From THE HINDU group of publications
Thursday, November 29, 2001


Will Dandi steal a march?

Purvita Chatterjee

From sarees to salt. Certainly not a natural progression in any business. If a company like the Rs 100-crore Surat-based Kunvar Ajay Industries has done it, then it is indeed dynamic on its part. Entering the highly aggressive FMCG industry is going to be no easy feat, especially with no experience in marketing consumer products such as salt, atta, rice, soaps, masalas and namkeens.

Unleashing a multi-brand strategy, the company has decided to launch its first product, salt, under the Dandi brand, with more products to follow under different brand names. With no synergies between the two lines of business, the 20-year old saree player has decided to get adventurous and venture into the guarded territories of biggies such as Hindustan Lever and the Tatas.

But why salt? Well, Diwali is just over and the first product which people buy happens to be salt, explains Sureshchand Agarwal, Managing Director, Kunvar Ajay Industries, who wants to make an auspicious beginning in the FMCG arena. Pricing his brand of Dandi on par with the existing brands of Annapurna and Tata salt, the Rs 7 per one kilo bags are being made available at a national level.

Relying purely on internal funds, the company, which heavily advertised its saree brand on a budget of nearly Rs 25 crore, has marked a healthy budget of Rs 10 crore for its new salt brand. Using the USP of being a pure product, it is the triple-refined process in manufacturing which is expected to hold the product in good stead (considering most branded salts are double-refined). Says Agarwal, Our salt is absolutely pure and devoid of any impurity. His claims may be valid, but Nirma has already taken the lead with its Shudh brand as far as the pure positioning of the product and making a similar claim may or not help the saree maker who is trying out the same positioning. However, it has added the baseline, Amrit hai buddhi aur shakti ke liye (good for the body and the mind) which might make a difference to the USP of its brand. Considering its competitors have already made claims of their brands being iodised and free-flowing, highlighting the health factor in salt may add a new dimension to the brand.

Having reached saturation levels in terms of turnover for its saree brand, it is now time to explore another industry which holds more promise for the company. Apart from the Dandi brand, the company intends launching almost 25 consumer products such as atta, oil, soap, washing powder, sugar, rice, masalas and snacks in the months to come.

Treading into the competitive arena of bigger and established players, Kunvar Ajay is out to march into any territory of the FMCG business which portends growth. Branded salt has been slightly restricted in terms of the number of players with the market valued at Rs 500 crore with almost 85 per cent of the production remaining unbranded. With a few branded players in these respective food categories, Dandi is no doubt competing against Hindustan Levers Annapurna franchise. However, not much headway has been made in any of these categories in the branded market. Scope exists in terms of a market expecting certain quality and hygiene standards which loose unbranded products can never match.

States Jagdeep Kapoor, Managing Director, Samsika Marketing Consultants, It is a David versus Goliath strategy whereby a small player is out to create its own space. In fact, there has been a vacuum in the branded salt market with most players being sceptical in terms of treading into the territory of the big FMCG players already dominating the market.

The company has also decided to consciously price its salt on par with the market leader (Tata Salt) to ensure that its premium positioning in the branded salt market is not hampered. If the leader drops its price so will Dandi salt. The idea is to keep its prices on par with the market leader, states Kapoor.

But whether Dandi has launched itself at the right time may be debatable considering the slowdown in the FMCG industry. Adds Kapoor who has been appointed as a consultant for the company, Recession is all in the mind. However, this is a huge commodity-driven market and it is a challenge for any staple food brand.

Realising that distribution will be the key to getting its products accepted, the company has already covered 414 towns reaching out to half-a-million retailers within the 14 weeks since launch. It aims to reach out its salt to two lakh retailers by March. Besides, it has also decided to sell its salt on an advance demand draft system, breaking away from the long credit-based system adopted for its saree business.

Some amount of rural marketing is also being practised by the company whereby special vans and screen will be set up to reach out to the interiors of the country. Roping in the services of the Mumbai-based agency, Pinky Advertising, Dandi Salt is being reached out to the interiors of Kerala and Tamil Nadu initially, considering the brand has already a healthy recall value in the northern belt of the country.

But the company must also realise that it has to keep the distribution channels separate for its food and non-food products. Hindustan Lever has separate distribution systems since the shelf life for the categories differ. Kunvar Ajay might have to do the same as and when it launches its range of consumer products. Besides, Nirma recently relaunched its Shudh brand of salt after it failed to garner market share for the past two years and distribution failure may have been the main reason behind it.

Analysts tracking the FMCG sector feel that different distribution streams in FMCG are necessary. States Gaurav Narain, analyst with SG Asia Securities, While there might be potential for food brands in the huge unorganised market, any company which is getting into consumer products has to distinguish between the distribution channels for food and non-food items. Thus the challenges faced by Kunvar Ajay may increase as and when it decides to get into soaps and detergents in terms of setting up fresh channels to distribute its brands.

With intentions of emerging as a strong player in the FMCG industry, for the next 18 months Kunvar Ajay has already projected a turnover of Rs 100 crore from salt alone.

Next on the cards is an atta brand (scheduled for January). It will be interesting to see where the Dandi march leads.

Pic.: Mr Sureshchand Agarwal, Managing Director, Kunvar Ajay Industgries, Mr Jagdeep Kapoor, Managing Director, Samsika Marketing Consultants.

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