MTR moves to stop rival from snacking on its market share

Relaunches its snacks portfolio as SnackUp after just two years of existence. Hopes course correction will speed up growth in the face of competition from Maiya's

Within two years of entering the traditional snacking category, MTR Foods, the Bangalore-based Rs 400-crore ready-to-eat foods major, is re-launching its entire range.

It is a move to checkmate its erstwhile founder Sadananda Maiya, as seen by experts. Maiya, after selling MTR Foods to Norway-based Orkla, has been aggressively investing in the snacks category and is understood to have notched a larger market share than MTR.

Vikran Sabherwal, vice-president (marketing) MTR Foods, says, "Research pointed out that while MTR was a loved brand in Karnataka, the snacks range of MTR was seen a little out of sync with the snacks category practices of using vibrant and youthful colours. Hence, the snacks range has now been re-launched as MTR SnackUp, with new packaging using vibrant colours, which give an extremely strong shelf-presence and great consumer-connect to the range."

Snacks is now becoming an important growth driver for MTR, traditionally depending on its two key categories of spices (masalas) and ready-to-cook mixes.

Even though it had launched snacks in 2011, and is third with a 10 per cent market share in the Rs 83-crore ethnic snacks market in Karnataka (according to Nielsen Retail Audit), Maiya with his Maiya's Beverages and Food has been giving it a run for its money.

Even though Sabherwal says that the re-launch is in line with MTR Food's strategy to differentiate and insists it is "neck to neck with Maiya's", industry watchers say that it has been caught off-guard in the segment. While Maiya had signed a non-compete agreement on his exit with MTR on instant mixes, spices and frozen foods till 2012, there was nothing to stop him from replicating his foray in snacks with MTR for Maiya's.

Where MTR Foods now has 14 different kinds of packages (SKUs), up from the earlier nine, Maiya's has upwards of 40 SKUs and is looking to grow this number by another 10-15 per cent shortly.

"Maiya's entered this segment with a clear focus and has been investing and innovating aggressively. A crucial difference is that Maiya's comes out with seasonal snacks which has worked to its advantage," a senior industry watcher tells Business Standard.

Both MTR and Maiya's are looking to play in regional snacks such as murukku. Haldirams is the leader in most markets in packaged traditional snacks. In ethnic snacking, modern retailers have also entered such as the Future Group with its brand Ektaa. In Karnataka, Maiya's is said to have already overtaken MTR in this segment. MTR will expand to other markets once it achieves the targets in Karnataka.

Maiya, considered as the father of India's ready-to-eat category (for his work in MTR's packaged foods), says that he is focusing on what he does best and will not be getting into knee-jerk reactions to competition. "Our roadmap is clear. From our current revenue of Rs 40 crore from the snack category, we want to have revenue of Rs 250 crore in three years. We are investing heavily in automation and we know the tastes pretty well," he adds. He is said to have extended his brand overseas (US and Japan, for example).

Given that Maiya is in the market to raise his first growth equity from private equity investors and has had discussions with blue-chip PE funds, including TVS Capital and India Value Fund, to expand in ready-to-eat and spices, the tussle between his former and present brands will only intensify.