FMCG brands up pace in India

21 March 2012

NEW DELHI: Many brand owners in the Indian FMCG sector are trying to create new categories, and thus drive growth through gaining a first-mover advantage.

Agro Tech Foods, a division of ConAgra Foods, has traditionally drawn the bulk of its Indian sales from the Sundrop brand of edible oils, but is now pushing less established lines like popcorn and peanut butter.

In keeping with this goal, the firm is attempting to boost its local distribution network from around 400,000 stores today to around 1m in the next 12 to 18 months.

"There will always be a temptation to not spend that 10–15% on the future. But, if you don't do it today, you won't have a future," Sachin Gopal, CEO of Agro Tech Foods, told the Times of India.

"To create a new category is the hardest of the lot. But there are enough examples of people who have created categories and have enjoyed a market leadership. Those who were at number two or three will only struggle to make money."

ITC experienced this challenge first hand. The food group has long boasted the capacity to manufacture a mass market noodle brand, but will be forced to compete with Nestlé's dominant offering, Maggi.

"It takes two-to-three years to develop a good product. If we have a differentiated product we'll get into it. To get into a similar product which is already in the market would have been much easier for us. But it is difficult to go beyond a certain share when you are number two or three," Chitranjan Dar, divisional chief executive at ITC Foods, said.

Elsewhere, Yakult Danone India has invested over Rs200 crore in India since 2007 to try and stimulate interest in the probiotic segment that it has pioneered highly successfully in other countries.

"Being global leaders, establishing a strong probiotic food category in India was our key objective and we focused largely on educating consumers about probiotics," a company spokesperson said.

Looking ahead, the organisation, which sells 2m bottles of Yakult a month at present, believes the Indian probiotic market could quadruple in size by 2015, reaching a value of Rs40 crore.

MTR Foods is also endeavouring to tap changing popular habits concerning snacks in the south of India.

"We are betting big on conversions from unbranded to branded snacks. The opportunity is huge as the unorganised snack market in Karnataka alone is around Rs 700 crore," said Sanjay Sharma, CEO of MTR Foods.

Data sourced from Times of India; additional content by Warc staff