foods had made a name for itself in dairy products and processed foods. Could it repeat its success in an impulse purchase category like fruits?

PRATAP Rao was excited as he rummaged through his files and cupboards. He was looking for data on Funsip, the once successful but now dead fruit drink brand of Kremmer Foods. Rao, who was head of marketing at Kremmer, was determined to bring Funsip back from the grave. His determination was rooted in research that had indicated that the processed foods sector was poised for phenomenal growth. Kremmer wanted to tap this opportunity. Rao's objective was to expand the processed foods category by introducing ready-touse products. While such products would remain niche items, he was also researching other products that would be accepted by the mass market. Mass market products like processed milk, packaged atta (flour) and bakery products were identified as major opportunities in the foods business – high-growth products that promised big volumes. Reports said rising income levels had changed the food consumption patterns of the rich as well as the not-so-rich. At one level, the lower middle class was emulating the eating habits of the rich by laying greater stress on nourishment and quality. At another level, as choices increased, the high-end consumer was getting more adventurous when it came to eating. Funsip was targeted at this segment. Rao was happy when Kremmer decided to expand its processed foods division, particularly the biscuit and frozen vegetable categories. That was when he hit upon the idea of introducing processed fruits. A fruit-based drink would be ideal, he reasoned, because it would fit snugly into the entire portfolio of food products. Simultaneously, the brand could be extended to other fruit intermediates like squashes, cocktails and concentrates. Funsip had caught Rao’s fancy after he came across media reports which said that fruit drinks could grow into a multi-billion rupee business in India over the next eight years. That Funsip had failed 10 years ago did not deter him. Rao felt that the company had, in fact, learnt a lot from the brand’s failure. The research and investment that had gone into Funsip had helped Kremmer ascend the learning curve on fruit drinks. “A fruit drink is just what we need to complete the portfolio,” he told his managing director, Vidyut Saraf. But the sales director, Anshu Vaid, did not like the idea one bit. Funsip’s debacle had left an indelible mark on him.


In the 80s. Kremmer targeted a 50% marketshare over the next three years. It came in three flavours – mango. Kremmer decided to launch Funsip in Chennai. pickles and chutneys and marketed them under the same name. Given the sourcing and processing advantage Kremmer gained from its new acquisition. The strong brands in this segment at that time were Frooti. There too. apple and orange. processed dairy products were not a fastgrowing segment. the move to launch Funsip was natural. The tetra packaging was franchised to third parties and plans were underway to add newer franchisees in different markets. the response was very good. Research had commenced on the proposed frozen vegetables project and other value-added food products. thanks to the funky. butter and a small range of milk-based Indian dessert mixes. But the tetrapack segment was growing very rapidly at 15-20% a year. Funsip was conceived and positioned as a natural fruit drink that offered convenience. The soft drinks market then was roughly 600. By the year-end. The euphoria over the brand's success was naturally very high and Saraf congratulated the sales force on what he called “one of the biggest successes” at Kremmer. That was when Kremmer decided to launch the Funsip range of fruit drinks. In the second year of the launch. Suddenly Kremmer was a company to watch out for. Kremmer bought GreenFoods. Kremmer held promotional Ras Garba festivals in Ahmedabad and Baroda. which fitted in well with Saraf’s vision of expanding Kremmer's food business. 2 . Funsip was a brand being researched at GreenFoods when the company was acquired by Kremmer. Driven by the Gujarat success. All these were to be marketed under the Funsip brandname. though Kremmer's milk-based drink RevvUp was a leader in many markets. It was Saraf’s foresight that led to a strategic entry into vegetable and fruit processing. Volfarm and Tree Top. which resulted in a very good trial rate. young and festive advertising. By then.Vaid was funsip’s product manager when it was launched in 1984.000 tonnes. Funsip was available in all the metros and was posed to enter mini metros. Kremmer's vegetable processing plant had been refurbished and tailored to processing tomato ketchup. Funsip had a great start. Buoyed by the exemplary launch results. hygiene and variety. Kremmer was predominantly a dairy products company with substantial dairy operations that gave it synergies to produce milk powder. of which the tetrapack segment was a mere 10%. He clearly saw Funsip as a forerunner to a bigger foray into the foods and processed foods business. In fact. GreenFoods came with a large plant for processing and freezing vegetables. Funsip had gained a 25% marketshare which was very heartening. In the early 80s. The synergies derived from its own dairy products business and GreenFoods' jams gave Kremmer greater distribution strength and catapulted it into the limelight as sales grew. The test market in Gujarat was opportune since the Navratri festival had just begun. a small company that made jams.

And then the first blow hit Funsip. appointed more packaging franchisees and stepped up advertising. That's because we supply one to those outlets which are serviced by the common distribution network. the timing of our service – while Frooti's van reaches these outlets at 7. At outlets where consumers could choose from a menu of fruit and soft drinks. but they certainly are prime outlets for fruit drinks.. By that time. Funsip had garnered a 33% share of the fruit drinks market. to his boss. the marketing head. GreenFoods' processed foods. Three. the product manager. Kremmer's servicing strategy was ill conceived. Being in the wrong outlet was not the only problem for Funsip. our van reaches them only at 11. The latecomers miss out. were growing at a faster clip. In soft drinks and fruit drinks. the outlets would have already bought Frooti. If the brand was gaining strength. but we have no dealings with Sangam because it never buys RevvUp.More good news was in store. we are servicing only one of the five outlets we should be supplying our drink to. Funsip was just not available at outlets where there was an opportunity to cater to an impulse purchase. Advertising visibility existed. the brand that reaches the outlet first gets the biggest share of that cash. 3 . Studies showed that Funsip was not easily available to the consumer. butter or jams. This bundling of all Kremmer products into one basket meant that all products ended up in grocery stores and supermarkets including dairy products. and Funsip. jams and chutneys. The company doubled the production and sales targets. It was not easy to sell to someone with whom there had been no past dealings. the menu did not include Funsip. but not shopshelf visibility. Vaid's notes also pointed out that.m. given the high seasonality of the soft drinks category. 60% of sales occurred between mid-April and June. Two. so were Kremmer's expectations.” Another note from Vaid to the sales head read: “There are three factors which drive soft drink sales. So. on the other hand. these outlets have limited cash. the outlets need extensive point-of-purchase promotion. Rao found numerous notes from Vaid. By the close of the second year. One such note read: “Funsip should ideally be present in Jacob's Fun Food Parlour. So.m.30 a.30 a. The Kremmer sales force was not familiar with outlets that should have been stocking Funsip. These outlets are not central to foods and dairy products. The initial boost during the trial phase had given way to a plateauing of Funsip sales. One. It’s rivals. As he rummaged through the old files on Flinsip. The brand recall was very high and it seemed that Funsip was on its way to market leadership. but he is not stocking RevvUp. Products did not find their way to roadside vends or places of entertainment where cold drinks sales were brisk. how can we survive in a seasonal market without aggressive selling?" he asked. you must have a high frequency of service. Two. Then there was a small second summer (particularly in Delhi and Mumbai) between September and October. Cinema halls like Sangam stock soft drinks. therefore. One. it does not appear on our route. Kremmer had a common distribution set-up for its dairy products. “We have a problem on two counts.

There was another obvious problem: the outlets which stocked Gold Spot or Frooti were also the target outlets for Funsip. Funsip had to be hived off as a separate profit centre to evaluate its performance. As a result. where the entire budge had been earmarked for Frooti's promotion. The other players. That was a major problem because Kremmer's sales force and its distribution system weren't geared to handling a product with such high seasonality.” wrote Vaid. This posed another problem. there was no real need to look for a change. For instance. Rao found that Funsip's failure was due to its faulty sales and distribution strategy. since it had committed vast sums of money to the acquisition of GreenFoods and to refurbishing its processing and freezing plant. 60% of the sales demand was not being met by Kremmer. He realised that the sales strategy did not optimise opportunities present in the market. Earlier. In other words. Each of these brands had a powerful national presence that gave Frooti a lot of marketing synergy. The money Parle made on its fizzles was ploughed into Frooti. jams and chutneys. . therefore. In operational terms. As he pored over the notes. For example. Both these businesses had a common distribution network. it increased his confidence in the Parle group. This was in stark contrast to Parle’s strategy. The marketing plan directed that 80% of the budget be spent on thematic advertising and 20% on promotions. Funsip languished for want of a distinctive focus. cinema halls and roadside vends But these were not being serviced by Kremmer because they did not fall in the distribution route of its diary products. there was no problem with the product. Kremmer’s financial situation was tight at that time. the dairy products and foods business assured higher volumes. had developed the agility to match Frooti’s 4 . Rao felt Kremmer should have set up a dedicated distribution system for Funsip. if Kremmer gave one pack of Funsip free with a tray of 27. But since the major chunk of the products under the allied foods business had a destination common to the dairy products. it was unable to commit any more money to the aggressive marketing that Funsip required. Frooti had an added advantage because it came from Parle which had other beverages like Thumps Up. As a result. The sales set-up considered the mainline dairy products and foods business. aided by the prevailing imagery of its beverages. have to achieve our sales virtually in these 14 weeks. Also. Limca and Gold Spot. as priority. That also meant that those 14 weeks required a very intensive marketing and sales effort. not Funsip. So. jams. when Frooti gave an offer to the retailer. one business head looked after the dairy products business while another looked after allied foods businesses like ketchup.which lasted four weeks “We. he learnt that over 60% of soft drink sales happened at impulse purchase points like fast food places. This meant that the sales staff was not as interested in pushing Funsip. too. as it was in selling jams and butter. After all. Funsip was under the new foods profit centre and a common sales team handled its sales and distribution. Funsip's targets and revenues were simply added to those of RevvUp and other dairy products. Parle gave five. frozen vegetables and Funsip.

Let us face it: the problems which we had 10 years ago exist even now. The processing business was new and we were still on the learning curve after the acquisition of GreenFoods. managing director Saraf was wary about getting into the fruit drinks business again. And that is expensive. Ask Coke and Pepsi.” he said. The entire marketplace infrastructure is both expensive and time consuming. We have realised this the hard way. Value-added foods would grow at an even faster rate. “We simply do not have the portfolio or channel synergies necessary to sustain soft drinks selling.” said Vaid. Eventually. But Rao was smitten by food industry reports that indicated a three-fold growth in the industry by the year 2005. But we were still in the growth phase and could not allocate huge sums to the marketing of Funsip. why don’t we relaunch Funsip?” he asked. the brand had to be withdrawn. It was clear that Rao's optimistic presentation had little effect on Vaid." Vaid shook his read. Now that we have the synergy and the processing plants. However. Do we want to take that route? Then there is the channel servicing – refrigerators and refrigerated vans. a dedicated sales force and aggressive marketing. While the first year losses were attributed to depreciation and infrastructure costs. Our sales force will also have to change its mindset from monthly purchase products like RevvUp and jams and squashes to an impulse product that demands daily servicing. Funsip soon ran out of steam. I suppose we would have taken corrective steps. and since our foods business has become so salient in the domestic market.” he said. “It is not just the money. Setting up a distribution system for soft drinks is a virtual nightmare. in impulse purchase categories. Today. Up against such powerful rivals. “Ten years ago. but not Funsip. Kremmer is stronger after a string of successes with its other food products.competitive thrust. It took these global giants many years to develop that market agility. “After all.” he said. success depends on the agility with which you can service the market. Rao could see that Funsip had failed in the market because of the diffused focus. Where do we have that kind of resources and agility?" "But why should that be a deterrent?" asked Rao. It failed because we did not get our distribution strategy right. “Today. If we had the money and the resources. the 5 . Funsip was not rejected by the consumer. “The marketing of fruit drinks is an altogether different ballgame. Our fruit processing is better than it used to be. surprised. the second year saw a bigger drain. our systems are in place. After all. we have crossed all that. “It requires a dedicated distribution system. we had another problem which was more overwhelming: shortage of money.

The opportunities today are far more.” he said. I think we should steer clear of any plans to relaunch Funsip. Beverages in tetrapacks are impulse purchase items. Creating a viable system in a short time or at a low cost is unthinkable. In fact. felt Saraf. thanks to rising income levels and higher aspirations for quality and health. “The same problems will still be there. too. They sell on imagery and no differentiator really works. fruit cocktails and fruit pastes for infants and the infirm.” he said. both Vaid and Saraf could see Funsip's grave with a huge epitaph that said 'Failed'. since a shift from subsistence foods to value-added foods was expected. That thumping success of its dairy products and other businesses notwithstanding. However.reports said. The soft drinks market today is far more competitive than it was 10 years ago. “The mere growth of the food sector does not assure success. multi-flavoured concentrates. frozen vegetables. but also thought of using it as an umbrella brand to sell squashes. “We have overcome many of the hurdles.” said Vaid. “I don't think we should allow the past to stay so firmly entrenched in our mind. This is a high-cost segment. In this segment. “What do you say. “Bring back Funsip and you bring back trauma and failure. the entry cost is very high. Can't we find a way?” he asked. and the chances of success assured. The sheer upfront investment required in promotions and advertising will not be less than 20% of sales. he not only wanted to revive the Funsip brand. Vaid?” _________________ Source: Business World 6 . doesn't ensure success.” he added wryly. But Saraf was categorical. But Rao felt that there was an advantage in reviving Funsip. Having the funds. the marketing of beverages was very different.

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