Knorr's souped-up portfolio pays off

The brand has been growing on the back of soups. An instant variant and ready-to-eat food are the latest additions

Walk into a supermarket and a green wall will most likely catch your attention. Hindustan Unilever (HUL)'s Knorr range of soups available in trademark green packs appear to be bucking the slowdown that packaged foods as a category has seen in the last few quarters.

Consider this: In the three months ended September 2013, Knorr sales, says R Sridhar, chief financial officer, HUL, during an analyst concall, were driven by instant soups, which nearly doubled during the quarter. Sridhar does not specify the rate of growth of Knorr's soup portfolio during the quarter, but trade sources say the product has been practically flying off the shelves.

There is a reason for this. With over 10 flavours ranging from vegetarian to non-vegetarian, Knorr has a fairly wide spread available for the harried home-maker or working woman, both hard-pressed for time, who, at the same time, do not wish to compromise on the health of their families despite their hectic schedules.

GROWTH SLURP

• Instant soups nearly doubled in the Sep’ 13 quarter for Knorr
• Knorr has had an early lead in branded soups as it had entered 15 years back
• Has 63-64% of the Rs 300-crore market
• Both Capital Foods with Ching’s Secret and Knorr bank on all-year soup consumption
• Soups are a better bet than ready-to-eat/cook products

Says Abneesh Roy, associate director, research, Edelweiss, "Knorr has positioned itself on the health and wellness platform and the assurance of quality it gives, convinces buyers to pick up the product despite a cut in discretionary spends that a number of other packaged food categories have seen."

Inspite of being almost four times the price of Ching's Secret from Mumbai-based Capital Foods, which is available for Rs 10 per pack, Knorr has seen no dip in sales. That is why it remains the leader in the Rs 300-crore branded soups market, with a share of about 63-64 per cent, according to industry estimates.

Nestle's Maggi, on the other hand, is estimated to have a share of around 23 per cent, while Ching's Secret, which has been continuing with its mainstream launch campaign since last year, has a share of around 11-12 per-cent, according to industry sources.

"Knorr's foray in India started with soups (about 15 years ago). Developing and creating the market for soups in India has allowed us to be market leaders in the same. Quality is at the heart of what we do and we pride ourselves in delivering the best products made from real vegetables to our consumers," says Abhirrop C, general manager, foods, HUL.

Mixed bag of success and failures
The success of branded soups as a category is partly linked to the rise of modern trade, which remains the key channel of distribution for it. Modern trade is also where most branded soup consumers congregrate - urban middle-class households - who, at most times, are juggling multiple tasks.

Soups, as Ajay Gupta, managing director, Capital Foods, says, are emerging as a viable option for urban consumers, which is why the category growth rate, he explains, has been steadily moving up, now clocking upwards of 20-25 per cent year-on-year. "The Rs 10 price-point has made Ching Secret's accessible to a number of consumers," Gupta says, "driving growth for us". Soups under Ching's Secret was launched only last year.

Capital Foods has also aggressively marketed the new range of soups in cities such as Mumbai, which are big consumers of the category.

The endeavour, experts say, by Capital Foods, has been to position its range as an all-year healthy snack rather than something consumed during winters.

Capital Foods has also attempted to increase consumption of packaged soups, whose base remains small in comparison to allied packaged food categories such as noodles and oats.

HUL hit back by launching a new instant soup range under Knorr recently. "Ready in a minute with the benefit of crunchy croutons, it makes for a light and healthy snack," Abhirrop says. This takes forward Knorr's positioning of its soups as an evening snack that it had tried a few years back.

Abhirrop says the company continues to look at ways and means to improve its soups range. One such extension has been Knorr Soupy Noodles, a combination of noodles and soup, which analysts say has failed to click in the marketplace.

"Coming at a time when there were other high-profile launches in the noodle category such as Foodles from GSK, it failed to cut ice with consumers primarily because people were confused whether it was a noodle or a soup," says Roy of Edelweiss.

While HUL continues to extend the Knorr franchise into ready-to-cook Indian and Chinese products, again tapping into urban consumers' need for a healthy, easy-to-prepare and convenient cooking option, soups remain the key driver of growth for the brand.

One reason for this is the presence of few key players in branded soups as opposed to the ready-to-cook category, which has many players including national (such as ITC and MTR) as well as regional brands (such as Gits from a Mumbai-based company of the same name).

Ease of preparation and the taste factor, which is more difficult to nail, are very significant in ready-to-cook, making it a tougher category to crack.

For now, soups will continue to rule the portfolio as far as Knorr goes.