DS Group's Entry Into Food and Beverages Sector

Details

Themes: Brand Management
Period : 1998-2002
Organization : DS Foods
Pub Date : 2002
Countries : India
Industry : Foods, Beverage and Tobacco

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Case Code : BSTR024
Case Length : 10 Pages
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"We want to be a dominant player in the foods sector and increase our growth rates in the tobacco business. We hope to grow by Rs.5 billion in the next three years."

- Rajiv Kumar, Managing Director, DS Group (Businessworld, November 8, 1999).

"Flavoured water and iced tea are examples of niches in the market but the fact remains there is no market in these niches."

- Jagdeep Kapoor, Managing Director, Samsika Marketing Consultants, Mumbai.

DS Group's Entry Into Food and Beverages Sector: Introduction

In 1998, the DS Group¹ set up a subsidiary, DS Foods, to enter the food and beverages market and transferred its flagship brand 'Catch'² (See Exhibit I on DS Foods product list) to DS Foods. In October 1999, DS Foods launched bottled natural spring water under the 'Catch' brand.

The group announced that it would invest Rs 1 billion³ in the next three years, in its foods venture. In 1999, DS Foods launched the Pass Pass (Closeness) mouth freshener. This was the first branded 'Indian' mouth freshener. By mid 2001, Pass Pass was a Rs 350 million brand.

Pass Pass aimed at becoming a Rs 500 million brand by the end of 2001. Similar products like Aas Paas, and Saath Saath⁴ soon appeared in the market. DS Foods also planned to enter other 'untapped' markets like Club soda, flavored water, and iced tea.

While some analysts felt that DS Foods might not be able to leverage the brand equity of Catch in the new categories, DS Foods thought otherwise.

Background

Dharampalji Sugandhi (Dharampalji) set up the Dharmapal Satyapal Group (DS Group) in 1929, as a manufacturer of fragrances. In 1935, it diversified into flavored chewing tobacco. By 1950, Dharampalji's sons had introduced many varieties of chewing tobacco. In 1965, they launched the first branded chewing tobacco in India.

This was the first saffron flavored chewing tobacco in the world. In 1979, the DS Group launched Tulsi Zafrani Zarda (tobacco powder) and Rajnigandha gutka (tobacco powder mixed with beetle-nut powder). By the mid, the DS Group became a leader in tobacco-based products with brands like Baba, Tulsi and Rajnigandha.

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1] DS Group was a manufacturer of tobacco-based products.
2] Salt, Spices and Mineral water.
3] In September 2002, Rs 48 equalled 1 US $.
4] Products of regional manufacturers.