As Heinz goes local, Rasna turns to the world

More international flavours will let the company uptrade consumers with larger packs in modern trade

This summer, an interesting battle is likely to be fought in powder beverages. While the home-grown market leader, Rasna, is venturing out of its comfort zone - local flavours - multinational Heinz, maker of Glucon-D glucose powder, is localising its line-up.

Rasna would be venturing into classic juice flavours, or western flavours as they are commonly known, while Glucon-D is planning to test an Indian favourite, aam panna (mango nectar), after launching nimbu pani (lemonade) earlier.

Rasna lords over the powdered beverage concentrates market with the sheer number of flavours. Rasna had come up with a nimbu pani variant in the 1990s, long before carbonated beverage companies such as PepsiCo and Coca-Cola had come up with their Nimbooz and Minute Maid Nimbu Fresh, respectively, in 2010. Piruz Khambatta, chairman and managing director, Rasna, says, "We had put spices inside, to give it a flavour of 'ghar ka nimbu pani' (homemade lemonade). We now have around 13 to 14 flavours."

From the usual orange and mango flavours to regional flavours like kaala khatta, rose, kesar elaichi, khus, jaljeera to more universal flavours, that it started introducing from 2000 onwards, like guava, litchi, watermelon, mixed-fruit and pineapple, Rasna has them all. It commands over 85 per cent of the fragmented Rs 600-crore soft drink concentrates market. However, Khambatta says that apart from flavours like orange and mango, consumer preference for every other flavour has a shelf-life.

But behind Rasna's push into universal flavours is the need to uptrade its customers. With the new focus, it would push harder into modern trade that stocks large packs of powder beverages, including Mondelez' Tang. The leader in satchet packs, Rasna would now be able to sell the international flavours, which would see two more additions this summer, in larger packs of 200-gm as opposed to the Rs 1-satchets. "All companies that are into sachets, at some point, find their balance sheets squeezed, as they cannot easily raise the price to even Rs 1.5, without facing sales erosion as the consumer feels the price pinch immediately. But with bigger packs, a Rs 3-4 raise per pack does not get noticed much," explains Khambatta.

While Rasna trains its guns on the margin advantage in premium packs through flavours, US-based Heinz will be looking to enter its bastion of local taste, if not geography.

Mohan V, director, business development, corporate and legal affairs,Heinz India, says, "We will test-launch a new variant Glucon-D Aam Panna this year. Consumers enjoy our Glucon D Nimbu Pani. It has been in the portfolio for the last five years. We aggressively invested in it in 2012. It has become one of the leading variants in the market. In 2013, it was close to 7 per cent of the (glucose) market." Mohan says in the flavour-driven markets of the north and west, its market share is between 11 and 15 per cent. Glucon-D's flavours accounts for nearly 40 per cent of its sales.

Market leader with 60-62 per cent of the Rs 700-750 crore glucose powder segment, Heinz says two-third of the glucose market is in urban India, but rural has scope for growth. "Urban markets are growing at 8 per cent over three years, and rural at 1 per cent. But we have a successful rural operation, especially in rural Bihar, which has helped us gain 500 bps share in last two years," says Mohan.

Ruchita Maheshwari, an analyst with Nirmal Bang, feels that any MNC entering India would eventually need to localise. As rural consumers have more disposable income, increasing penetration in these markets is a sure-shot way to maintain healthy margins. "The rural consumer is not brand-loyal, unlike the urban consumer," she warns.

Khambatta says Glucon-D's brand connect would be strong in smaller towns: "Glucose is the ultimate health drink in rural and small-town India."

However, Glucon-D would face a challenge in tapping into Rasna's satchet-hold. "Glucon-D's cheapest pack is 100-gm for Rs 20. We use it to drive trials in urban and rural areas. We are exploring an entry in the sachet market," Mohan says. Rasna has Rs 1 sachets that make four glasses of the drink, but one has to add sugar. The Rs 2-sachet comes with added sugar. Rasna has even launched its Fruit Plus range of drinks with added nutrients to counter Glucon-D's proposition.

However, Harish Bijoor Consults CEO Harish Bijoor says, "While Glucon-D will find market penetration with the move (local flavours), the task might be tougher for Rasna to get urban consumers to uptrade, as they already have a plethora of choices." Moreover, the biggest challenge for Rasna would be to position itself above the entry-level, mass brand that it has come to be known as, says Bijoor. The summer of 2014 would be its litmus test.