Marico Industries has extended its up-market Saffola brand - well known in the refined oil segment - to salt. Saffola salt was launched in November 1998 and is priced at Rs.20 for a 1-kilo pack available in a re-usable jar. The product is being launched in select towns of Mumbai, Delhi, Chandigarh, Calcutta and Pune at an introductory price of Rs.20.
The company's pricing is interesting. Compared to this, the price of a 1-kilo plastic pack of Tata salt, the market leader, is Rs. 6. Hindustan Lever's Annapurna salt is priced at Rs 6, and DCW's Captain Cook at Rs.7. Will this strategy pay off for Marico? Why should people pay Rs 20 a kilo for a simple thing like salt when other reputed companies are selling the commodity for just a third of that price?
Marico Industries Ltd chief executive officer (health care) Pranab Datta says that the company wants to capitalise on the brand popularity of Saffola oil as a health product and extend it to salt, which doctors advise patients suffering from hypertension or a heart ailment, to cut down.
Marico's reasoning is that since Saffola oil commands a premium of 10 to 15 per cent over other edible oil brands, the company should be able to pull off a similar feat with salt. The rest of the mark-up is supposed to cover the cost of the jar. The company wants to leverage the Saffola brand equity through brand extension to expand its product portfolio, just as it has done with hair oil.
In 1997, the company extended its 'Parachute' brand to the value-added hair oil market. In a year's time, the product is estimated to have notched up a 10 per cent share in a highly competitive market dominated by heavyweights such as Dabur (Vatika) and Hindustan Lever (Clinic Plus), who command a share of 40 per cent each. Marico seems to have a similar game plan for its salt.
The 5-million tonne Indian salt industry is mainly an unorganised business, and branded salt accounts for only a fifth of the market. The branded salt segment, valued at Rs.500 crore, is growing at around 20 per cent annually. The market leader is Tata Salt, with a share of 30 per cent. Hindustan Lever's Annapurna salt and DCW's Captain Cook account for around 15 per cent each.