Why does ITC need multiple brands to mark its presence in dairy market?

The company is using the wide assortment of brands under its umbrella to extend its footprint in the dairy market

How does a large diversified conglomerate break into a market that has global and national players competing with hyperlocal regional brands? The answer for ITC seems to be, by leveraging the array of brands at its disposal to create a differentiated story for every geography and product segment.

Last week ITC launched Aashirvaad branded milk and curd in Kolkata, after having pilot-tested and launched it in Bihar earlier. Earlier it had launched its ghee under the label Svasti in Bihar and Bengal, a sub-brand for Aashirvaad that was first launched in the South. 

In a few months, the company plans a national launch for flavoured milk, a value-added dairy product aimed at young urban consumers. And the brand that the company is expected to choose for this launch is a variant of Sunfeast, although the official word on this is still ‘no comment’. 

Why does ITC need multiple brands to mark its presence in dairy? And does this help fight the large multinationals such as Amul, Mother Dairy, Nestle or Britannia?

The idea is to leverage each brand for the strengths it has vis-à-vis target consumers. Aashirvaad stands for wholesome goodness, the company indicates, implying that it is the best fit for a product such as packaged milk. This is a market where the company wants to capture 8-10 per cent market share. Flavoured milk, on the other hand, is aimed at a young consumers and needs a ‘fun and trendy’ brand

Banking on national recall

Hemant Malik, divisional chief executive of foods at ITC said at the time of the launch that the newly introduced liquid pouch milk and curd, which are associated with grocery and household items, can leverage the goodwill the Aashirvaad brand already enjoys. “It is a fairly well respected brand and associating this brand with a new product, which is also centred around the kitchen, is a good move,” said brand consultant and founder of Mogae Media, Sandeep Goyal. 

Before associating fresh dairy with the Aashirvaad brand, ITC had launched ghee under the Svasti label in 2015 in the South. Svasti is a sub-brand of Aashirvaad and the company preferred to keep the association but the labels separate for a value-added product. 

Ramesh Thomas, president at brand finance consultancy, Equitor is of the view that products like fresh dairy have lesser brand recall value as compared to value added brands. Keeping it separate from all value added dairy products without disassociating from them is prudent strategy, he believes.

Building clout

ITC’s push into dairy is part of its effort to generate Rs1,000 billion of revenue from the non-cigarettes business by 2030. It is therefore keen to use all the brands at its disposal to build its presence in the segment. ITC had launched an integrated animal husbandry programme titled Project Gomukh in Bihar to increase milk productivity and quality in the area and pave the way for its entry into dairy all those years ago. Now it is keen to consolidate its gains. “We will shortly launch paneer as well which will be made available in the Bengal-Bihar belt,” Malik said.

In all these markets and products ITC faces a strong threat from local and hyperlocal players as well as from the national ones. Using Aashirvaad indicates the seriousness of the company and also drives home the strength of its initiative to rival brands, say experts.

It will be a while before ITC hits the national market with Aashirvaad milk and curd, though. “I would rather wait and delay the launch in other markets (for fresh dairy) and focus on Bengal and Bihar,” Malik said, adding that sourcing the milk locally is pivotal for success.

Different products, different brands

Converting a strong brand into a mother brand that captures all the products under a segment is risky. A case in point is what happened with ITC in March this year, when the Aashirvaad brand had come under fire after allegations that the flour was mixed with plastic. While the allegation has now been addressed, Harish Bijoor, CEO at Harish Bijoor Consults, a brand strategy firm, says it is a risk a company has to take when it starts converting an existing strong brand into a mother brand.

“There is always a concern that the mother-brand may get affected when a sub-brand or a product fails in the market. It happens vice versa too. This is a risk which ITC has to take,” Bijoor said. But ITC is not putting all its dairy products into a single brand basket.

Malik has chosen to avoid the Aashirvaad brand in the value-added dairy space arguing that while Aashirvaad is mostly associated with the kitchen, grocery and family, a product like milkshake isn’t. So a different brand is needed for this product. “It’s more of a trendy product for the youth while Aashirvaad is associated with kitchen and household,” Malik said. 

Sources suggested that ITC may extend the Sunfeast brand to cover milkshakes under  Wonderz sub-brand. The company’s portfolio of biscuits, noodles and pastas come under Sunfeast. With this foray, initially with two variants – mango and kesar badam - the company will be competing against Amul, Cavin, Hershey and others in the Rs15 billion flavoured milk market in India. Amul is the market leader in the market with 40 per cent share. ITC will need to harness all the brand power at its disposal to challenge its dominion.