Over 90% of product launches fail in India

21 July 2010

NEW DELHI: Over 90% of the new products launched in India in the recent past failed to make an impact among shoppers, indicating the challenges facing brand owners in the country.

According to estimates from AZ, the market research company, 1,500 offerings have been introduced in India in the last 18 months, equivalent to approximately three per day.

The agency reported that this activity peaked in the FMCG industry, with segments such as telecoms, apparel, automotive and consumer durables also receiving considerable interest.

However, only 5% of products rolled out during this period experienced any degree of longevity, with the remainder being withdrawn after they were unable to gain meaningful traction.

Marico, the FMCG firm, halted the test phase for Saffola Zest, a snack carrying a "good for you" positioning, due to a lack of uptake, but is currently in the midst of a pilot scheme for Saffola Oats.

"It has to first meet action standards. The prototype will run for at least six months," Saugata Gupta, ceo of Marico's operations in this area, said.

Parle, a competitor to Marico, has attempted to extend its Monaco biscuit range by unveiling a corresponding selection of crisps, and believes a long-term approach will be essential.

"Healthy snacks as a category is small at the moment, just about Rs 100 crore. We don't expect it to grow overnight. Until that time we will stick around," said Pravin Kulkarni, Parle's general manager.

Santosh Desai, chief executive of Future Brands, another consumer goods specialist, argued there is much room for optimism as supermarkets and chain stores enhance their role.

"There are still a large number of categories in India where the organised to unorganised ratio is low. As modern trade evolves, the need for organised products will grow," he suggested.

Technopak, the consultancy, has predicted the share of the retail market held by the latter of these sectors will climb to 25% in India in the coming decade, compared with roughly 5% at present.

"Launching brands then will be easier,” Purnendu Kumar, associate vice-president at Technopak, said.

"A marketer will not need to set up an exclusive distribution chain or network of stores. The footprint of organised retail outlets will suffice to push his products."

Nestlé has achieved particular success in India through expanding its Maggi portfolio, which now houses everything from noodles to ketchup.

Hindustan Unilever also released Knorr Soupy Noodles at the end of March, and adopted a strategy using modern retail formats nationwide alongside traditional channels in the south of the country.

A spokesman for the company stated that Soupy Noodles had been "well received" by shoppers thus far.

Data sourced from Business Standard; additional content by Warc staff