Financial Daily from THE HINDU group of publications
Monday, Feb 14, 2005
Marketing - Strategy
With summer approaching, cos line up `cool' offers
Sindhu J. Bhattacharya
New Delhi , Feb. 13
WITH winter on the wane and temperatures set to rise, India Inc is firming up plans for new product launches, expanding existing ones and chalking out pricing strategies to beat the summer heat.
For certain product segments, particularly beverages including soft drinks, ice-creams and other milk-based products, the period between March and October accounts for as much as 85 per cent of annual sales, hence companies dealing in these products have already donned the war paint.
Besides, with a steep rise in input costs, including prices of sugar, packaging materials and other raw materials already denting margins, most of these companies are also debating whether to alter the price-value equation this summer.
Take the case of Universal Dairy Products Pvt Ltd, the Jaipuria Group company that has a technical tie-up with French dairy major Soddial for the Cream Bell brand of ice-creams in India.
After two years of slow offtake, the company has decided to invest about Rs 30 crore in putting up its second ice-cream plant in Uttaranchal, anticipating increased demand this time around.
Says its Chief Executive Officer, Mr M.S. Parikh, "We are putting up the second ice-cream facility since we anticipate sales to grow exponentially over the next couple of years. The Uttaranchal facility will have installed capacity of about eight million litres per annum and should be on stream by the end of this year."
Universal is eyeing Rs 30-crore sales in 2004-05 from the Cream Bell ice-cream business, up from Rs 25 crore in the previous fiscal.
The Anand-based Gujarat Cooperative Milk Marketing Federation (GCMMF) has lined up a host of new product launches to beat the heat. These include the `Masti' brand of spiced buttermilk in cartons, taking packaged `lassi' and cold coffee from their current regional ambit to the national circuit and expanding the range of flavoured milk.
Says the GCMMF General Manager Marketing, Mr R.S. Sodhi, "The summer months will see us consolidate our topline growth with emphasis on these new products. We have priced these competitively. For example, the buttermilk is priced at Rs 5 for 200 ml and we feel these products have good potential."
He said these new products account for 25 per cent of the company's sales.
And while neither Coca-Cola India nor PepsiCo want to divulge their peak season plans just yet, industry sources aver that both companies may be contemplating a price increase in the 200- and 300-ml pack sizes due to steep input cost increases and continuing Special Excise Duty of 8 per cent.
"The soft drink industry bled last summer due to the affordability strategy of lowered price points. This year, both the companies want to make up for past losses and are expected to raise prices selectively. Also, the 200-ml pack size will be promoted in select markets only," they say.
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