MxMIndia

Tag: beverages

  • Modern retail shoppers seem to be less impacted by economic factors like inflation, high interest rates and slower growth, says Nielsen's April report

    Shoppers at retail chains buy premium items

    By Sarah Jacob & Writankar Mukherjee

     

    Shoppers at food and grocery retail chains appear disconnected from the overall weak consumer sentiment in the country as they upgrade to premium products and buy bulk packs, helping big retailers and consumer goods firms boost average realisation per sale.

     

    Daily use products like hair oil, refined edible oil and toothpaste, and impulse-driven categories such as biscuits, beverages, salty snacks, instant noodles and chocolates are growing much faster in sales value than the number of units sold in modern trade, a report by market tracker The Nielsen Company says.

     

    Modern or organised retail within food and groceries refers to convenience stores, supermarkets and destination outlets called hypermarkets. This is opposed to the traditional kiranas or neighbourhood stores.

     

    Modern retail shoppers seem to be less impacted by economic factors like inflation, high interest rates and slower growth, says Nielsen’s April report.

     

    Industry officials say this trend also has to do with consumer’s shopping motivations. “Consumers are purchasing larger packs, and more value-added products in modern retail since they are showing a tendency to complete their monthly shopping in such stores. They are topping up with smaller purchases from kiranas,” said Dabur India CEO Sunil Duggal. Value growth of one-litre Real juice pack is almost double in modern retail than kiranas.

     

    Manish Tiwary, executive director-sales and customer development at the country’s largest consumer goods company Hindustan Unilever, said modern retail consumers are comparatively better off. “The profile of shoppers in modern trade clearly reflects a higher living standard measure. This is one of the main reasons for the slightly more premium portfolio (in big chains),” he said. HUL’s largest brands within the personal wash category in modern trade are Dove and Pears, while Lux and Lifebuoy rule the roost overall.

     

    Nielsen says stronger purchasing power of modern trade consumers and wider product assortment at such chains encourages impulse purchases and deal-based large-pack buys. “This mix of affluence and experimentation is an invaluable asset for all stakeholders. This can be useful in times of uncertainty like 2011 since the sharp increases in value growth indicates resilience amongst them,” said Adrian Terron, Nielsen Company’s executive director (retailer and shopper).

     

    He said refined edible oil and instant coffee are examples of categories where value growth outpaced volume growth by 2-3 times. Of course, product prices have increased 2-8 per cent over past year, but Nielsen says the effect has more to do with shopping behaviour.

     

    Spencer’s Retail chief (operations and merchandising) Mohit Kampani said nearly 30 per cent of growth that Spencer’s Retail posted across its 189 outlets was from consumers upgrading purchases last year. “This is also because the price points of products being stocked have widened considerably. A year ago, skincare brands would have been priced between 10 and 800 while today it is between 10 and 2,200,” he said.

     

    Devendra Chawla, president (Food Bazaar category) of India’s largest retailer Future Group, said value-added categories are incubated at modern trade outlets: “A lot more cookies, cream and health biscuits have been launched in the past 18 months than mass biscuits, which makes value contribution higher, although the category is growing double digits by volume.”

     

    Even in personal care, anti-ageing and performance creams are growing much faster than general-purpose creams.

     

    HUL’s Tiwary said it sometimes launch certain pack sizes in modern trade first and then in other channels. Future Group’s Chawla said launch of international foods is also contributing to this trend. This includes packaged cheese, international pasta and brands like Choco Pie among biscuits and Ferrero Rocher in chocolates that are resulting in faster value growth than volume. Overall, modern trade is proving more profitable for marketers because profit margin is higher on premium products and large packets.

     

    Meanwhile, mobile phone and durable makers too report higher sale realisation in large chains due to rising demand for premium products. Research in Motion (RIM), makers of the BlackBerry smartphones, said Indian consumers are upgrading from feature mobile phones to smartphones. “This is boosting the average selling price of the handset market, even though overall demand is yet to pick up,” RIM India Managing Director Sunil Dutt said. He estimates that the smartphones market is growing 60-70 per cent a year in the country, while feature phones at 10-15 per cent.

     

    Panasonic India Managing Director Manish Sharma said: “Consumers are increasingly going for large screen televisions, which is pushing up value sales.” The average selling price of the company’s flat panel TV business has gone up by more than 5 per cent in six months.

     

    Korean brand Samsung too says sales of its high-end split ACs, frost-free refrigerators and smartphones are growing faster than lower-end products.

     

    Source: The Economic Times
    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • A Coca-Cola spokesman confirmed the company is introducing Citra in "a few towns in Maharashtra and Gujarat" on a pilot basis

    Eye on volumes, Coca-Cola to revive Citra after 19 years

    By Ratna Bhushan

     

    Coca-Cola will revive Citra, a clear-lime drink it bought from Ramesh Chauhan two decades ago but junked in favour of Sprite, in a move that analysts believe is more to target price-sensitive consumer segments than to unlock the brand’s heritage value.

     

    A person familiar with the top beverages maker’s plans said Citra will be priced about 20 per cent cheaper than existing lime-lemon drinks such as its own brands Sprite and Limca as well as PepsiCo’s Mountain Dew and 7 Up, to target a wider audience and take on smaller brands.

     

    A Coca-Cola spokesman confirmed the company is introducing Citra in “a few towns in Maharashtra and Gujarat” on a pilot basis. This will be followed by a staggered launch across other metros and bigger cities.

     

    The move has surprised industry watchers because Coca-Cola’s Sprite, the second-largest soft drink brand in the country after Thums Up, leads the lime-lemon drinks segment, which is the fastest-growing soft drink category in India’s Rs13,000-crore fizzy drinks market.

     

    Among those surprised is Ramesh Chauhan, who created brand Citra and made it popular in the late 1980s and early 1990s.

     

    “After keeping the brand in cold storage for so many years, it’s strange they want to re-introduce it now, especially when they have a strong presence in the clear-lime segment,” Chauhan said. “If they are looking for retention and heritage value, then logically even Gold Spot should be revived.”

     

    When Coca-Cola re-entered India in 1993, it bought out all Parle brands except Bisleri from Chauhan.

     

    Move aimed at mopping up volumes

    While Citra and Gold Spot were phased out to make way for Coca-Cola’s global brands Sprite and Fanta, respectively, Thums Up, Limca and Maaza were retained. Shashi Kalathil, CEO of management advisory firm Y-factor and partner at private equity fund Exponentia Capital, said the move may be aimed at mopping up volumes. “Coca-Cola probably doesn’t want Citra’s pricing to impact its larger brands. So this could be more of a pricing game and about treating Citra more as a trademark than a brand,” he said.

     

    Parle brand again

    It’s history that the US major sidelined Parle’s cola brand Thums Up to promote its own brand Coca-Cola for years before waking up to the potential of the Indian brand and backing it.

     

    Now it seems like deja vu for Coca-Cola as it is banking on a Parle brand once again to push market share in the lime segment. The Coca-Cola spokesman said Citra would not cannibalise its existing lemon drinks because there is ample room for multiple brands in a developing segment like sparkling fizzy drink in a high-potential market such as India.

     

    Devendra Chawla, president of food & FMCG segments at the country’s largest retailer Future Group, said the move will aid the growth of the clear-lime category, which is already seeing heightened brand activity. “To grow carbonated soft drinks’ per capita in India, apart from growing colas, it’s critical to activate flavours which have natural acceptance from Indian consumers such as lime and mango,” said Chawla, who formerly worked with Coca-Cola.

     

    India’s per capita consumption of carbonated drinks is just 11 litres a year compared to 34 litres in China and 675 litres in Mexico.

     

    The lime-lemon category in India has been growing 16-17 per cent a year, ahead of colas at about 11-12 per cent and orange drinks at 8-9 per cent. Apart from being a familiar flavour that Indians consume at home (in the form of nimbu paani), lime-lemon drinks are considered ideal thirst quenchers.

     

    Both Coca-Cola and PepsiCo have been promoting their brands aggressively in this segment. PepsiCo has Bollywood star Salman Khan endorsing Mountain Dew and actor Sharman Joshi for 7 Up, while Coca-Cola pushes clear-lime drink Sprite and cloudy lemon drink Limca on the irreverent and freshness platforms, respectively.

     

    Source:The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved