DS GROUP'S ENTRY INTO FOOD AND BEVERAGES SECTOR
INTRODUCTION
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.
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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 Products8, “We do
not view Catch as a competitor as volume-wise it is insignificant.” |
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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).
THE PASS PASS GAMEPLAN
DS FOODS - SPICING UP STRATEGIES
EXHIBIT I - DS FOODS'PRODUCT LIST
EXHIBIT IV - COMPARISON OF PRICES OF VARIOUS BRANDS OF SALT & SPICES[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.
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