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The two major players Britannia and Parle were busy biting of chunks of the national market among themselves, with a host of smaller brands in various regions. While the business was still very competitive, there wasn't anything groundbreaking. In 2003, with ITC foraying into the segment, a lot of that changed. At that time, Britannia and Parle held, between them over 82 per cent of the market in value terms. The rest too was firmly held by smaller players like Priya Gold which had a strong presence in the north. So, in essence, the market already had strong well entrenched players. So how could a late entrant like ITC make its mark? Three years down the line, however, things have changed a lot. It is a classic story of the hare and the tortoise. While it is far from winning the race, slowly and steadily, the tortoise is gaining ground. The late entrant is already on the podium in the third place with as much as 7 per cent of the market in terms of value. "ITC made hay when the sun wasn't shining," says a consultant who's been tracking the industry for a long time. But first, why did ITC train its eye on biscuits? Ravi Naware, chief executive, ITC Foods, makes it sound simple. "We decided to enter the foods segment because it's a Rs 550,000 crore (Rs billion) market in India. But only 6 per cent of this is branded and packaged. In developed markets, nearly 95 per cent of the food market is branded and packaged. So there was lot of scope for a branded player." In foods, biscuits were tempting. The Rs 4,000-crore (Rs billion) Indian biscuits market has grown at 12-14 per cent year-on-year. Then, there was a business synergy. ITC was already value-adding to wheat with its branded atta presence. By entering the biscuits segment, it could also improve its bottomline further. But despite the fast growth rates, the biscuits industry was not all rosy. Over the years, even giants like Hindustan Lever had failed. For instance, HLL which had flirted with biscuits under the Max brand exited in 2005. But ITC's Sunfeast has a different story to tell so far. the strategist looks at the game plan of a late entrant and how the biscuits industry has responded.
Britannia launched its new doubleflavoured Mariegold and 50-50 Chakkar. Yes. "The biscuits industry had witnessed little innovation. however. says. the industry has seen a flurry of innovations from the big two.New recipe by ITC Before entering the segment. Says a consultant. Richa Arora. Marie light and butterscotch-flavoured cream biscuits. helped matters. ITC launched Sunfeast with six ranges. Marie and Bourbon cream. That was precisely what the competition had not done in a big way.which the company claims has been very successful. But it was a calculated risk. Consumers were just waiting for something new. it also has launched the Sunfeast Snacky and Sunfeast Golden Bakes." The company decided that this could be its biggest point of attack.boxes of assorted biscuits priced between Rs 50 and Rs 200 -. "We are not just looking at new products. Findings revealed that consumers wished to taste new and innovative products. something fresh. ITC stuck to category favourites like Glucose. but tapping newer opportunities -. In 2006. Along with that. when Sunfeast happened." In 2005. Says Naware.such as different occasions as well as out-of-home consumptions. "The biscuits industry had not witnessed any major product innovation in years. In 2003. Britannia launched Occasions -. ITC dug into market research. it also launched innovations such as orange-flavoured Marie. before Diwali. Between 2000 and 2005 neither Parle nor Britannia launched any major new product. Sunfeast followed this up with the launch of Sunfeast Milky Magic. Research revealed that the category had gaps which ITC could settle into. In 2004. . general manager and head of marketing and innovations. Digestive Marie -." Even the competition had not made things better. But Britannia claims that it is looking at more than just products. More recently. Britannia did re-launch its Tiger brand in 2005.was launched by Parle in early February 2006. Analysts believe that just because Sunfeast was a new brand. Glucose was Glucose and Marie was still Marie. And Parle is all set to launch at least two new products before the end of this year. Britannia Industries.
setting up a distribution channel is anything but easy. In April 2005. However. the popular television series that was a rage among children. Sunfeast launched its major campaign. on general entertainment channels. cream mountains and cream trees. Well differentiated advertisements. that for FMCG products.8 million outlets.the company's name for the hole-in-the-wall pan-beedi shops -. Parle. is struggling to find its feet even five years later. which entered the western region in 2000. . The company says the brand is now available in nearly 1. the seasoned player itself. were targeted at kids watching cartoon channels. the company also looked at grocery stores and other retail formats. Not content with the existing resources. the company undertook a major sampling exercise to promote the product. Shah Rukh Khan as its brand ambassador. mothers received information on the importance of glucose. Sunfeast's next step was to step up its branding and promotion. Parle Products.3 million outlets. the company tied up with Bey Blades. says it is available in 1. "For biscuits. a month after its launch. Also. It signed on Hindi film actor. The company used its existing network of convenience stores -.Distribution network of ITC It's common knowledge. distribution and visibility are extremely important as it's partly a impulse purchase product. Priya Gold. general manager. to promote itself. distribution channels are very important. Consider this. For two years then. the wholeness of wheat and so on. ITC already had a good understanding of distribution channels. Advertising campaign In August 2003.5 million outlets. some which showed a complete cream world with cream rivers. Says Pravin Kulkarni.riding behind buses. booking that corner space in your favourite newspaper and so on. in this regard." And in biscuits. marketing.for Sunfeast. Sunfeast has been fortunate: thanks to its tobacco business. blocking television spots. Britannia claims it has a superior distribution clout with its presence in nearly 3. At the same time. the brand did all the usual rounds -.
Even market leader Britannia with spends of Rs 100 crore (Rs billion) (2004-05) spends about 10 per cent of sales on marketing. Going by that number. ITC is clearly among the largest spender on ads and promotions in the biscuits category. low margin game. "Although Sunfeast's Shah Rukh Khan association is interesting." Pricing models The biscuits industry now has two clear models. But Arora says that the figure will increase substantially in 2006-07. only charges Rs 5 for its cream variants. But that's not all. Analysts predict that these figures are all set to rise this year. The company claims that it has been spending 35-40 per cent of its turnover from the biscuits segment on advertising and promotions. like Britannia khao world cup jhao or the Lagaan promotion for that matter. Until last year. But Britannia and Sunfeast look at a two-pronged strategy. Except for Hide & Seek. ITCs annual marketing spends are estimated to be in the region of about Rs 115-120 crore (Rs billion).titled the Sunfeast Open -. High margins in cream variants and volumes from the Marie and Glucose segments. Analysts say that ITC's deep pockets have helped Sunfeast in many ways. it is yet to do something groundbreaking. Parle products plays the low price game at all varieties of biscuits from glucose to cream. Says a consultant. cream biscuits from both Britannia and Sunfeast cost Rs 10 for 100 grams. Essentially. For promotions in southern states.In the same year. Parle. nearly 10 per cent of its turnover on marketing. as the official sponsor of the WTA tennis championship -. Priya Gold spent close to Rs 45-50 crore (Rs billion).the company had teenage sensations Sania Mirza and Mahesh Bhupathi campaigning for it. Sunfeast has signed Tamil super star Surya as a brand ambassador. all of Parle's products lie in the price range between Rs 4 and Rs 6 for 100 gram packs. however. Parle plays a high volume. . For instance. But industry experts aren't impressed.
Sunfeast still has a long way to go." Importantly.200 crore (Rs billion). Hence companies have little choice in terms of pricing.a significant Rs 2. While the full game is yet to be played out. As there is little differentiation. Both Britannia and Parle have very high volumes and can easily afford to lower their margins.3 per cent. Nevertheless. Says Naware." No wonder all the Glucose and Marie variants straddle price points of Rs 4-6 (for 100 grams). the gap is still wide.000 crore (Rs billion) biscuits segment -. But these segments are important. But what can the bigger players do? Alagh has an interesting observation. Parle's shares have also dropped from 42. both Britannia and Parle have lost volumes. followed by Parle's 31. Key challenges Back in 2003.5 per cent in May 2006 (volumes).7 per cent. Creaming the market by ITC . ITC's Sunfeast has been a big gainer with its share increasing from 2.7 to 6. nobody thought Sunfeast would have consumers eating out of its hands.4 per cent in the same period. Says he. Marie and the popular glucose varieties make up for nearly 55 per cent of the Rs 4.2 to 38. "Seven per cent in less than three years is something that we could have only dreamt about. Says Sunil Alagh.4 per cent to 5 per cent.3 per cent and ITC's 6. and former CEO of Britannia Industries. Even Priya Gold has seen a minor dip from 6.8 per cent in 2004-05 to 30. Britannia leads the market with 37 per cent market share.To be fair. in Glucose and Marie. for the moment the sun seems to be shining on Sunfeast." A potential after-effect? Sunfeast too may have to drop its prices to be in the reckoning and this will squeeze its margin even lower. industry barometer AC Nielsen has indicated that both Parle and Britannia are losing market shares. SKA Advisors. Britannia's shares have dropped from 35. consumers are extremely price sensitive. "the biscuit consumer is willing to pay more only when he sees a clearly differentiated product. chairman. According to the AC Nielsen retail sales audit in March 2006. "Biscuits have always been a low margin. high volume game. In terms of value. the companies have little choice.
Mahesh Bhupati and Sania Mirza. .biscuits with butterscotch cream with actual granules in the cream. Branded the WTA tennis tournament with promos starring tennis stars. Gained an edge from the well established distribution network of its tobacco business. Innovation in the product line -. Signed up big film stars like Shah Rukh Khan and southern star Surya as brand ambassadors for Sunfeast. strawberry cream with flavour-enhancers and orange-flavoured marie.
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