Fast moving consumer goods major, Hindustan Unilever’s packaged foods brand, Kissan is proposing to make a farmer, or more aptly a kisan out of its consumer. The latest from the brand: A chance for its consumers to grow a tomato sapling.
One can order tomato seeds through a specially created website, titled kissanpur, plant the sapling and share its pictures, with a chance to feature on the special edition packs to be launched during the second half of the year. The activation is a first of its kind initiative from the brand after launching its new brand proposition — goodness of 100 per cent real fruits and vegetables — last year around September. According to Harpreet Singh Tibb, general manager, HUL Packaged Foods, the initiative is all about 100 per cent ‘real growing’ and getting people to experience ‘real products’, all in line with the brand’s repositioning.
The line extensions launched last year — malted food drinks (MFDs) with Kissan Nutrismart milk additives, mayo-based spreads as alternatives to butter and a juice offering, a combination of fruit juice and soya milk - were intended as a step in the same direction. It was also an attempt to cash in on the brand equity of Kissan.
Harish Manwani, COO, Unilever told Business Standard in a previous interview, “India’s consumption in many categories is not even one-tenth of the rest of Asia. In packaged foods, the brand equities of Knorr and Kissan, for example, are Olympian, but the size of the market here is still small. But I am confident they will live up to the potential a few years later.”
In fact, the challenge and the opportunity lies in low penetration of packaged foods, a category that as per Euromonitor numbers has been growing at a compounded annual growth rate of 14 -15 per cent since 2005. Currently, packaged foods make up just five -six per cent of the overall foods market in India. Unpackaged or unorganised segment contributes significantly to packaged foods, more often than not at lower price points. A problem that even the flagship product, ketchups, in the Kissan portfolio is dogged by. As Tibb admits that a cottage industry player may sell a one kilogram bottle of ketchup for Rs 50, while a Kissan 500-gram pack will sell for Rs 75.
Low penetration of packaged foods coupled with a changing socio-economic fabric (increased urbanism and rising incomes) is what is believed to be the reasoning behind the renewed focus on packaged foods from a predominantly soaps and detergents and personal care products-focused company according to analysts tracking the company. Little wonder then that the company has spoken of its intention of increasing the contribution of packaged foods to the overall revenues (processed foods contributed a little under five per cent to the overall revenues of HUL for the financial year 2010-11, total portfolio standing at around Rs 900 crore) in several analyst meets.
But first, it must face the challenges, chief among them, the competitive intensity, with several established brands jostling for the space. Examples range from Nestle’s Maggi (for ketchups) to Cadbury’s Bournvita and Glaxo Smith Kline’s Horlicks (for milk additives). Even where it is trying to carve out a niche for itself, like with its creamy spreads as an alternative to butters, it must challenge the likes of Amul, that controls almost 90 per cent of the butter market.
In fact, competition seems to have already taken its toll on Kissan with the company admitting that the milk additives launched in test markets in south have had limited success. It may also be recalled that Kissan’s attempt at foraying into the malted drinks space previously (with Amaze, about two years back) went wrong with even regulatory run-ins involved. However, Tibb dismisses the notion of discontinuing the Nutrismart product in near future, saying that the company sees a better opportunity in the other new products and would like to build on them instead.
And to do so, HUL is banking on ‘wet sampling’. Simply put, it means getting consumers to actually try out the products through its 200 food ambassadors in modern trade stores in metros like Mumbai, Delhi, Bangalore and Hyderabad. “While television works well for other categories, it is important to establish the taste credentials in the foods category,” says Tibb. This may be especially important for the new products where the company is banking on product differenciation. And in a way attempting to change the consumers’ taste buds, by giving them a mayo-based spread as an alternative to the traditional butter.
Analysts have their reservations about this going niche philosophy (for the new products) of HUL, “They have gone niche before going mass, a typical approach may have been to build scale and size and capture a decent market share to establish themselves in the face of competition.” Brand experts, on the other hand are unsure about Kissan’s attempt at unifying the paradox of healthy food and packaged food.
“Kissan’s buyer (the parent) may understand the health language but the consumer (the child) may not identify with it. For the latter, Kissan (the core products like ketchups, jams and squashes) is all about fun. So, any move to bring in the health angle must be done covertly, to avoid breaking away from the brand’s core,” says Harish Bijoor, CEO, Harish Bijoor Consults. Otherwise, the brand may risk falling in an in-between no man’s land.