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, it had introduced many varieties of chewing tobacco. In 1965, it 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 1980s, the DS Group became a leader in tobacco- based products with brands like Baba, Tulsi and Rajnigandha. In 1983, the DS Group entered the food and beverages market when it acquired the Noida-based Hi Tech Foods Ltd., (Hi Tech). In 1987, Hi Tech created a niche market for tabletop salt with its ‘Catch Salt Shaker.’ Satyapal, the then proprietor of the DS Group, felt that branded free-flowing table salt was exactly what many Indian homes were looking for. DS Foods aimed to become a Rs.5 billion company by 2002. To achieve this, DS Foods launched many variants under the Catch brand name. Aggarwal said, “Catch enjoys high brand equity but negligible volumes when compared to kitchen salt brands such as Tata Salt and Captain Cook.” DS Foods planned to launch Catch salt in lined cartons for the kitchen segment and hoped the product would exploit the suburban markets. DS Foods also planned to launch tea and edible oil in different pack sizes, sachets and pouches to cater to all market segments – larger packs for middle and upper classes and affordable, small pouches for daily wage earners. Aggarwal said, “Neither branded tea nor edible oil is available in small packs for the daily wager. They buy loose tea and oil.” DS Foods planned to use its cold chain for the natural spring water and the proposed iced tea and flavoured water. However, some analysts felt that the strategy might not be successful. A few years back, Nestlé had failed to push its Paloma brand of iced tea.1. Some analysts also felt that DS Foods’ natural spring water, at Rs 25 per litre was unlikely to find a market. Although they claimed that the product was different from bottled mineral water, Catch was likely to face a stiff competition from Parle’s Bisleri, a Rs.3 billion brand in a Rs.5 billion market. DS Foods was looking at hotels, embassies, clubs and restaurants to begin with, and hoped for sales of Rs 250 million in the next two years. In December 2001, DS Foods announced plans to enter the ready-to-eat snacks market by the end of the month. Six varieties of Catch snacks were to be initially available – jumbo corns (in two variants) chana dal, cashew etc. The products were claimed to have a shelf life of a minimum of six months as compared to other brands, which had a shelf life of around two to three months. The USP of the newly launched products was that no oil was used to prepare it. The company, which had a growth rate of 10% during 1999 had set an internal growth target of 35% in the next three years. Analysts felt that if it achieved the target that it had set itself, the foods and beverages venture will be highly successful. By 2006, the group aimed to achieve a target of Rs.5 billion in the Food and Beverages business alone.

1. DS foods is trying to exploit its Catch brand name. Describe briefly how it is following product development strategy? 2. Analysts feel that this product development strategy might not be successful? What do you say?