DS GROUP'S ENTRY INTO FOOD AND BEVERAGES SECTOR

DS FOODS – SPICING UP STRATEGIES

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.

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 tea¹⁵. 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.

QUESTIONS FOR DISCUSSION:

1. In the late 1980s, DS Group launched branded salt and pepper under the Catch brand. Soon it extended the brand to other products like spices and mineral water. What are the factors, which attributed to the success of these products?

2. “Analysts felt that with Pass Pass, DS Foods was launching a branded product in a market that required changing old habits.” How did DS Foods create a market for mouth fresheners with its branded product?

3. To fulfill its aim of becoming a Rs. 5 billion company by 2002, DS Foods is launching various products like iced tea, flavored water etc. Keeping in view the Indian food and beverages market, do you think DS Foods'strategy would be successful? Justify your answer.

[15] Nestle planned to create a market for iced tea in India and launched Paloma iced tea in India in the late 1980s. The company was not successful. Analysts felt that the idea of having a beverage cold was not acceptable easily in India, as Indians traditionally liked to have a beverage hot.

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