HUL is trying to strengthen the Kissan franchise with innovative products
Kissan acts as a catalyst, easing stressful moments at the dining table.
— Hindustan Unilever website
The brand intended to ease stressful moments for homemakers has given HUL managers many sleepless nights with misfired line extensions and advertising. The consumer foods giant hopes to put it all behind with three new initiatives. It has stepped once again into malted food drinks (MFDs) with Kissan Nutrismart milk additive, has unveiled a range of salty bread spreads as alternatives to butter and, in an effort to disrupt the non-carbonated beverage market, it has launched a unique combination of fruit juice and soya milk. “Each of these are businesses of the future,” says Harpreet Singh Tibb, general manager, HUL Packaged Foods.
Kissan, which HUL acquired from the United Breweries Group in the nineties, has had a chequered past. The brand also epitomises the journey of HUL’s foods business in India. The well-known brand of jams, ketchup and squashes has seen many short-lived product innovations that were quickly withdrawn when they failed to take off. As a result, the older categories dictated the growth rate of the brand (at around 26 per cent per annum), which has now come to denote ready-to-eat processed food for the FMCG multinational.
Of the Rs 50,000-crore packaged ready-to-eat processed food market, growing at over 30 per cent, HUL’s portfolio accounts for Rs 903 crore. Kissan has the largest market share in jams with Rs 176 crore of the Rs 264-crore market and trails Nestlé’s Maggi with Rs 135 crore in the Rs 566-crore ketchup/sauces market in India, according to Nielsen.
Till now, HUL’s food portfolio — Knorr, Annapurna and Modern besides Kissan — have played second fiddle to its core laundry products business. The renewed thrust on foods comes at a time when operating margins in laundry products have fallen to a record low of 7.7 per cent in the quarter ending December 2010. Of course, the company will argue, the new initiatives are part of its ongoing efforts to beef up the foods business. In line with that strategy HUL extended Knorr into instant noodles (Knorr soupy noodles) last year. Such efforts will provide it with the leverage to get a larger chunk of the processed food market. HUL’s processed food business (minus beverages and ice creams) operates on 1-2 per cent margin, according to analysts.
Analysts put the Kissan brand — HUL’s top grosser in foods — at Rs 360 crore, Modern Foods at Rs 190-200 crore, Annapurna at Rs 190 crore and Knorr at Rs 160 crore.
Mixed fortune
MFDs are not new for brand Kissan. Two years back, HUL had dabbled in the category with Kissan Amaze, comprising milk additives and chocolate bars, but was hauled up by the Food Safety and Standards Authority of India for “misbranding”. The brand was withdrawn hastily after it failed to fly off the shelves. Now, HUL is test-marketing the new Kissan Nutrismart in the southern markets of Tamil Nadu and Andhra Pradesh. “We are taking the fortification route rather than talk about taste.” Says Tibb. “So even though we have vanilla and chocolate to cover the two most popular tastes in MFDs, we highlight the presence of iron and iodine in the product that aid memory and learning.”
GlaxoSmithKline’s Horlicks has a stranglehold over the south and east markets with its white malt drink while the likes of Cadbury’s Bournvita rule over the brown malt belts of the west and north.
The international portfolio of Unilever also came in handy with the launch of the bread spread, Kissan Creamy Spreads. Unilever has other spread brands such as Hellman’s and Ramas. The Indian Creamy Spreads are mayonnaise-based spreads in three flavours — classic mayonnaise, tomato twist and cheesy garlic — and have been rolled out across India. “These spreads are three times more nutritious than butter while the three flavours have been tailored for Indian taste-buds,” says Tibb.
The non-sweet bread spread category is ruled by the butter market, which stands at around Rs 1,500 crore. Amul leads the market with close to 90 per cent share. While margarine is growing, mayonnaise remains a small market. Tibb says, “While butter is big, the potential for spreads is five-six times bigger.” The price for this eggless spread has been kept close to butter with a 100-gm pack available at Rs 26 and a 250-gm pack at Rs 62. If they click, it will help the company enter the dairy fats market currently ruled by Amul, Nestlé and Britannia.
The category which is completely new for Kissan and HUL is fruit juice. Kissan fruit juice and soya, which has been launched in three flavours, apple, mango and orange, is available in two pack sizes — Rs 20 for 200 ml and Rs 90 for one litre.
To differentiate its fruit juices, HUL tapped into its learnings in other markets. Unilever markets a similar product in Latin America under the brand name of AdeS, which combines soya with fruit juices. “Soya is a super-food with 13 key nutrients, without lactose and cholesterol. Couple that with 100 per cent fruit juice, and we are talking about a product which combines the goodness of both,” points out Tibb. Plain vanilla soya milk, which will be part of the range, will be made available through modern retail outlets while the fruit juices will be distributed widely.
If one went by past records, soya milk is an extremely tough product to crack. It needs to be deodorised and processed to ensure it is palatable and the product does not curdle. HUL hopes to fall back on its global expertise to offer a differentiated offering that will cater to health-conscious customers.
Harnessing product knowledge from Unilever’s other markets helped it cut down its time to market. This time around, the company has ensured that its products don’t need cold storage. Its Blue Band range of margarine, which had been launched 20 years ago but was later withdrawn, needed a cold storage chain. The new juices and the spreads survive in ambient temperatures.
“Earlier too there were a slew of food product innovations under Kissan; but they did not perhaps get enough time in the market,” says an analyst. “That it has come back with a new brand of MFD despite Amaze shows the company is willing to wait it out this time around.” That explains why HUL came back with Knorr Soupy Noodles even after the failure of Annapurna 4 ‘clock Tiffin snack in the year 2000. Kotak Institutional Equities analyst (consumer division) Manoj Menon says, “Challenging trusted brands like GSK’s Horlicks or Cadbury’s Bournvita will become easier for HUL as it is going ahead with the most popular and most trusted food brand in its portfolio.”
HUL had earlier dabbled in a number of products under the Kissan brand. It had sought to introduce spices in the year 2000 which were found to be a mismatch during the test-marketing phase. Kissan Bistix, which needed kids to dip biscuit sticks in a dip, too failed to take off as “impatient kids found it cumbersome”, according to an observer.
Kissan had even been merged with Annapurna, known for its staples such as atta and salt. As a result, there were products like ready-to-eat chapattis which spoke to on-the-go couples rather than the usual mother-child audience, the mainstay of jam and squash/ketchup advertising. They did not go past the sampling stage. Now, HUL’s food portfolio looks better organised. Knorr is emerging as the ready-to-cook brand, Kissan would be known for its ready-to-eat products in processed foods, Annapurna will be staples and Modern bakery.
Concerted effort
HUL is trying its best to avoid repeating mistakes it had committed with Kissan earlier. Rather than test-market products in a hush-hush manner, it is orchestrating advertising campaigns to support the three new launches. The campaigns reinforce the Kissan lineage to connect with consumers instantly. Based on research on attitudes done by Kissan’s creative agency, Lowe Lintas, it also reworked Kissan’s positioning. “Earlier Kissan had come to be known as a brand for tasty condiments or enhancers for meals,” says Anaheeta Goenka, the executive director at Lowe Lintas who is spearheading the campaign. “The new campaign, in a way, marks the rebirth of the brand. We have used the shift to tie in with the product benefits as well.”
During the survey respondents had said that Kissan is seen as a “happy” brand. “We homed in on the feedback that mothers wanted to experience their child’s growth as a journey and not as a destination. It set us thinking if Kissan is the champion of happy growth, it should have health and functional benefits and should also be fun and tasty,” says Goenka.
Creamy Spreads, therefore, were positioned as foods that made daily meals more interesting and easier to administer to kids. And while the soya fruit juices refreshed kids and adults alike, Nutrismart fuelled the curious child’s mind, according to Goenka. Bollywood actor Juhi Chawla was roped in to feature in the ads portraying the “optimistic mom”, the protagonist of the new campaign. In line, the tagline for the brand says, “Eat happily, grow happily”.
The earlier Kissan Fruit Kick Spreads, low-calorie fruity sweet spreads, were targeted at teenagers. To avoid any confusion, Lowe is playing up the mother-kid proposition once again in its campaign. And rather than market its spreads as mayonnaise, HUL is pitching them as a nutritious alternative to butter. Kotak’s Menon says, “With a healthier message from Kissan, HUL seems to be trying to rebuild the credentials of the brand.”
Tibb also points at another vital piece of the company’s strategy — sampling. HUL did it on a large scale (with 250-strong team of samplers, mobile dispensing units and door-to-door visits) with its Knorr Soupy Noodles and ready-to-cook spices last year. Tibb says there will be no let up. “It is critical that we generate sampling to convert consumers for the long term. So we will invest a lot of energy and money on sampling.”
HUL is reaching out to eating-out joints, which were not part of its plan earlier. “We were not present in these outlets; but for this product we need to have a presence in these,” points out Tibb. For now, the soya-fruit juice combo product is available in Mumbai, Delhi and Chennai in around 10,000 outlets. Eighty per cent of the volumes for 100 per cent juices come from the top three-four cities in every state. For Nutrismart, HUL has been sending out teams to liaise with doctors and urge them to recommend the product.
Hurdles and more hurdles
All said, the going will be far from easy. “HUL feels it will enter a category only if it can differentiate its products,” points out a category analyst, who refuses to be identified. “So, it went with soya-based juices to enter the fruit juice category which has grown considerably over the last few years. But it might have been more prudent to gun for size and scale through a more mainstream or mass juice category rather than try and create a niche at the first shot.”
HUL’s parent already purchases one per cent of the world’s soya produce for its products ranging from margarines and spreads to its juices that are marketed across the world. A renewed focus could mean that the company is willing to do all it takes to survive in the category.
Similarly, “it will be a task for a mayonnaise-based product to recreate the feel of melting butter in parathas or pao-bhaji,” says RS Sodhi, managing director of Gujarat Co-operative Milk Marketing Federation, the owner of Amul, pointing at the challenge to scaling up in the spread market.
However, one of the biggest challenges that HUL faces in its foods business is inherent in the category, according to analysts. “Food brands need to be managed with a certain passion in India because it calls for localisation, monitoring changing tastes and ultimately building a business with scale over time. The gestation period for innovations in food is much more than personal and household care products,” points out an expert who does not wish to be named.
“Many such brands have failed not because there was something inherently wrong with the brand but because these companies are not ready to sit out the time needed to change food habits,” says a senior marketing executive with a rival company. “There grows a disconnect between growing revenues and margins to meet targets and innovating to grow the market.” Unni Krishnan, managing director, Brand Finance India, a brand valuation consultancy, agrees, “It is not endemic to HUL. Such things happen if you set short-term goals.”
