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| Private labels challenge Maggi's dominance |
| Suvi Dogra / New Delhi Feb 17, 2009, 00:01 IST |
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While Nestle’s instant noodle brand Maggi has been almost synonymous with the category (similar to Xerox), the game may just be changing with almost half a dozen new brands — mainly private labels — finding favour with Indian consumers.
Players such as Food Bazaar, Reliance, More and Vishal have already launched their private labels in this category. Names such as Tasty Treat, Disney, Ching’s, Smith & Jones from the Future Group stables and Reliance Select from Reliance Retail among others are challenging the market dominance of Maggi in terms of in-store purchases in these retail formats.
Growth is largely on the back of competitive pricing, availability of different pack sizes or stock keeping units (SKUs) and variety in terms of taste. Retailers are positioning these products to offer a superior quality with the benefit of a value pricing. Most of the private labels are nearly 5 per cent cheaper than the mainstream FMCG brands.
“Instant noodles is a category which has created an additional snacking occasion and has given us another way to enter the household of our consumer since there was only a single lead player in the category,” says Sadashiv Naik, CEO, Food Bazaar, Pantaloon Retail. While it has retailing tie-ups with the three brands Disney, Ching’s, Smith & Jones, it also offers its own private label of instant noodles by the name of Tasty Treat.
Business consultancy firm Technopak says the instant noodles market in India is about Rs 800 crore growing at 15 per cent per annum.
“Due to its higher branding strategy and innovation led marketing, Maggi is very strong in the market. The market is still under penetrated, hence more private labels may lead to overall growth of the market,” says Purnendu Kumar, associate vice-president, Technopak, adding “it’s still early days to say if private labels are performing better.”
Industry experts believe that private label margins range from 30-40 per cent in the FMCG space and in most cases, these margins are 5-10 per cent better than the mass market brands these retailers sell.
Future group is targeting 25 per cent instore sales share to 25 per cent within the next 6 months by introducing more pack sizes, sampling and product placement initiatives and providing healthier options. According to Food Bazaar, Tasty Treats has captured 15 per cent share of instant noodles sales in its stores within 7 months of its launch.
Reliance which, on the other hand, got into the category 6 months ago with its Select brand says that the response (in terms of trails and repeats) has been exceedingly good. “In categories which are impulsive in nature; pack size, price points and value for money offering helps build preference for the brand and in the process, drives the category penetration,” says Gunender Kapur, President and Chief Executive, Reliance Retail.
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