Cavinkare's Innovative Marketing Strategies

            
 
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Case Details:

Case Code : MKTG092
Case Length : 15 Pages
Period : 1991-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : CavinKare
Industry : FMCG
Countries : India

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"It's a classic case of a small fish making a meal out of the big ones. Think of shampoos or fairness creams, and it used to be multinational brands like Clinic and Fair & Lovely that came into mind. But not any more."1

- An article in Brand Equity, Economic Times, in January 2002.

Cavinkare in the Food Business

In November 2003, the Chennai-based CavinKare Pvt Ltd. (CavinKare), the Rs 2.64 billion (bn) hair, skin and personal care company, announced the acquisition of the Andhra Pradesh-based Ruchi Agro Foods' pickle brand, 'Ruchi,' for Rs 150 million (mn).

The acquisition also included the Ruchi Agro Foods' pickle manufacturing plant (with a capacity of 130 to 150 tonne per month) and machinery in Gudur, Andhra Pradesh. Ruchi was the first major brand acquired by CavinKare, since its inception in 1983. The acquisition was aimed at boosting the branded food business, which the company had entered in September 2003, through its Chinni's brand of pickles.

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

The 'Ruchi' brand was the market leader in Tamil Nadu (a Southern state in India) and was also a major player in other states in South India. The brand was expected to give CavinKare a firm footing in the food market in the region. According to sources in CavinKare, the "Ruchi" brand would be promoted as a premium brand, while "Chinni's" would cater to the mass market.

CK Ranganathan (Ranganathan), chairman and managing director, CavinKare said, "The price of Chinni's is half that of Ruchi and we will position both brands to capture the entire market and also take Ruchi nationally."2

CavinKare, which began as a small regional player in the early 1980s, emerged as major fast moving consumer goods (FMCG) player in India in the early 21st century, competing directly with multinational companies (MNCs) like Hindustan Lever Limited (HLL)3 and P&G Home Products Limited (P&G)4, in various product segments like skin, hair and personal care. However, analysts wondered whether CavinKare would taste similar growth and success in the food business.

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1] "One Size Beats All," Brand Equity, Economic Times, January 10, 2002.

2] "CavinKare Buys Ruchi Brand for Rs 15 Crore," Business Standard, November 29, 2003.

3] HLL, a 51% subsidiary of the Anglo-Dutch, fast moving consumer goods (FMCG) major Unilever Plc., is the largest FMCG player in India, with revenues of Rs 101.38 bn in 2003. The company's businesses mainly include manufacturing personal and household care products, foods and beverages.

4] P&G Home Products Limited is a 100% subsidiary of global FMCG major P&G and a major FMCG player in India. The company is one of the leading players in hair care, wash powder and detergent categories. Some of the most popular P&G brands in these categories included Pantene, Head & Shoulders, Ariel and Tide. In 2003, the company registered Rs 4.382 bn revenues.

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