Go Bingo

Branded snacks segment is dominated by Frito-Lays (Pepsi’s Snack Division) with a market share of 40-45% divided amongst their five brands --- Lehar, Kurkure, Lay's, Cheetos and Uncle Chips. The total snack food market is estimated at Rs. 4,500-5,000 crore. Within this, the Branded segment notches up revenues of Rs. 2,000 crore, growing at the rate of 30% annually.

Bingo is ITC’s foray into this fast growing branded snacks segment. After reasonable success in Staples (Aashirwad), Biscuits (sunfeast), Ready-to-Eat (Kitchens Of India) and Confectionery (Candyman) businesses, this is ITC’s fifth major line in foods business. The branded snacks category is sub-divided into the traditional segment (Haldirams), Western segment (Lays and Uncle Chips) and the Finger snacks segment (Kurkure).

ITC the undisputable king of cigarette industry in India, over a period of time has done an astounding work on their distribution. But their efforts to brand a product in the minds of the consumer have always remained questionable or just futile. Decades ago, at the wake of anti-tobacco movements in India, people began realizing the ill effects of Cigarette and began reducing the numbers of cigarettes they consumed. The primary fall out of this was reduction in the sales of full packs of cigarette. This can also be attributed to the fear of lending cigarettes that pre-occupied the consumer’s mind. This made ITC realize that the most important issue in their distribution is availability.

ITC started servicing all the pan shops and mom and pop stores to sell their cigarettes. Cigarette being a completely Pull-based product never allowed the distributors to overload the retailer. The frequency of transaction was high, but the volume transacted was low (which was often 2 cigarettes, one to smoke and one to carry). Volatile sales of the product also meant that the salesman had to visit the pan shops (to distribute the product) at least twice every day.

A century of cigarette sales led to a clear distribution mindset in the company and they began lacking the mindset to brand products well. Their recent branding efforts, be their positioning or their advertisements, leaves a lot to be desired. This is clearly the reason why a very premium “ Kitchen of India” lost out of both the visibility (hence mind share) and consumers.

ITC has always been playing on the availability and a high margin factor and hence get their product pushed through the retailers. A dealer selling biscuits can push Sunfeast on an account of getting better margin from ITC than what Britannia can offer.

Their Recent ads for the product Bingo has been built on what a marketer would call “No Positioning” Strategy. The ad is funny, amusing and also a little stupid towards the end when the customer realizes that its an ad for 'potato wafers'. Foods historically are being shown aesthetically in advertisements with tastefully done visuals (even if it means showing a solution of red sand and water in the place of home-cooked Rasam). Trying to be different, Bingo Ads comes up with stuffs unrelated to the product in the beginning (that’s probably what they are trying to do) and the ad closes, by the time the product is on the screen. Customer looking at this ad can happily move ahead without even realise what the product was. This will never even push the consumers to try out the product even when it is at an arms' reach and with the delicious Lays stacked next to it.

God Save Bingo … With some of Bingo’s Flavors tasting funny, God Save Consumers as well.

Distribution Blues

[A Sales Man's Horrid Nightmare]

This is typically the case of sad distribution, when your product does not reach the point of sale. Your good quality and nice looking pet-cartons would land up being used to display your competitors' Product. In the Hilly and 'complex to acccessible' areas like the ones in the north-eastern part of india, Nestle has been doing quite a lot of promotion, pushing their Nescafe, Munch and Kitkat. All that cadbury has managed to do, has been giving them storage space ... Look at this ....

[ Taken at a shop near Cheerapunji, meghalaya - Dated March 2007]

Travails of a Coffee Cup !

The Instant Coffee Market is ruled by two Multinationals who together control more than 98 % of the market. Bru from HLL (now HUL) and Nescafe from Nestle need no introduction. Though present in the same market and address the same needs of the consumer, these brands represent two very different and distinct personality.

Bru has always worked on the platform of being a slightly cheaper product, ‘closer to filter coffee’- taste and ‘reinforcing happiness’ image. Nescafe is a more evolved brand, which just focuses on “Being Yourself” and “Deserving the best cup”. Nescafe if not heavily, but outsells Bru by a margin of 7 % in market share. With a slightly better quality product and a ‘very rich coffee’ image, Nescafe has always been a pull product unlike bru which does quite a bit of pushing (remember ads where the protagonist cries out load .... “Itz Bru Maaaaa”).

While branding a product of Nescafe’s caliber, Nestle has to manage 2 things – Its Current Brand Image and Future Positioning Plan. Being a premium product which advertises emotional gratification, it can only try moving higher up the value chain. But what Nescafe is doing in south has made me feel, if they too are trying to push their product. Nescafe team seems to have become ridiculously desperate with their Activation efforts.

[Outside Jeeva Park - T.Nagar, Chennai - Dated March 2007]

What you see above in the New Nescafe Activation, where they are trying to own the small platform hot teashops (HTS in FMCG lingo) and advertise their brand through these shops. Premium Product through these shops is indeed a funny idea with the Nescafe Banner in the shop reading “ Rich Taste; Richer Moments”. This has been quite a terrific irony I have come across in the recent past. With no analysis on who in Nestle gave this idea and what are they trying to do, here is a look at why this is gonna leave their brand identity in shambles.

• Chennai or any South Indian city is the biggest consumer of Nescafe as its taste is closer to filter coffee than Bru. With the acceptance of the “a richer taste” among these consumers, Nescafe should be doing things to get a better premium on their products than taking their product to the platform. This will definitely alienate these consumers for whom ‘filter coffee’ is available at an arm’s reach.

• 90 % of the Teashops in chennai are owned by keralites and is frequented mostly by bachelors and workmen. 70 % of the teashop’s sales come from selling Tea. Even companies like Brooke Bond and Tatas have ignored these shops not willing to reduce the brand image. Nescafe, which costs around twice as much as Red Label or Tata Tea, ideally should have not gone for this.

• If this is just an attempt to hike up the visibility, Nescafe could have tried it on any other place, which could range anywhere from upcoming malls to parking spaces. The place should not add any 'negative' value back to the brand like what might happen with the current effort.

• Coffee always has a premium positioning in people's mind and is considered a "Rich Man’s Drink" unlike Tea. People associate Barista’s and Starbucks with Coffee and not a Roadside Nair’s shop.

Nescafe trying to reach out to the public is understandable, as they have been in a silent mode in the past. But what needs to be noted is the fact that they have been the market leader despite not being over pushy. Its time Nestle starts acting like a market leader and work more on innovating and growing the market rather than doing some cheap activation which might burry the brand beyond resurrection.