Q: There is a lot of action in FMCG space from ITC. What's the strategic take on this?
-Rahil N, Kolkata
A: Rahil, ITC is the classic Indian multi-national on the prowl. The company, over the last decade, has unleashed its FMCG and hospitality play with gusto in the Indian market. And literally every one of its calculated forays has met with success. Some with more, and some with less.
If I am to credit reason, the first would be its very focussed approach into categories. The second would be its belief in the advertising and marketing process by investing deep moneys into this space. The third is of course its firm handle on distribution. Distribution in many ways is the cutting edge differentiator for an FMCG play.
In many ways, the last decade has seen ITC coming out of the closet. ITC today has emerged out of the cigarette closet, and has entered into every meaningful FMCG category. And how. In many ways it is the ultimate accolade to the vision of Yogi Deveshwar.
The company has successfully attempted to widen the niche of premium biscuit offerings. In a nation that is just about waking up to the premium movement, ITC has positioned products that cater to this emerging want, need, desire and aspiration.
The noodles category has become generic. Generic to the brand name Maggi. When a category does become generic, the opportunity arises for other brands to get specific with brand offerings that will chip away at shares. ITCs success comes from this opportunity it is tapping at. Differentiated product offerings that create brands once again from the generic space of a brand's(Maggi's) making. Maggi is today to the noodles category what Dalda had become to Vanaspati.
Q: Our Cola majors are morphing. They are moving drink to drink in experimentation. Am I right?
-Sohini Malik, New Delhi
A: Sohini, yes and no. The Cola majors are insulating their portfolio with all these diverse forays. When the glass-ceiling hits you rather early in your brand life cycle, you need to escape into markets that are possibly nascent to the category. Teh rural market effort is one such. Rural markets provide an opportunity and everyone rushes in here. Rural markets are therefore early-escape markets for the category.
There is aggression in terms of price as well. The idea is to upgrade from other categories that compete with the category. When gulp-to-gulp, your cola costs no more than the nimboo-paani, you upgrade to the brand. The battle is for price-of-gulp. The competition is not between the colas, but between the Cola and the local thirst-quencher of yore. That's yet another competitor to battle.
In the packaged juice category, is still an impulse-buy item at the corner store or Cafe. We are yet to see the big move of the 1 liter or more packs gracing early-morning dining tables in India. This will take time. As that will take time, brand shares have to be built 180 ml at a time! That is the challenge. It is an even bigger challenge because there is a huge degree of flavor fatigue in this market, and stocking multiple flavors on shelves is a logistics nightmare. Every time the consumer comes to a store bitten by thirst, the choice f flavor varies, and moves across brand to brand. Today it is a Tropicana, tomorrow it is a Real, and day after tomorrow it may even be to a Gold Spot, which is not even a fruit juice.
Further, as Cola and carbonated water majors see health issues emerging as hurdles to their growth, they will veer themselves towards more healthy options. Milk, yoghurt, fruit juices and traditional beverage options such as Kokum, Jaljeera and more, will be their first stop. Expect a lot of MNC action in this space. Expect a fair number of acquisitions in this space as well. Imagine a Paper Boat within the house of Coca Cola Inc.? The future is going to be different. Very different in this space.
Harish Bijoor is a business strategy expert and CEO of Harish Bijoor Consults Inc. Mail your queries to >cat.a.lyst@thehindu.co.in