It’s an initiative virtually unheard of in the fast-moving consumer goods industry. Facing resistance from retailers, Tata Chemicals Ltd has set up a call centre to sell its
i-Shakti brand of pulses to deliver the products directly at the doorsteps of customers, without any additional cost.
The company, known for its salt products under the Tata Salt and i-Shakti brands, forayed into the 18-million-tonne (mt) pulses market under the umbrella brand of i-shakti in November 2010. Over two years later, it has not been able to get even one per cent market share as retailers refuse to sell the product since it offers lower margin.
The call centre was set up in Mumbai three weeks ago, and any customer can make a call to get dal as little as 3 kg delivered to his or her doorstep in the city within 48 hours without any additional cost.
“Pulses-on-call is more of a complimentary channel to what we have in the retail channel,” said Ashvini Hiran, chief operating officer-consumer products, at Tata Chemicals.
Arvind K Singhal, chairman of Technopak, said the issue of low margin for retailers in Tata pulses’ case was not a unique problem. “Earlier when companies started branding atta (wheat flour) they faced similar challenges.”
Added Hiran: “Our study shows that even up to 20 to 25 per cent of their (retailers’) overhead costs are actually met through sale of pulses.” As the category gets branded, it becomes more standardised, the quality improves and margins also get squeezed, leading to resistance from retailers, he said.
The company offers toor, chana, urad and moong dal in unpolished form under the i-shakti brand. The i-shakti toor dal comes at a maximum retail price of Rs 105 per kg. The polished toor, offered by unorganised retailers in Mumbai, is sold at Rs 95 per kg. While polishing means an additional process, it actually brings down the cost as it adds moisture, which in turn increases the weight of pulses. Even though polished pulses give better shine and look, these are actually having lesser protein than unpolished pulses.
The polished toor dal is available at stockists in Mumbai for about Rs 70 a kg. These pulses are picked up by unorganised retailers who sell them in loose form, making over 25 per cent of margin. The organised retailers pick up pulses straight from millers, who polish it and save the margin of stockists. Though they incur cost in packaging under their private labels, they still make over 25 per cent margin on pulses. Comparatively, Tata Chemicals offers slightly above 10 per cent margin to retailers for its i-shakti pulses.
The company has, however, been able to convince some of the retailers about the benefits a branded pulse product brings as it reduces the hassles of labour, packing and standardisation.
The i-shakti pulses are currently available at 25,000 outlets in the country, including Tata Group’s hyper market chain Star Bazaar and Mumbai’s cooperative store chain Sahakari Bhandar. This is against over 1.5 million outlets in the country that sell Tata Salt.
“As you get into any category from commodity to branding, you will always have those initial issues and it is not that it is unique to pulses,” said Hiran. The company aims to cumulatively sell 300,000-400,000 tonnes of i-shakti dal in the next three-to-four years from roughly 10,000 tonnes it has sold till now.
It has already tied up with celebrity chef Sanjeev Kapoor to endorse the products and has launched a marketing campaign on television to sensitise the consumer and create demand for its products.
“It takes a long time for companies to demonstrate the value of packaged branded products to the customers who are used to buying otherwise,” says Singhal, who would not like to blame the retailers. “Alternative sales channels are good, but I would be more optimistic about online instead of the call centre route.”