DS Group's Entry Into Food and Beverages Sector

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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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Catching Up with 'Catch'

According to analysts, Hi Tech's willingness to take risks was largely responsible for the success of the Catch brand. Prior to the launch of Catch salt, Hi Tech carried out a random survey of the urban Indian market. Based on the findings of this survey, the company targeted Catch at two segments - upper class Indian households in the metros, hotel, and restaurants, which would use the product in large volumes. The company built a national distribution network covering 1,600 premium outlets in India's A and B class cities. Catch Salt was launched with a price of Rs.6 for a 200 gm pack.

At that time, Tata iodized salt, the market leader, was priced at Re1 per 1 kg pack and loose salt was priced at less that Re1. Analysts felt that there were bigger risks than what the price ratio would suggest at first glance. In India salt had always been a low-priced commodity, and many analysts felt that not many people would be willing to pay higher prices for it.

However, the DS Group seemed to be sure of success. Ashok Aggarwal (Aggarwal), Vice President, DS Group said, "We did not have any competitors, as the brand was a high-priced commodity packaged for convenience."

Manufacturers of other leading brands of salt seemed to be agree. Said Rajesh Srivastava, Vice President (Marketing), DCW Home Products,⁸ "We do not view Catch as a competitor as volume-wise it is insignificant." But, according to analysts Catch salt did find acceptance among urban Indian women. This was rather surprising they thought considering that the salt was being sold at thirty times the price of other salts.

In 1989, the company launched ground black pepper in 100 gm shakers. A 100 gm pack of salt was also launched (See Exhibit III for prices of 100 gm packs). In spices too, Catch was priced higher than other leading brands like Everest⁹ and Badshah¹⁰ (See Exhibit IV).

As different regions in India used their own distinctive mix of spices, the branded spices market was dominated by regional players. DS Foods hoped that its superior packaging would give Catch spices an edge over other brands in the market. Said L. Vinayak, Deputy General Manager (Marketing), DS Foods, "Our packaging ensures that we have a better quality."

In April 2000, the spices were introduced in lined carton packs at lower prices. Analysts felt that the move was aimed at generating volumes by bringing the product into the popular pricing range. The company could then compete with Everest, Badshah and others. Said Aggarwal, "The idea is to increase penetration. These are more consumer friendly packs and the aim is to extend the usage of the product from table tops to the kitchen."

So while the dispenser pack (100 gm) of red chili powder retailed at Rs 26, the price of the lined carton pack (100gm) was Rs 18. Similarly, turmeric powder (100 grams) priced at Rs 20.05 in dispensers was available at Rs 12.00 in lined cartons. By April 2001, the prices were further slashed - the red chili powder lined carton pack was priced at Rs 13.00 and turmeric powder at Rs. 10.00 (See Exhibit V).

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8] Owner of Captain Cook brand of salt.
9] Product of Everest Spices.
10] Product of Badshah Masala, member of Jhaveri Group of Industries, India.