itc agro products

7/28/2019 ITC Agro Products

1/14

ITC Agro Products

SUNFEAST

Strategic Marketing Management

Submitted By-

Sagar Sahai(1221330)

Elis Mary George(1221445


2/14

Indian FMCG Industry

Indian FMCG Biscuit is a fast growing industry, with strong players in the market, as Sunfeast,

with such a strong competition consumer is the king with better prices, much improved quality

and variety of the products.

The project tries to draw a comparison in the major brands focusing on the distribution

network, market penetration and the range offered. Sunfeast formed in 2003, being a

comparatively much newer company has given tuft competition to this industry. Sunfeast also

had a strong backup of brand image of ITC.Ltd and used it at most of its advantage.

Biscuit FMCG

Biscuit holds a very significant position in FMCG sector. The 10,000 large biscuit industries are

invaded by new players whilst older players struggle to get new markets. India has the turnover

of 3000 cores of that the unorganized sector accounts for the maximum amount as thirty fifth.

India is the third largest manufacturer of biscuits after USA and China. The segment is expected

to grow at a rate of fifteen percent within the next few years.

Britannia, Parle-G, Priyagold, ITC Sunfeast area unit a number of the popular brands.

Biscuits area unit placed at a better supply chain than Bread in India. This can be the rationale as

biscuits occupy hours of the assembly capability of bakeries. Cadbury, Nestle and Brooke Bond

tried to enter the biscuit market however their efforts flopped. A series of latest players are

waiting to enter the biscuit market.

2.3 ANNUAL GROWTH

The biscuit industry in India had an annual growth as below within the last few years:-


3/14

2008-09 16%

2009-10 14%

2010-11 11%

2011-12 11%

2012-13 09%

Figure 2.3

Source: www.indianmirror.com

3. COMPANY PROFILE

3.1 About ITC

ITC is one amongst India's foremost personal sector firm with a capitalization of $ forty five

billion and a turnover $ seven billion. ITC is rated among the World's best leading firms, Asia's

'Fab 50' and also the World's Most honorable firms by Forbes magazine and among India's most

Valuable firms by Business nowadays. ITC ranks among India's '10 most Valuable (Company)

1614

11 119

0

5

10

15

20

Year 2009 2010 2011 2012

Growth(%) Of Biscuit Industry

In India

Growth(%)


4/14

Brands', in an extensive study conducted by Finance Brand and released by the Economic Times.

ITC is also ranked among Asia's fifty best performing firms compiled by Business Week.

VISION

Sustain ITCs position as one of Indias most valuable corporations through world class

performance, creating growing value for the Indian economy and the Companys stakeholders

MISSION

To enhance the wealth generating capability of the enterprise in a globalising environment,

delivering superior and sustainable stakeholder value

ITC in cludes a wide-range in FMCG, Hotels, Specialty Papers Paperboards , Packaging,

Agri-Business, and data Technology. Whereas ITC is an impressive market leader in its ancient

businesses of Hotels, Paperboards, Packaging, Cigarettes, and Agri-Exports, it's quickly gaining

market share even in its emergent businesses of prepackaged Foods & Confectionery, attire, aid

and writing paper.

As one of India's most valuable and revered firms, ITC in its wide arena gave the impression to

be dedicatedly nation-oriented. Chairman Y C Deveshwar calls this supply of inspiration "a

commitment on the far side the market". In his own words: "ITC believes that its aspiration to

form enduring price for the state provides the driving force to sustain growing shareowner price.

ITC practices this philosophy by not solely driving each of its businesses towards international

height however by conjointly consciously tributary to enhancing the competition of the larger

price chain of that it's an area."

Sunfeast


5/14

This is a whole within the snacks food phase. ITC entered the biscuits market with Sunfeast

whole in July 2003. The ITC web site says: Sunfeasts whole essence, Spread the Smile

connotes happiness, happiness, satisfaction and pleasure. The organism Sunny reinforces the

emotional aspects of the whole. Tagline of Sunfeast Biscuits is: Jo Delaware jitne ki sakti i.e.

one that offers the ability to win. So, once more it's exploitation emotional charm.

ITC entered into the Biscuits market with the Sunfeast variety of biscuit segments, Marie and

Cream Biscuits. Sunfeast's whole essence depicts happiness, happiness, satisfaction and pleasure.

In a short span time, Sunfeast has well-established presence in most classes of biscuits and is

additionally a key player within the food and instant noodles segments.

Over the years, ITC has launched many alternative products like cookies and food beneath

Sunfeast brand. Sunfeast uses celebrity endorsements for promotions. The King Khan

Shahrukh Khan and wonder queen Diya Mirza area unit shown in Sunfeast advertisements. Most

Sunfeast advertisements revolve round the theme of happiness. An added common them across

Sunfeast advertisements is that they use kids plenty. There appears to be two-fold reason for

exploitation kids. Kids area unit one key target phase UN agency uses these product. It's terribly

straightforward to emotional connect with oldsters (who area unit the buyers) by exploitation

kids. To market Sunfeast whole, ITC conjointly goes for sponsoring events like lawn tennis

tournaments.

ITC reports 21.2% jump in net profit at Rs 1836.42 crore; no impact on cigarette sales despite

increase in taxes

KOLKATA: ITC Ltd reported 21.2% jump in net profit at Rs 1836.42 crore for the second

quarter ended September 30, on back of 19.6% growth in net sales at Rs 7146 crore.

The Kolkata-based marketer's non-cigarette FMCG business, comprising of packaged food,

personal care, lifestyle retail and stationery products, registered robust revenue growth of 26.4%

at Rs 1690 cr and reduced losses by 45% at Rs 30.31 cr over same period last year. boosting the

company's over-all profitability.

The brands of ITC foods are as follows:
http://economictimes.indiatimes.com/itc-ltd/stocks/companyid-13554.cmshttp://economictimes.indiatimes.com/topic/net%20profithttp://economictimes.indiatimes.com/topic/FMCGhttp://economictimes.indiatimes.com/topic/FMCGhttp://economictimes.indiatimes.com/topic/net%20profithttp://economictimes.indiatimes.com/itc-ltd/stocks/companyid-13554.cms


6/14

Aashirvaad Bingo Sunfeast Kitchens of India Mint-o Candyman

The various variants of biscuits offered by Sunfeast are as follows:

1) ChocolateSunfeast Dark Fantasy Choco Fills is the latest and the most premium offering from the

portfolio of Sunfeast.a) Dark Fantasy

b) Dark Fantasy Choco Fills

2) Dream CreamA creamy delight.

a) Bourbonb) Strawberryc) Choco Vanillad) Butterscotch

3) NiceThese are crisp coconut biscuits showered with sugar crystals.

4) CrackersThese are thin biscuits, taste of salt and sweetness.

a) Sweet n saltb) Snaky Chilic) Salted

5) Mariea) Marie Lightb) Oatsc) Orange


7/14

6) Milky Magic7) Special Cookies

a) Butterb) Cashewc) Chocod) Kesari Elaichie) Milk

8) Special Creama) Elaichi Creamb) Orange Creamc) Pineapple Cream

9) Glucose


8/14

Biscuits became the key market players and their favorite products.

a) The two major players Britannia and Parle were busy biting of chunks of the nationalmarket among themselves, with a host of smaller brands in various regions.

b) While the business was still very competitive, there wasn't anything groundbreaking.In 2003, with ITC foraying into the segment, a lot of that changed.

c) At that time, Britannia and Parle held, between them over 82 per cent of the market invalue terms. The rest too was firmly held by smaller players like Priya Gold which

had a strong presence in the north. So, in essence, the market already had strong well

entrenched players. So how could a late entrant like ITC make its mark?

d) Three years down the line, however, things have changed a lot. It is a classic story ofthe hare and the tortoise. While it is far from winning the race, slowly and steadily,

the tortoise is gaining ground.

e) The late entrant is already on the podium in the third place with as much as 7 per centof the market in terms of value. "ITC made hay when the sun wasn't shining," says a

consultant who's been tracking the industry for a long time. But first, why did

ITC train its eye on biscuits? Ravi Naware, chief executive, ITC Foods, makes it

sound simple.

f) "We decided to enter the foods segment because it's a Rs 550,000 crore (Rs billion)market in India. But only 6 per cent of this is branded and packaged. In developed

markets, nearly 95 per cent of the food market is branded and packaged. So there was

lot of scope for a branded player."

g) In foods, biscuits was tempting. The Rs 4,000-crore (Rs billion) Indian biscuitsmarket has grown at 12-14 per cent year-on-year. Then, there was a business synergy.

ITC was already value-adding to wheat with its branded atta presence. By entering

the biscuits segment, it could also improve its bottomline further.h) But despite the fast growth rates, the biscuits industry was not all rosy. Over the

years, even giants like Hindustan Lever had failed.

i) For instance, HLL which had flirted with biscuits under the Max brand exited in2005. But ITC's Sunfeast has a different story to tell so far. the strategist looks at the

gameplan of a late entrant and how the biscuits industry has responded.


9/14

j) New recipek) Before entering the segment, ITC dug into market research. Research revealed that

the category had gaps which ITC could settle into. Findings revealed that consumers

wished to taste new and innovative products. That was precisely what the competition

had not done in a big way.

l) Says Naware, "The biscuits industry had witnessed little innovation; Glucose wasGlucose and Marie was still Marie." The company decided that this could be its

biggest point of attack. In 2003, ITC launched Sunfeast with six ranges. But it was a

calculated risk. ITC stuck to category favourites like Glucose, Marie and Bourbon

cream.

m)Along with that, it also launched innovations such as orange-flavoured Marie, Marielight and butterscotch-flavoured cream biscuits. In 2004, Sunfeast followed this up

with the launch of Sunfeast Milky Magic. More recently, it also has launched the

Sunfeast Snacky and Sunfeast Golden Bakes.

n) Analysts believe that just because Sunfeast was a new brand, helped matters. Says aconsultant, "The biscuits industry had not witnessed any major product innovation in

years. Consumers were just waiting for something new, something fresh, when

Sunfeast happened."

o) Even the competition had not made things better. Between 2000 and 2005 neitherParle nor Britannia launched any major new product. Yes, Britannia did re-launch its

Tiger brand in 2005.

p) But Britannia claims that it is looking at more than just products. Richa Arora,general manager and head of marketing and innovations, Britannia Industries, says,

"We are not just looking at new products, but tapping newer opportunities -- such as

different occasions as well as out-of-home consumptions."

q) In 2005, before Diwali, Britannia launched Occasions -- boxes of assorted biscuitspriced between Rs 50 and Rs 200 -- which the company claims has been very

successful.

r) In 2006, however, the industry has seen a flurry of innovations from the bigtwo. Digestive Marie -- was launched by Parle in early February 2006. Britannia


10/14

launched its new double-flavoured Mariegold and 50-50 Chakkar. And Parle is all set

to launch at least two new products before the end of this year.

s) Distribution mazet) It's common knowledge, that for FMCG products, distribution channels are very

important.

u) Says Pravin Kulkarni, general manager, marketing, Parle Products, "For biscuits,distribution and visibility are extremely important as it's partly a impulse purchase

product." And in biscuits, setting up a distribution channel is anything but easy.

Consider this. Priya Gold, which entered the western region in 2000, is struggling to find

its feet even five years later.

However, in this regard, Sunfeast has been fortunate: thanks to its tobacco business,

ITC already had a good understanding of distribution channels.

The company used its existing network of convenience stores -- the company's name

for the hole-in-the-wall pan-beedi shops -- for Sunfeast. Not content with the existing

resources, the company also looked at grocery stores and other retail formats.

The company says the brand is now available in nearly 1.8 million outlets. Britannia

claims it has a superior distribution clout with its presence in nearly 3.3 million

outlets. Parle, the seasoned player itself, says it is available in 1.5 million outlets.

Sunfeast's next step was to step up its branding and promotion.

In August 2003, a month after its launch, the company undertook a major sampling

exercise to promote the product. For two years then, the brand did all the usual rounds

-- riding behind buses, blocking television spots, booking that corner space in your

favourite newspaper and so on.

Well differentiated advertisements, some which showed a complete cream world with

cream rivers, cream mountains and cream trees, were targeted at kids watchingcartoon channels.

At the same time, on general entertainment channels, mothers received information

on the importance of glucose, the wholeness of wheat and so on. Also, the company

tied up with Bey Blades, the popular television series that was a rage among children,

to promote itself.


11/14

In April 2005, Sunfeast launched its major campaign. It signed on Hindi film actor,

Shah Rukh Khan as its brand ambassador.

In the same year, as the official sponsor of the WTA tennis championship -- titled the

Sunfeast Open -- the company had teenage sensations Sania Mirza and Mahesh

Bhupathi campaigning for it. But that's not all. For promotions in southern states,

Sunfeast has signed Tamil super star Surya as a brand ambassador.

Analysts say that ITC's deep pockets have helped Sunfeast in many ways.

The company claims that it has been spending 35-40 per cent of its turnover from the

biscuits segment on advertising and promotions. Going by that number, ITCs annual

marketing spends are estimated to be in the region of about Rs 115-120 crore (Rs

billion).

Until last year, Priya Gold spent close to Rs 45-50 crore (Rs billion), nearly 10 per

cent of its turnover on marketing. Even market leader Britannia with spends of Rs

100 crore (Rs billion) (2004-05) spends about 10 per cent of sales on marketing.

But Arora says that the figure will increase substantially in 2006-07. ITC is

clearly among the largest spender on ads and promotions in the biscuits category.

Analysts predict that these figures are all set to rise this year. But industry experts

aren't impressed.

Says a consultant, "Although Sunfeast's Shah Rukh Khan association is interesting, it

is yet to do something groundbreaking, like Britannia khao world cup jhao or the

Lagaan promotion for that matter."

Pricing models

The biscuits industry now has two clear models. Parle products plays the low price

game at all varieties of biscuits from glucose to cream.

Essentially, Parle plays a high volume, low margin game. But Britannia and Sunfeast

look at a two-pronged strategy. High margins in cream variants and volumes from the

Marie and Glucose segments.

For instance, cream biscuits from both Britannia and Sunfeast cost Rs 10 for 100

grams. Parle, however, only charges Rs 5 for its cream variants. Except for Hide &

Seek, all of Parle's products lie in the price range between Rs 4 and Rs 6 for 100 gram

packs.


12/14

To be fair, in Glucose and Marie, the companies have little choice. As there is little

differentiation, consumers are extremely price sensitive. But these segments are

important. Marie and the popular glucose varieties make up for nearly 55 per cent of

the Rs 4,000 crore (Rs billion) biscuits segment -- a significant Rs 2,200 crore (Rs

billion).

Says Sunil Alagh, chairman, SKA Advisors, and former CEO of Britannia Industries,

"the biscuit consumer is willing to pay more only when he sees a clearly

differentiated product. Hence companies have little choice in terms of pricing." No

wonder all the Glucose and Marie variants straddle price points of Rs 4-6 (for 100

grams).

Key challenges

Back in 2003, nobody thought Sunfeast would have consumers eating out of its

hands. Says Naware, "Seven per cent in less than three years is something that we

could have only dreamt about."

Importantly, industry barometer AC Nielsen has indicated that both Parle and

Britannia are losing market shares. According to the AC Nielsen retail sales audit in

March 2006, both Britannia and Parle have lost volumes. Britannia's shares have

dropped from 35.8 per cent in 2004-05 to 30.5 per cent in May 2006 (volumes).

Parle's shares have also dropped from 42.2 to 38.4 per cent in the same period.

Even Priya Gold has seen a minor dip from 6.4 per cent to 5 per cent. ITC's Sunfeast

has been a big gainer with its share increasing from 2.7 to 6.7 per cent.

In terms of value, Britannia leads the market with 37 per cent market share,

followed by Parle's 31.3 per cent and ITC's 6.3 per cent. Nevertheless, the gap is still

wide. Sunfeast still has a long way to go.

But what can the bigger players do? Alagh has an interesting observation. Says he,

"Biscuits have always been a low margin, high volume game. Both Britannia and

Parle have very high volumes and can easily afford to lower their margins."

A potential after-effect? Sunfeast too may have to drop its prices to be in the

reckoning and this will squeeze its margin even lower. While the full game is yet to

be played out, for the moment the sun seems to be shining on Sunfeast.

Creaming the market. . .


13/14

Innovation in the product line -- biscuits with butterscotch cream with actual granules

in the cream, strawberry cream with flavour-enhancers and orange-flavoured marie.

Gained an edge from the well established distribution network of its tobacco business.

Signed up big film stars like Shah Rukh Khan and southern star Surya as brand

ambassadors for Sunfeast.

Branded the WTA tennis tournament with promos starring tennis stars, Mahesh

Bhupati and Sania Mirza.

Needs further embellishments

Big brand ambassadors, but not strong enough advertising campaigns for big brand

recall.

The gap between the number three and the top two slots is too wide.

Competitors can play the low price game as they have volumes to support.

The major competitors to Sunfeast who were identified during the study are Britannia

and Parle.

"The creamy category contributes to less than 20% to the complete Britannia

business. However, in the recent past some key brands like Bourbon and Treat have

gained much stronger position and appeal with consumers and have grown fast than

the overall biscuit market. Bourbon, in fact, has its share of 9% (9.2% last year)," said

a Britannia spokesperson.

Competition has also been there in different categories including a huge launch of

Oreo which has a market share of 1 % in the biscuit market, with an innovative and a

superior consumer quality, Britannia creamy segment will be sustaining pricing.

ITC has invested in Sunfeast premium creamy biscuits were at higher than 114% in

the last two quarters. In comparison, Britannia spends on the premium segment of

cream biscuits increased to 6%.


14/14

ITC gathered an edge with its high priced range of cream biscuits receiving a positive

response from the market with sales volumes of tremendous growth. Parle Products

now is the biggest biscuit maker, and tries to enter this premium creamy segment.

itc agro products

Documents