Financial Daily from THE HINDU group of publications
Wednesday, Jun 22, 2005
Marketing - Brands
Agri-Biz & Commodities - Sugar
Balrampur Chini exits branded sugar biz
Kolkata, June 21
INDIA'S biggest sugar producer, Balrampur Chini Mills Ltd, has withdrawn from the branded sugar sector after failing to generate much enthusiasm among the consumers.
The company introduced its branded product under the Balrampur Chini (Pyaar, Dulaar, Sanskaar) brand name approximately two and a half years ago. After a market research, 300 distributors were appointed. The target was to reach more than 10,000 outlets throughout the country.
However, industry sources said that the company failed to make an impression on the market. Subsequently, it had decided to stop marketing its products in the branded packet form. Mr K.N. Ranaseria, Chief Executive, told Business Line that the company has "more or less" stopped marketing its branded sugar.
According to him, the cost dynamics and the price difference between branded and unbranded sugar in the market place forced the company to withdraw from this business.
"There used to be Rs 3-4 per kg difference in price of sugar between branded and unbranded ones. The consumers were not eager to pay that premium for the branded product. They were happy with the unbranded material," Mr Ranaseria said.
Branded sugar meant extra cost for the company on account of packaging, transportation and dealers' profit margin. These two factors made branded sugar business an unprofitable venture for Balrampur Chini.
In fact, share of branded sugar business in India, which consumes 180 lakh tonnes every year, would be only 1-2 lakh tonnes. Other major players in this sector include Dhampur, EID Parry, Tirveni and Simbhaoli. Branded sugar was first launched in 1992 by Mavana Sugar Mills in northern India.
According to Mr Ranaseria, the branded sugar business hardly generated 1 per cent of the company's total turnover, which was Rs 930 crore for the year ended March 31, 2005.
It may be noted that Balrampur Chini made similar futile foray into IMFL (Indian-made foreign liquor). The company launched two brands of whisky, 4U and Blue Line, and rum, Black Punch, in the fourth quarter of 2002 in Uttar Pradesh, but two years later, it withdrew from the sector.
"It was totally a different kind of business. We were not cut out for it. So, we withdrew from it," he said. At present, apart from sugar, Balrampur Chini is producing ethanol, molasses and power.
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