1|P ag e
ITC FOODSAn understanding of the What and WhyA Project Report
for the requirements of the Product Management Course at SPJIMR,
Mumbai
Group 9Abhishek Goud Ankita Biyani Pausali Sarkar Anuj Mittal
Umar Ameen PGP-11-004 PGP-11-014 PGP-11-043 PGP-11-106
PGP-11-172
2|P ag e
Table of ContentsAbout ITC Foods
......................................................................................................................................
4 Sourcing
..............................................................................................................................................
4 The Journey to
here.................................................................................................................................
5 The Need for Diversification
....................................................................................................................
6 Kitchens of India
......................................................................................................................................
7
Genesis................................................................................................................................................
7 Rationale
.............................................................................................................................................
8 Product Lines and Variants
..................................................................................................................
9 Positioning
........................................................................................................................................
10 What we think
...............................................................................................................................
10 Possible Extensions/ Future
...............................................................................................................
11 How does it fit?
.................................................................................................................................
11 Mint-O and Candyman
..........................................................................................................................
12
Genesis..............................................................................................................................................
12 Rationale
...........................................................................................................................................
13 Product Line and Variants
..................................................................................................................
13 What we think
...................................................................................................................................
14 How does it fit?
.................................................................................................................................
14 Aashirvaad
............................................................................................................................................
15
Genesis..............................................................................................................................................
15 Rationale and What the Group Thinks
...............................................................................................
15 Product Lines and Variants
................................................................................................................
16 Proposition/ Positioning
....................................................................................................................
17 Suggestions/ Future
...........................................................................................................................
17 How does it fit?
.................................................................................................................................
18 Sunfeast
Biscuits....................................................................................................................................
19
Genesis..............................................................................................................................................
19 Rationale
...........................................................................................................................................
20 Product Lines and Variants
................................................................................................................
20 From Biscuits to Pasta to Noodles
......................................................................................................
21 Future Prospects
...............................................................................................................................
22
3|P ag e Bingo
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23
Genesis..............................................................................................................................................
23 Rationale and What the Group Thinks
...............................................................................................
23 Product Lines and Variants
................................................................................................................
23 Segmentation/ Targeting/ Positioning
...............................................................................................
24 Future
...............................................................................................................................................
24 How does it fit?
.................................................................................................................................
25 Recommendations for the ITC Foods Portfolio
.......................................................................................
26 Does it make sense?
..............................................................................................................................
26 Bibliography
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27
4|P ag e
About ITC FoodsSource: ITC Portal -
http://www.itcportal.com/itc-business/fmcg/foods.aspx (excerpts
directly taken from the site)
ITC made its entry into the branded & packaged Foods
business in August 2001 with the launch of the Kitchens of India
brand. A more broad-based entry has been made since June 2002 with
brand launches in the Confectionery, Staples and Snack Foods
segments. The Foods business is today represented in 4 categories
in the market. These are:
Ready to Eat ITC Foods
Staples
Confectionery
Snack Foods
All products of ITC's Foods business available in the market
today have been crafted based on consumer insights developed
through extensive market research. Apart from the current portfolio
of products, several new and innovative products are under
development in ITC's state-of-the-art Product Development facility
located at Bengaluru, Karnataka (India).
SourcingITC has over the last 100 years established a very close
business relationship with the farming community in India and is
currently in the process of enhancing the Indian farmer's ability
to link to global markets, through the e-Choupal initiative, and
produce the quality demanded by its customers. This long-standing
relationship is being leveraged in sourcing best quality
agricultural produce for ITC's Foods business.
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The Journey to here
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The Need for DiversificationITC Foods is now a Rs.3000+ Crore
child of its parent ITC Limited. The need for diversification is
always doubted and questioned and here we attempt to provide a
business rationale for the decision taken in August 2001.
STRENGTHS Distribution and procurement capability e-Choupal
helped them surf through differentiated products at the grass root
level and mix them to come out with branded products Leveraged the
convenience selling points to venture into the Candy/ Confectionery
business and drew synergy from its distribution strength Perfect
positioning & segmentation: o Mint-O Youth whilst Candyman Kids
Understanding Segmentation (the market is becoming more and more
segmented) and Innovation simultaneously is the key Leveraged on
Welcome Group to come up with ideas ITC Foods integrated customer
feedback as a SOP
WEAKNESSES Lack of Manufacturing, Technology and Product
Development Expertise Aggressive Competition No Price Control
(Competitors control price) Pushy Wholesale Channels
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Kitchens of IndiaGenesisKitchens of INDIA is much more than just
a delicious meal. It is a mystical voyage through the legacy of
authentic, regal Indian gourmet cuisine. Crafted with 100% natural
ingredients and no preservatives, these delectable treats capture
the essence of an exotic dining experience. ITC hotels- one of the
top luxury hotel chains in India- had won international accolades
for its gourmet restaurants Bukhara, Dum Pukht, Gharana and
Dakshin. They had been recognized, to say the least- as the final
word, on what authentic traditional Indian cuisine should be. Their
expertise in understanding the Indian taste and appetite was
fruitfully translated into a wonderful dining experience for their
customers. With the desire of bringing this luscious fare in the
dining rooms of the world, Kitchens of INDIA ' was launched in
August 2001. Kitchens of INDIA products embrace the Indian recipes
of the bygone era safeguarded and conceded
from generation to generation by the royal chefs of the
Maharajas, capturing the rudiments of a time when cooking was an
art form perfected by a few and every meal was treated as a grand
feast. The conventional culinary pedigree of Indian food has been
further enriched by the pioneering works of the Master Chefs of
India`s prestigious ITC Gourmet restaurants - with passion and an
eye for detail to deliver nothing short of an enthralling
experience. Kitchens of INDIA had its genesis in Dal Bukhara-the
signature dish of Bukhara, ITC Welcom Groups award winning gourmet
restaurant. This famous dal preparation has been appreciated by
distinguished patrons- from Bill Cinton to Bill Gates-and has been
eulogized and written about across the globe. The notion was to
serve royal Indian palate on the dining tables of the world which
was once the privilege of a favored few. Canned Dal Bukhara was the
first offering from the house of authentic culinary delights. With
the endeavors of the ITC group it has been possible for the common
man to savor the culinary delicacies of the royal Dal Bukhara,
Baingan Mirchi ka Salan (a creation of ITC Dum Pakht), Dal Dakshin
(created by Dakshin restaurant), Bohri Biriyani, Noormahal
Biriyani, Hyderabadi Biriyani, Yakhni Pulao,
8|P ag e Chicken Chettinad, Malabari chicken stew, Murg methi,
exotic fruit and spice conserves and rare chutneys- within the
comfort premises of the home. 2004 saw Kitchens of INDIA diverging
into curry pastes and ready to cook offerings of ready pastes, to
add piquancy to the meal. Desserts were introduced in 2005 to bring
wholeness to the menu. The endeavor to revive and preserve the
culinary heritage of India has made a huge impact on international
markets as well. Savored by millions across several continents,
Kitchens of INDIA continues to wield the magic wand from the
closely guarded walls of the royal kitchens to the dining tables of
global consumers. In a departure from restaurant signature dishes
in 2006, Kitchens of INDIA launched the Gharana range. The
selection encompassed traditional Indian family favorites - paneer,
vegetable curries, chicken, biryanis etc. By 2007, the company
managed to garner 35% market share in India in the RTE meal segment
alone (Source: AC Nielsen Retail Audit, MTS).
RationaleThe rich cultural diversity of our country is mirrored
in its equally rich cuisine-influenced by history, culture,
climate, topography and the local flora and fauna. However diverse
may be the tastes of people, they are unified in their affinity for
fresh food. RTE was earlier considered an extravagant affair a
needless indulgence. However in the recent past there has been an
air of change driven by a high level of urbanisation, emergence of
nuclear families and advent of professional women. With significant
increase in disposable income per household, the time available for
cooking has reduced drastically. Urban families are now
experimenting and seeking out delicacies and scrumptious
specialties of yester years. Hence the birth of an entire new
generation of convenience seekers who have adopted RTE with
inadvertent ease as an essential part of their daily lives
propelling the dawn of a whole new industry.
Research studies have revealed that if the consumer demand for
greater affordability and availability are met, RTE segment could
explode into a Rs. 2900 crore industry by 2015 compared to Rs. 128
crore it registered in 2006. (Source: Tata Strategic Management
Group). The market for Indian food in US is growing at a stunning
rate of 150% Y-o-Y implying spectacular export potential.
9|P ag e
Product Lines and VariantsThe entire Kitchens of INDIA RTE range
is aimed at offering the discerning global consumers a delectable
and complete meal experience by bringing within reach the authentic
and timeless recipes served on the royal palate. At present, ITCs
offerings have expanded into over 40 products classified into
Ready-to-Eat, Curry Pastes (Dal Bukhara, Mirch ka Salan, Paneer
Darbari, Mughlai Paneer, Paneer Malai, Chicken Chettinad, Chicken
Darbari, Malabari Chicken Stew, Murgh Methi), Chutneys, Biryanis
(Hyderabadi mutton biriyani, Noormahal biriyani, Bohri Biriyani,
Yakhri Pulao), Conserves and Desserts. The Kitchens of INDIA
Ready-to-Dine Range include-vegetarian and non-vegetarian curries,
biriyanis, halwas and Kitchens of INDIA masala mixes (Paneer
Makhani, Hyderabad chicken biriyani, vegetable biriyani, Mutton
Kolhapuri, Butter chicken, chicken curry). The shelf stable range
which is available across the globe includes- RTE dishes,
biriyanis, desserts (Jodhpuri moong dal Halwa), curry pastes,
cooking sauces, chutneys and frozen range. The 100% preservative
free range of food products are packed in 4-layered, keep fresh
pouches to ensure enhanced shelf life and protection from germs.
Shelf Stable Range
Ready to Dine Range
10 | P a g e
PositioningKitchens of INDIA is positioned as Feast of the
senses, which also is, by design (not default) its tagline.
What we think We believe that price is a huge deterrent for the
growth of Kitchens of INDIA in the domestic market. A product like
this costs a bomb and serves only two; at that price consumers do
notfind it worth it especially when other options are
available.
ITC never made an endeavour to be the market leader in the RTE
segment. It just wanted to be a me-too player in the category and
capture the maximum market share with multiple products and product
variants. This is not a sustainable market strategy for the long
run because being No.2 or No.3 doesnt help the company much in
commanding a premium in pricing while
11 | P a g ecompeting with small to medium (but significant)
players (Haldiram, MTR, and Dabur) providing inexpensive options.
Besides, when you have too many products in a portfolio, the
ability to differentiate between them shrinks, and the consumer
cannot perceive much of a difference among them. Unique product
offerings and packaging technology-pioneering introduction of
retorting technology- ensuring longer shelf life, definitely
provides a competitive edge over the competitors. Huge potential in
the overseas market driven by NRIs and popularity of Indian culture
and cuisine. Threat of new entrants in the segment offering
inexpensive alternatives might affect the brand. Should come up
with customer engagement programs like cookery shows on television
to promote the brand on a large scale. Constant innovation required
to retain global appeal.
Possible Extensions/ FutureThe possible product extensions that
ITC can reflect about include the following: regional sweets,
exotic kulfi mixes, fruit pulp/slices, non-vegetarian pickles,
packaged dry fruits and beverages/herbal syrups. The suggested
extensions are in alignment with the current product portfolio and
can be positioned with the same royal touch and feel. Besides,
existing competition ranges from little to none and is bounded
within medium to local players. Hence ITC might have a prospective
opportunity in the domestic market and a colossal one in the
overseas market because of the simple fact that: NRIs and
foreigners who are fascinated by Indian culinary delicacies will
pay a premium for the exotic range of product offerings from the
established house of ITC- Kitchens of INDIA brand, the only brand
in its category to have been awarded the prestigious SuperBrand
Award.
How does it fit?ITCs Food Division came into being a couple of
years ago as a diversification by ITC into the FMCG area. The
company felt it had certain strengths that it could capitalize in
the business of packaged, branded foods. For instance, the
distinguished chain of ITC hotels provided a rock-solid platform to
have a superior understanding of traditional Indian cuisine,
gourmet food, the Indian palette, and also the exquisite recipes
and knowledge for making exotic Indian delights. Besides, they had
an enduring familiarity in brand-building which is of utmost
essence in the packaged food business. Over the years, ITC had also
erected a profound and extensive infrastructure for distribution of
FMCG products, not to mention its intimate association with
farmers- which is now being further expanded through echoupals.
This is a major advantage in sourcing agricultural raw materials.
Owing to these aspects, the organisation felt that by stepping into
the packaged/ branded foods, they might be able to derive a lot of
competitive edge in the market by leveraging their existing
strengths. And hence, ITC gave an entirely new dimension to the
FMCG business which was not thought of by any of its major FMCG
competitors- a path still not treaded, a move yet not foreseen. The
birth of Kitchens of INDIA is an unprecedented chapter in the
history of the FMCG giant which once again brought international
recognition to brand ITC across the all over the world.
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Mint-O and CandymanGenesisITC currently has two brands in the
confectionery segment - 'mint-o' and 'Candyman'. 'Mint-o' was
acquired by ITC from Candico in March 2002. ITC re-launched the
compressed mint offering, across all major markets in India, with
new and improved product and packaging. It is available in mint
flavor with added blue specks to enhance consumer experience.
Mint-o Cool Blue - a single mint in a pillow-pack was launched In
November 2007. 'Mint-o' is available in 3 sizes rolls of 20 and 6
and singles, capturing the international essence of youthful cool.
ITC launched 'mint-o Fresh' in October 2004. An active mint
deposited candy, mint-o Fresh is available in a refreshing mint
flavor - mint-o Fresh Eucalyptus. Its launch extended the footprint
of the 'mint-o' brand in line with the strategy of adding
excitement and contributing to the growth of the confectionery
category. 'mint-o Fresh' is especially targeted at the adult
consumer creating a basket of mint-based products across price
points. The latest offering in the adult mint confectionery segment
is mint-o GOL, in the 'Chews' sub-segment. A brand for young
adults, mint-o GOL, appeals to both men and women, offering a never
before "refreshing indulgence". Recently, a Green Mango variant of
mint-o Gol was launched which has been well received by consumers.
The latest punch of mint from Mint-o Mint-o Strong Power Mint! has
been launched to strengthen the cough lozenges portfolio of ITC.
The response to this transparent mint with blue speckles, icy
compounds and double dose of eucalyptus, menthol oil has been very
encouraging. ITC launched the 'Candyman' range of confectioneries
in August 2002. Led by the 'Candyman Fruitee Fun' range of assorted
fruit flavours ('Wild Banana', 'Pineapple Punch', 'Orange Josh' and
'Mango Delite'), the 'Candyman' portfolio now includes deposited
candy products like 'Candyman Butterscotch Licks' and 'Candyman
clairs' (Choco flavored as well as Vanilla Cream centre inside a
Butterscotch outer shell). The coffee toffee segment also saw the
successful launch of 'Candyman Cofitino' in November 2005. The
brand was further strengthened with the launch of 'Candyman Natkhat
Mango' and 'Candyman Maha Mango'. In line with the strategy to
provide innovative flavours and formats to consumers,
13 | P a g e Candyman Mango Licks was launched in June 2007,
Candyman Lacto Creme Centre in June 2008 and Candyman Toffichoo
Strawberry in early 2009. Candyman Lacto Creme Center is the only
Lacto with a yummy cream filled center, and Candyman Toffichoo is a
luscious fruit flavored soft and chewy toffee. The 'Candyman' range
of confectionery is targeted at fun-filled, naughty kids who seek a
delightful candy experience through a range of candy types and
flavours.
RationaleDespite its vast population, Indias confectionery
market is still very small. It is valued at close to US $450
million, and is estimated to be 138,000 MT. Sugar confectioneries
(candies and toffees) has the largest share (50%), followed by
chocolate, (16%), and bubble gum, (10%). Over the 1998 - 2003
period, confectionery retail sales have grown more than 55% in
value terms and 46% in volume terms, at an average annual rate of
9.5% and 8% respectively. There is a clear trend of faster sales
growth in value terms, indicating that consumers are increasingly
ready to pay a premium for higher value products. Almost all
confectionery purchases in India are believed to be impulse driven.
Experts indicate that sugar confectionery and gum products
consumption are driven almost entirely by impulse purchasing. The
Confectionery segment in India is extremely tight with respect to
margins and is flooded with many players trying to gain that extra
share of the Indian Consumers wallet but ITC had what most players
didnt, one of the strongest distribution networks in the country.
Complementary selling allowed for assured sales and continuous
revenue where ITC stacked their confectionery with their ever loyal
paan wallahs along with the regular stock of cigarettes. The
Confectionery Industry pie was too delicious to resist having a
piece of with the knowledge and knowhow of technology and
distribution. Ability of ITC to stomach the high amounts of fixed
cost in setting up plants due to their ever cash rich and always
profitable cigarettes business.
Product Line and VariantsMint-O Fresh Mint-O Fresh Eucalyptus
Mint-O Gol Mint-O Strong Powermint! Candyman Fruitee Fun Candyman
Butterscotch Licks Candyman clairs Candyman Natkhat Mango Candyman
Maha Mango Candyman Mango Licks Candyman Lacto Creme Centre
Candyman Toffichoo Strawberry
14 | P a g e
What we think A brilliant extension/ expansion considering the
extensive distribution network of ITC and they can leverage
reaching the targeted 200 million outlets as planned with ease.
Growing inorganically by buying over Candicos Mint-O allowed them
the technology expertise and knowhow to enter into this tough
segment a strategically brilliant move This would later help them
to leverage the technology to come up with multiple extensions and
variants Tagging along confectionery products with the cigarettes
allows for direct consumer touch points and immediate sales Impulse
purchase category and therefore it made sense to couple it with
kirana stores and paan wallahs to stock the products initially
thereby creating a top-of-the-mind presence.
How does it fit?With confectionery being an impulse purchase
segment, coupling it with cigarettes makes perfect sense as smokers
prefer mint to freshen the breath after smoking. This ensures a
larger pie of the consumers wallet. A possible future entry point
would be the CHEWING GUM market.
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AashirvaadGenesisITC believes that an effective growth strategy
for our nation must address the needs of rural India, home to 75%
of our poor. ITC believes only an inspired publicprivate
partnership can transform lives and landscapes in rural India.
ITC's humble endeavors have demonstrated that it is possible to
create and sustain a model that can harmonize the need for
shareholder value creation with making a substantial contribution
to society. To achieve the same, ITC has partnered the Indian
farmer for close to a century. The agri-business division of ITC
connects with 5 million farmers in 170 districts of 16 states.
Leadership in the Foods business requires a keen understanding of
the supply chain for agricultural produce. ITC is now engaged in
elevating this partnership to a new paradigm by leveraging
information technology through its trail-blazing e-Choupal
initiative which is the prime source of ITCs competitive advantage
of procurement of commodities. The company leverages this to good
advantage for all the commodities it requires for the food
business: Wheat, sugar, edible oil, potatoes, soyabean, coffee,
pulses, shrimp etc. Such commodities account for almost 60 per cent
of the costs of the business Aashirvaad started and the success of
the brand is actually due to the ability of our sourcing team,"
says Dar. The thought of Aashirvaad germinated from this surfing
expertise of ITC, which was utilised to procure and create an
extremely standardised and branded product. We said - let's
experiment whether we can give something differentiated to our
consumer. Theoretically, if you add wheat with this much hard work,
with this much hectoliter density, which if you mix it up
consistently, it should bring you better quality wheat, which will
not only be determined by taste but also when you're making it.
Rationale and What the Group ThinksITC is a cash rich company
and a well known name in the hospitality and tobacco business. Its
financial health was good for it to be able to sustain pressure
from the competitive FMCG sector and make large investments. The
first product to be launched under the brand name "Aashirvaad" in
May, 2002 is "Atta" or wholewheat flour. While the concept of
branded staple food in India is relatively new, there are already
several established players in this market including Hindustan
Lever (Unilever). The strength that ITC brings in addition to its
distribution is the fact that it is able to source the most
consistent and finest quality wheat through the network of
e-choupals leading to a strong vertical integration. Branded flour
sales in the country are around Rs 4,000 crore (Rs 40 billion),
which is just 4 per cent of the market, rest is all sold loose.
However, conversion to packaged flour is happening at about 8 per
cent per annum.
16 | P a g e There existed an opportunity in the branded segment
and it established itself at the base of the food chain. This
procurement of wheat directly through the e-choupals gave ITC an
added advantage as most of its competition buys the commodities
from spot market which are subject to risks like price rise
depending on seasons and the commodities being sold out. Due to the
overwhelming response received by the packaged flour, ITC decided
to expand its brand to salt which it can easily procure at
extremely low costs. ITC came up with its salt in March, 2003. At
the time of launch, the packaged salt industry was valued at 700
crores. The market size was growing with the increasing awareness
about the benefits of consuming iodized salt. Also, the increased
income and growing middle class wanting to shift to branded staples
was increasing. ITC expected to receive the same response for its
salt that its flour received and capture a portion of the salt
market even if it did not manage to become the market leader and
make profits dur to its low cost of procurement and manufacturing.
It was also a part of its efforts to clock a Rs 500 crore sales in
five years from the Food division. Aashirvaad then decided to
extend its brand include spices in under its umbrella to make the
most of Rs 3000 crore plus spices market which was dominated upto
70% by regional players. It launched chilli powder, turmeric powder
and coriander as they were the most prominently used spices all
over the country. Aashirvaad as a brand was always targeted at the
Indian housewife who desires to give her family and children the
best she can. Hence, after offering atta, salt and spices,
Aashirvaad decided to extend to Instant Mixes and Ready to Food in
March, 2006. They are all targeted at the middle class women and
hence the price range for the Ready to Eat Food is 35/- to
50/-.
Product Lines and VariantsThe Aashirvaad Brand has been extended
to several categories of products, Aashirvaad Atta , Salt ,
Spices,instant mixes and Ready meals. Product Line : Aashirvaad
Atta Variants : Aashirvaad Atta Aashirvaad Atta with Multi-Grains
Aashirvaad Select Aashirvaad Select MP Sharbati Atta Aashirvaad
Whole Wheat Atta Product Line : Aashirvaad Salt (Iodized Branded
Salt) No variants Product Line : Aashirvaad Spices Variants :
Aashirvaad Chilli Powder Aashirvaad Turmeric Powder Aashirvaad
Corriander Aashirvaad Pickle Mirch Powder
17 | P a g e Aashirvaad Select Organic Spices Product Line :
Instant Mixes Variants : Rava Idli Mix Rice Idli Mix Rice Dosa Mix
Gulab Jamun Mix Product Line : Ready to Eat Variants : Aloo Mutter
Pindi Chana Palak Paneer Dal Makhani Navratan Korma Yellow Dal
Tadka Mutter Paneer Rajma Masala Pav Bhaji Pongal
Proposition/ Positioning Targeting: Aashirvaad is targeted at
the typical Indian family where the woman is the home maker wanting
to give her family and children the best quality and purity she
can. Positioning: Aashirvaad is positioned as the best quality and
choicest grains, purest spices. Till recently spices, salt, atta
were considered as commodity and were sold unbranded. Now, to cut
through the clutter of unbranded varieties ITC used a combination
of functional and emotional attributes to position the products.
Now these are mass market products. It is the whole family that
consumes these products. Khusiyan Chun Chun Ke or happiness
collected by pieces is the tag line which makes an instant
emotional appeal. At the same time, the products contain a 1 liner
about the variant which highlights the functional benefit. Value
Proposition: Aashirvaad believes in delivering its promises of
providing the choicest and the best very seriously along with high
quality so that the mother can deliver her promise.
Suggestions/ FutureSuggested New In Atta Aashirvaad Healthy Atta
Aashirvaad Diabetic Atta Aashirvaad Obesity Atta Aashirvaad
Cholestrol Atta
18 | P a g e Aashirvaad Energy Atta
Suggested New In Salt Table Salt Coarse salt Kosher salt
Suggested New In Spices Aashirvaad Sambhar Masala Aashirvaad Rasam
Masala Local variants that work in particular locations Masala for
Pav Bhaji, Pani Puri etc Aashirvaad is largely associated with atta
and has failed to establish a connect with target when it comes to
salt, spices,RTE and instant mixes. It is dur to the low
advertising spend. Hence, the brand should aim at increasing its
spend on promotion and advertising It should also try to tap the
South Indian market
How does it fit?Aashirvaad is a good fit in the ITC product
portfolio because it has managed to establish an emotional connect
with the Indian housewife and it also symbolises the relationship
with the Indian farmer. It is a 1000 crore plus company which has
helped ITC leverage on its strength of the distribution channel as
well as procurement via e-choupal and hence assure high quality.
ITCs strength is not in product development and since staples do
not need much of an innovation and more of quality, it is a good
fit. ITC has also some experience by being in the hospitality
sector and can leverage upon the learnings about the Indian palate
to provide suitable offerings in the Ready to Eat and Instant Mix
range.
19 | P a g e
Sunfeast BiscuitsGenesisOn July 30th, 2003 ITCs Food business
announced the launch of Sunfeast range of high quality and great
tasting biscuits with offerings in Glucose, Marie and Cream
segments. It marked ITCs entry into the branded biscuit market with
a range of offerings in both basic and value added segments.
"Sunfeast", with the Brand Essence "Spread the Smile" connotes
happiness; contentment, satisfaction and pleasure one would derive
from great tasting and high quality biscuits. The brand positioning
and imagery is reinforced by the Sun mascot conveying the emotional
and gratifying aspects of the product. This offering from ITC Foods
was in tune with the company's strategic direction to develop new
product lines by synergizing its proven competencies. With the
launch of Sunfeast, ITC entered the branded food product category.
Sunfeast later became the umbrella brand under which ITC also
launched pasta and noodles. The brand extension of Sunfeast into
the pasta and noodles segments was a puzzler for everyone in the
FMCG sector. In 2003, the biscuit segment was a Rs. 8000 Crore
market and was growing at 15%. The Indian consumer had accepted
biscuits as a healthy packaged food, drifting from the previous
mentality that biscuits were only for the old and those who were
recovering from illness. It had become a household commodity and
was taken positively by the Indian consumer. This was a very
lucrative market for ITC to enter and build on its core
competencies of: Depth of distribution. Brand building
capabilities. Ability of quality outsourcing.
ITC had conducted extensive market research before the launch of
Sunfeast brand. The outcome of this research was very positive for
ITCs plans of launching its brand of biscuits. The research
stressed on the fact that the Indian consumer was vying for new
taste. Hence, ITC decided to launch Sunfeast. The launch of
Sunfeast was backed by extensive marketing across a number of media
including TV, radio and print media. Sunfeast range of biscuits was
competitively priced and included two new product innovations -
Orange flavored Marie and Butterscotch flavored Cream biscuits
launched for the first time in the Indian market. The results of
this venture by ITC were seen soon enough and Sunfeast achieved 7%
market share within 3 yrs of its launch and was ranked 3rd in the
biscuit market.
20 | P a g e Sunfeast was positioned as An exciting brand which
gives contentment, satisfaction and pleasure. It was targeted at
the entire Great Indian Middle Class. The mascot was the Animated
Sun, which was promoted as a symbol of contentment, satisfaction
and pleasure.
RationaleITCs market research which was carried out before the
launch of Sunfeast was also an encouraging factor for it to enter
the biscuit industry. The industry was growing at a steady rate of
15% and presented great opportunities for other players to enter
the market. All these reasons along with ITCs core competencies of
depth in distribution, brand building capabilities and ability of
quality outsourcing paved the way for it to launch the Sunfeast
range of biscuits.
Product Lines and VariantsConsumers expectations from ITC were
high. They expected great taste, quality and affordability. To
address to this need of consumers, ITC had the following product
lines and variants: 1. Glucose Biscuits: For the light hunger
pangs, Sunfeast glucose biscuits provide a wholesome and nutritious
choice. These glucose biscuits were in direct competition with
Parle-G and Britannias Tiger biscuits. This was the primary
offering from Sunfeast as the Indian consumption of glucose
biscuits was very high. 2. Marie Light: Much like the Glucose
biscuits, Marie was also a common household biscuit category which
had high consumption among the Indian consumers. This was a
point-of-parity for ITC with Parle and Britannias variants.
Sunfeast however innovated this category and released the following
variants: a. Marie Light Original b. Marie Light Orange c. Marie
Light Oats 3. Snacky: Sunfeast snacky falls into the salted biscuit
category and competes directly with Britannias Timepass biscuits
and Parles Monaco biscuits. Sunfeast innovated this category as
well by releasing the following variants: a. Classic Salted b.
Chilli Flakes 4. Milky Magic: Sunfeast Milky Magic biscuits strike
the perfect balance between energy that aids physical strength and
mental ability. The Milky Magic biscuits compete with Britannias
Milk Bikis and Parles Milk Shakti biscuits. 5. Sweet n Salt:
Sunfeasts Sweet n Salt biscuits compete with Britannias 50-50 and
Parles Krack Jack biscuits. 6. Nice: Sunfeast Nice biscuits are
sugar coated biscuits which compete with Britannias Pure Magic
Biscuits and Parles Magix biscuits. 7. Special Cookies: Sunfeast
Special Cookies are high quality and rich-in-taste biscuits that
compete with Britannias Good Day biscuits and Parles 20-20
biscuits. These are available in the following variants: a.
Cashew
21 | P a g e b. Butter These Special Cookies were further
innovated by Sunfeast to add Special Creams biscuits than contained
a thick layer of cream between two Special Cookies biscuits. The
Special Creams are available in the following variants: c. Orange
d. Chocolate e. Elaichi 8. Dream Cream: This category of biscuits
fall into the Cream Biscuit family. They compete with Britannias
Treat biscuits and its variants as well as with Parles Kreams. They
are available in the following variants: a. Choco-Vanilla b.
Strawberry-Vanilla c. Bourbon d. Orange Cream e. Butterscotch Cream
9. Dark Fantasy: Sunfeasts Dark Fantasy range of biscuits is
high-end biscuits and falls into premium category. The latest
competition for this range is being felt from Oreo biscuits. They
are available in the following variants: a. Vanilla b. Chocolate c.
Choco Fills Apart from the Biscuits category, ITC forayed into the
Noodles and the Instant Pasta segments under the Sunfeast umbrella
brand.
From Biscuits to Pasta to NoodlesITC launched its Sunfeast Pasta
Treat in the year 2005. This was done to include healthy snacking
options for the consumers. This was a major product innovation by
ITC as it was the first FMCG to enter the instant pasta market.
Although there was a first-tomarket advantage, ITC could not build
on this and was followed by Nestles Maggi Pazzta, HULs Knorr Soupy
Pasta and Bambino Agro Industries Instant Pasta, among others. The
instant pasta market is predicted to be worth Rs 1500 crores in the
next 5 years and all the players could reap benefit from this. The
variants under Sunfeast Pasta Treat are as follows: 1. Masala 2.
Tomato Cheese 3. Cheese 4. Sour Cream
22 | P a g e ITC also launched Sunfeast Yippee! in the year
2009, which falls into the Instant Noodles category. The instant
noodles was a Rs 1000-crore market, growing at 10-15% annually. It
was dominated by Nestles Maggi which had a market share of about
70%. A lot of other players had also entered this market as shown
in the table below: The 2 - Minute War Companies Nestle Nissin
Capital Foods Ltd Future Group Aditya Birla Retail GSKCH HUL
ITC
Brands Maggi Top Ramen Ching's Secret Tasty Treat Feasters
Horlicks Foodles Knorr Sunfeast
Sunfeast Yippee! comes in the following variants: 1. Classic
Masala 2. Magic Masala ITC wanted to leverage the growth of these
two segments and hence entered them under the brand name of
Sunfeast. The rationale behind using the Sunfeast brand for this
purpose, as explained by ITC was that Sunfeast was already an
established brand and any newly created brand would require huge
investments in brand building. These extensions under the Sunfeast
brand were a shocker to the other players as Sunfeast had the
consumer perception of being a Biscuit Brand. We as a group think
that this wasnt the smartest of moves by ITC, as the consumer
relates the brand Sunfeast with biscuits and not with other food
items. This might result in brand dilution of Sunfeast. In case of
Nestle extending their Maggi brand to include Pastas, the rationale
is that Noodles and Pastas are related categories which fall into
the healthy snack segment. A consumer would view both of them on
the same platform while thinking of an evening snack. But, in case
of Sunfeast this isnt true as Sunfeast is known for its biscuits
and not other healthy snacks. This looks like a bold move from ITC
and might need a lot of work on brand management of Sunfeast.
Future ProspectsSince ITC has taken the step of adding Noodles
and Pastas under the Sunfeast brand, the future would be to extend
the product offering under Sunfeast as the brand umbrella. ITC can
think of entering the Soup Segment which is currently headed by
HULs Knorr. Crossover products such as Soupy Noodles could also be
a future prospect of ITC under the Sunfeast brand. Other
international cuisines can also be added to this product category.
As far as the biscuits category is concerned, we can expect brand
extensions in the Dark Fantasy, which is an indulgence
category.
23 | P a g e
BingoGenesisBingo! was launched in March 2007 with a wide range
of exciting packaged salted snacks. The range includes multiple
flavour variants of Potato Chips & Finger Snacks. The brand is
associated with youth, fun and excitement. It fulfils the consumers
need for variety and novelty in snacks. At present Bingo! has 3
sub-brands in its portfolio, each of which have unique values based
on product differentiators.
Rationale and What the Group Thinks The organised snacks
category had been growing at a healthy 30 per cent annually with
little or no differentiation between the existing players. Market
research and testing showed that Bingo products were crunchier and
crisper. The differentiation also extends through varied shapes and
textures. The move is well aligned with the broader corporate
philosophy of ITC to grow its non-cigarette businesses. Lower
gestation period compared to hotels and paper industry. A robust
distribution network across India is a big plus making market
penetration into the hinterlands easier. The strong farm linkages
that ITC has developed due to its E-Choupal Initiative enables it
to source potato and other raw materials for its chips at a lower
cost. Potato-based snacks are the largest product segment (85
percent share) in the Indian snacks market. This gives ITC a great
chance to make its presence felt in the category. When launched in
2007, ITC was already in the food business with Kitchens of India
and Sunfeast.
Product Lines and Variants1. BINGO POTATO CHIPS - Bingo! Potato
Chips are all about irresistible combinations. They are
acombination of crunchy potato chips along with yummy flavors.
Variants Potato Chips Variants Product Description Premium Salted
Salted crunchy potato chips International Cream N Onion Cheese,
cream and spring onion on potato Chips Red Chilli Bijli Potato
chips spiced up with red-hot chillies Spicy Masala Remix A mix of
spicy masalas on potato chips Juicy Tomato Ketchup Ripe tomatoes on
crisp and crunchy potato chips Pickle Tickle(NEW) Combination of
achaari lemons and potato chips Fiery Red Tomato Potato Chips with
dry red chillies and red tomatoes
24 | P a g e Oye Pudina Potato chips with sprinkling of fresh
Pudina leaves
2. BINGO MAD ANGLES - Bingo! Mad Angles has carved a niche for
itself in the consumers mind and issynonymous with the perfect
triangular snack. Innovative flavours on a traditional khakra base
makes it a snack thats truly "har angles se Mmmm" Variants Mad
Angles Variants Product Description Mad Angles Tomato Mischief
khakra with tangy tomato flavour Mad Angles Chilli Dhamaka Crunchy
triangles with a taste of chillies Mad Angles Achaari Masti Mad
Angles and sweet-sour mango pickle Mad Angles Masti Chaat(NEW)
Combination of fresh pudina, tamarind & yogurt
3. BINGO TEDHE MEDHE - Bingo! Tedhe Medhe is the popular spindle
shaped format from Bingo! thatis a delicious blend of handpicked
spices with an aroma that makes one crave for more. The taste of
fiery sparks which masalas leave on ones tongue is an experience
with savouring! 4. BINGO TANGLES - The latest addition to the
Bingo! portfolio is Bingo! Tangles in masala and tomato flavours.
Each piece of this innovative crunchy snack is made out of strands
loaded with lip smacking masala or tantalizing tomato flavours.
Once bitten, they break into many more delicious strands in the
mouth
Segmentation/ Targeting/ Positioning Segmentation: Geography
North-Spicy Red Chilly East-Mustard Sting West-Plain Salted
South-Nimbu Spicy Psychographic Outgoing Fun loving Carefree
Demographic 15-30 age group
Targeting: Bingo has targeted the age group between 15-30, which
includes students, office goers and evening snackers. Positioning:
Bingo! Is Positioned as a youthful and innovative snack, offering
the consumers with choice in terms of both formats and traditional
flavours. Value Proposition: Fulfilling the consumers need for
variety and novelty in snacks.
Future Growth prospect for the snacks industry is positive, with
the expected increase in urbanisation, busy schedules, changing
eating habits and increasing influence of children in the purchase
of packaged food items in the forecast period. The rural market
will become more important, as a result of improved household
disposable income and increasing availability of sweet and savoury
snacks. As consumers are becoming more health conscious, niche
products like low-fat, sugar-free, lowsalt, non-fried or roasted
snacks are expected to gain popularity.
25 | P a g e Competition will further heat up with several firms
such as Perfetti van Melle, Kohinoor Foods, Dirty Potato and Leher
Namkeen etc entering the fray. Existing firms will adopt organic as
well as inorganic route for growth . To encourage impulse purchase,
new product development and innovation will be the norm and new
flavours and types will be added to manufacturers product
portfolios. An increasing number of products which cater to Indian
taste preferences will be launched. The Indian-centric flavours
help manufacturers to differentiate their offerings from
established brands in the market.
How does it fit?Bingo as a brand fits strategically into the ITC
portfolio. With experience in the agro foods business and a market
increasing at 25-30% annually, it was an opportunistic move by ITC
to tap the snacks segment. Bingo as a brand has great amount of
association with other brands in the ITC portfolio. It carries the
same legacy of innovative products, different from the market
offerings served in a unique way.
26 | P a g e
Recommendations for the ITC Foods PortfolioIn order of priority,
as a group, we believe the next few important steps should be thus:
Release a chewing gum variant in the confectionery segment o This
is due to the largely underplayed segment where Prefetti rules the
roost and developing competencies in this arena will give a full
blooded rounding to the portfolio and a completion of the pie
Release RICE as one of the staples o Being high consumers of rice
and being an integrated value chain player in the staples market,
ITC Foods needs to develop technologies for creating a product of
this commodity too. Aashirvaad already is being established as
household name for quality staples in Aata and Dal and Salt, the
next logical step is to complete the circle by coming out with Rice
Extend brand variations in the Sunfeast Biscuits provide more
premium variety o India is heading for differentiation within the
premium category and hence we believe that in order to increase
wallet share, expansion should be done in this segment. Extend into
Exotic Regional Sweets and Exotic Herbal Products in the Kitchens
of India brand o This allows for logical extension in due to the
premium positioning of the brand along with increasing propensity
of the Indian Consumer to spend and consume. The Indian consumer is
awaiting exclusive products differentiated at the regional level
and customized for them.
Does it make sense?Extending the Sunfeast brand into instant
noodles whilst being a major player in the biscuits segment? o As a
group, we believe that it doesnt make sense to dilute the brand
equity being established in the market for Sunfeast Biscuits. A
Niche segment is being carved out for Sunfeast, by diverting the
consumers attention into thinking Sunfeast is a portfolio of
various products will only add to the confusion. We believe that
another brand be created for the instant foods category since there
is potential growth. Overplaying the Aashirvaad card to launch
variations in the staples category? o As a group, we strongly
support this move. Why not? When the brand is bring established as
a household name for quality assurance and excellence in the
staples category, it only makes sense to complete the circle and
possess maximum shelf space of the Indian household and for this it
is critical to develop the synergy with the rice cultivators. An
exit strategy? o On the contrary, we believe ITC should only
strengthen the portfolio. Being an old player in the refined oil
category (they used to own Sundrop), they should consider
re-launching themselves into more food categories to help morph ITC
Foods into a stronghold of household of food brands.
27 | P a g e
Bibliography1. www.itcportal.com/itc-business/fmcg/foods/ 2.
http://www.docstoc.com/docs/14515330/ITC-Foods-Project 3.
http://www.itcportal.com/about-itc/chairmanspeaks/ChairmanSpeak.aspx?id=807&type=B&news=chairman-1997
4. http://www.itcportal.com/ReturnViewImage.aspx?fileid=187 5.
http://business.rediff.com/slide-show/2010/may/04/slide-show-1-the-secret-of-itc-foodsterrific-success.htm
