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Thursday, Feb 21, 2002

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Southside story

Ratna Bhushan

Whether it's test-marketing, customisation or regionalising, it's the Southern consumer that's calling the shots - at least when it comes to flavoured foods and beverages.

GUESS what made Pepsi India drop plans to introduce Dole, its fruit-based beverage from its international portfolio, in favour of brand Tropicana three years back?

And what made Dabur Foods give up plans to introduce papads and other ethnic foods?

The answer to both questions is the same - the response of the consumer south of the Vindhyas, who disapproved of both marketers' planned launches. While Dole was tested in Bangalore (leading to a lukewarm response), Dabur Foods undertook an extensive test-marketing exercise for a foray into papads and pickles, a bastion dominated by the unorganised sector. Both the Dabur products were tested in Chennai for over a year - papads in as many as four flavours. "We decided against going ahead with these products based on consumer feedback,'' says a Dabur India spokesperson.

Now the bigger question - can a handful of four States influence cash-rich FMCG marketers to influence their brand strategies for a market comprising a one billion-plus population?

The answer is yes, at least for certain categories.

As an executive with research agency KSA Technopak explains, "Think global, act local may be passť. Now it's think local, act regional.''

Explains Raghavan Srinivasan, Executive Director of research agency, TNS Mode, "Marketers use the South to test their operational efficiencies. Earlier, test-marketing was fairly expensive. Today, there are pre-market tools available that can give simulated test market data."

But why the South? "The propensity index in the South is higher than in the North and the per capita consumption for many products categories is higher too. Also, SEC A and B households in the South have excellent cable and satellite penetration. This leads to vernacular isolation. However, most marketers just use test-marketing as a phased roll-out,'' adds Raghavan.

So, Joyco India decided to take on rival Perfetti's well-placed Alpenliebe with its caramel-flavoured, milk-based Solano brand in Tamil Nadu and Kerala last year.

According to A.K. Dhingra, Director, Sales & Marketing, Perfetti India Ltd, the fact that flavoured candy attracts a huge following in the South makes it a market that can't be ignored.

Hindustan Lever, has, of course, made it a habit of creating brands customised to suit specific needs. The recent example being its Max brand of hard-boiled candies. It was in Chennai that the FMCG giant made its much-awaited foray into the Rs 1,100 crore organised confectionery market with Max. The brand was brought to Northern cities only in late 2001. According to HLL's spokesperson, the company's plans in the confectionery segment are in line with its decision to leverage strong brands - in this case, Max ice cream.

Meanwhile, Nestle and Cadbury are fighting tooth and nail in the Chennai market with recent product innovations. While Nestle has introduced the liquid chocolate formulation-based ChocoStick priced at Rs 2, Cadbury has rolled out a similar liquid chocolate brand called Chocki priced similarly. The liquid format of these brands, which requires no refrigeration, is expected to drive distribution.

Nestle's Chocostick was extended to Mumbai just last month, after making headway in Tamil Nadu. According to a Nestle official, Chocostick has grabbed an 11 per cent share of the chocolate market in Chennai six months into the market.

While the Southern consumer has been hogging the limelight as far as the candy and confectionery industry is concerned, carbonated soft drinks companies too prefer to gauge the Southern consumer's response before venturing elsewhere.

Therefore, last year saw Pepsi Foods' Mirinda add a third apple variant to its orange and lime portfolio, and Fanta from Coca-Cola being extended to three variants. Mirinda Apple was rolled out in Bangalore last summer, and was taken to Chennai two days later.

Says Pepsi's official spokesperson, "It's known that the South has always been a flavour-base market. While UP remains an 80 per cent cola market and Punjab is a 65 per cent cola market, carbonated soft drinks comprise about 40 per cent of the Chennai market.''

Just three months back, the Pepsi group chose to re-launch Slice, its mango drink, in a slim-line cardboard pack in Chennai, to be followed subsequently in other Southern cities. The reasons were, once again, geographical, explains the Pepsi official. "The decision was research-based. The consumer in Chennai takes to fruit drinks better than his counterpart elsewhere, and it is a temperate market.''

Last summer also saw Coca-Cola India extending its orange carbonated soft drink brand, Fanta, to green apple and watermelon variants in - you guessed it right - Chennai and Bangalore. That Fanta Orange grew by 30 per cent last year in Tamil Nadu explains why the company chose this market for similar extensions. (That Fanta Watermelon has since bombed is another story.)

Sunfill, a bold attempt by Coca Cola India to crack the exceedingly difficult powdered soft drink market, was also inaugurated in Hyderabad in November last. Sunfill, available in single-serve sachets of 25 gm priced at Rs 2 each, and multi-serve pillow pouches of 200 gm for Rs 15 a pack, is yet to be made into a nationally available brand. Apart from Hyderabad, the ready-to-mix soft drink concentrate is currently available only in Tamil Nadu. Explains Sanjiv Gupta, Senior Vice-President, Coca-Cola India, "We have a well-established distribution infrastructure in Andhra Pradesh and have tied up with a local company in Tamil Nadu to tap the grocery store channel. Moreover, soft drink consumption in India is very sensitive to seasonal variations. Fruit-flavoured drinks are preferred in these two states more than other regions."

In fact, following its decision to regionalise operations, Coca-Cola India has been pushing niche brands in region-specific markets. Rimzim - a masala soda brand - has been rolled out in Mumbai and Gujarat. The black currant flavoured Portello is expected to cater to the Tamil Nadu market. And, energy drink Shock was introduced in Delhi. Points out Gupta, "We are focused on consumer demand and preferences. Therefore, our initiatives are designed to create a strong consumer connect which is consistent with the brand profile."

Apart from taste-led preferences, another significant reason why FMCG marketers prefer Chennai or Bangalore to test-market products is to do with the media scenario. As Dhingra elaborates, advertising on a local channel turns out very cost-effective and makes the Southern market far more media-friendly. Compared to Star Plus which charges over Rs 50,000 for a 10-second slot, ad rates on, say, Sun TV hover around Rs 5,000-8,000 for 10 seconds.

Elaborates Usha Kavan, Vice-President, TNS Mode, "A critical aspect of test marketing is using the media and assessing its reach. In the South, the reach of the media is most insular. It is, for example, possible to cover the entire Southern region with one Sun TV. For a brand's target audience in, say, UP, one would not know what percentage of them watches Sony and what percentage watches Zee. In such circumstances, perhaps, the South is a more suitable test-marketing ground."

Distribution is another key influencer. Elaborates Kavan, "On the whole, distribution systems, wholesale markets and transport systems are better organised in the South."

Clearly, the consumer is king everywhere. But the one down South is emperor - at least that's what marketers of flavoured foods and beverages seem to believe.

(Reporter Associate: Harsha Subramaniam)

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