Marketing review

28 Jun 2007


Future Bazaar plans home delivery of food, groceries
The Future Group''s e-commerce portal, Future Bazaar, plans to offer home delivery of food and groceries from its grocery retail store Food Bazaar.

Future Bazaar expects to strengthen its back-end operations to include food as an additional category. At present, sells nearly 5,000 products listed under several categories such as consumer durables, home décor, apparel, mobiles, watches and accessories.

The company feels that it would not be as easy to get into food retailing as it has been other categories because food retailing is complex and local sourcing expertise is needed in this business.

The existing brick and mortar retailing format of Food Bazaar has been offering doorstep delivery format for a while but considers it as more of an ''add on'' service rather than an independent business model.

Officials said, though most retailers are offering home delivery informally it is not an organised service since the supply chain is fractured as regional sourcing is involved.
With regional sourcing being the key to the success of the business, a central warehousing model is unlikely to work in the case of doorstep food retailing in the country.

While there have been successful doorstep delivery models of retailers such as Tesco and Fresh Direct, emulating their models in the Indian market may take time.

With intentions of strengthening its back-end processes, Future Bazaar is expecting to tap into a ready market with its e-commerce model. But such models can only work locally.

Meanwhile, Future Bazaar has been working closely with the sourcing departments of all the retailing formats of the Future Group. In fact, for some categories such as electronics, it is also vending items that are not available at E-Zone, the electronics vertical of the retailer.

Reliance Retail to boost private labels business with help from Punjab, Haryana
Reliance Retail has tied up with the Punjab and Haryana Governments to set up food processing units and procure land for cultivation of fruits and vegetables to help boost its private labels business.

The company is likely to build two food processing units in Haryana and make Punjab one its large sourcing hubs for fruits, vegetables, dairy products and grains.

Reliance Retail''s plan is to build two food-processing units in the two places, with a total investment of Rs100 crore. The plants would be engaged in processing, packaging and distribution of fruits, vegetables, and milk products for the retail chain''s private labels.

While the process of setting up the two facilities will begin in the next three to six months, the units will become functional in the next one year.

In Punjab Reliance Retail has acquired three lakh acres of land for the cultivation of fruits, vegetables and food grains. It plans to use the State for 10 to 15 per cent of its total procurement of fruits, vegetables and milk.

The company plans to procure a total of 2 lakh tonnes of fruits and vegetables and around 9 lakh tonnes of foodgrains such as rice and wheat all for its private labels.

It has also tapped 1.5 lakh milk farmers across 3,000 villages in Punjab to procure 7 lakh litres of milk, which would be converted into dairy-based products such as ghee, butter, cheese and cottage cheese.

The company''s private label business strategy comprises a supplying products not only to its own outlets across the country, but also to other retail chains.

Now Coupon Mall from Prateek Lifestyle
Apparel manufacturer Prateek Lifestyle, the retail division of Prateek (a player in), has announced its first retail venture - Coupon, a chain of value lifestyle malls. The first ''Coupon'' mall has been set up in Bangalore.

The Coupon mall spread over four floors and 50,000-sq. ft will offer around 140 brands in categories like apparel, footwear, accessories and home furnishing at discounted prices. The company said the venture would provide the best of national and international brands across categories at the best of prices with discounts ranging from 30 per cent to 55 per cent.

The company also promises to launch its private label soon. The plan is to open a chain of Coupon malls across the country to tap the organised value retailing segment, which is currently estimated at Rs 6,000-8,000 crore.

The second Coupon mall will come up in Ahmedabad by mid-August. Prateek Lifestyle will roll out 12 malls by March 2008 in 10-12 cities such as Kolkata, Chennai, Hyderabad, Mumbai, Delhi and Pune. It hopes to have 50 malls by 2010.

Air Deccan targets the corporate passenger segment
Air Deccan may continue to be a low-cost carrier but is likely to be low cost for fewer passengers.

Instead of offering the Re1 and Rs99 tickets on routes the airline will offer these only to penetrate the virgin routes and to build up demand.

Hence, Air Deccan is tweaking the customer profile to woo the big corporates as well as the small and medium enterprises aggressively. However, it will expand its customer profile while remaining within its basic business model such as not of offering hot meals to customers.

The airline is targeting to becoming profitable in the next 12 months. It is targeting to double the percentage of corporate passengers using its services and is looking at ways where Air Deccan tickets are on a travel agent''s platform and for the small & medium enterprises segment.

It is planning to introduce coupons, which can be bought in bulk and also wants to offer tele check-ins for corporate passengers as well as string together better schedules and timings so that company executives can pick up an early Air Deccan flight and return the same day.

Sabka Bazaar, Home Stores to be brought under Spinach brand
Wadhawan Food Retail (WFRPL), owner of Mumbai-based super market chain, Spinach, is planning to change the branding of its two newly-acquired Delhi-based retail chains.

The company recently acquired Sabka Bazaar and Home Stores, two formats of Home Stores and plans to bring them both under the Spinach brand. With the acquisition, WFRPL now has access to 31 Sabka Bazaar and seven Home Store outlets in Delhi.

The acquisitions mark the company''s foray in the organised retail trade market in the northern region that has been a part of the firm''s future plans.

Currently the company hopes to operate the stores as they are, without making too many changes till a final decision is taken.

However, there would be some changes made to improve operational efficiency.

The company plan to set up a total of 1,500 Spinach outlets by 2012, around 300-400 of which would be through acquisition of already established small and medium retail chains.

Spinach currently has 24 outlets in Mumbai, and has plans to expand to other parts of Maharashtra soon.

HLL''s Unveils new corporate identity
Hindustan Lever has formally introduced a new corporate logo and has changed its name to Hindustan Unilever Ltd. The company has adapted its universal global logo comprising 25 different icons with the aim of leveraging the global scale of the company and at the same time keeping its Indian identity intact with its new name.

For its Indian operations alone Unilever has decided to use its name as a suffix for its Indian subsidiary unlike the rest of its subsidiaries where it prefixes its name with the name of the country.

HLL says, retaining the name "Hindustan" as the first word in its name reflects the company''s continued commitment to local economy, consumers, partners and employees. The new logo is symbolic of the company''s mission of `adding vitality to life''.

It comprises 25 different icons representing the organisation, its brands and the idea of vitality. Each of the icons, which make up the ''U'', represent broadly product categories the group is in - for example, a tiny spoon in the logo is a symbol of nutrition, taste and cooking, while a chilli indicates spice and flavours and lips represent beauty, looking good and great taste.

Doug Baillie, CEO, Hindustan Lever, said, "The identity symbolises the benefits we bring to our consumers and the communities we work in. Our mission is full of promise for the future, opening up exciting opportunities where we have competitive advantage for developing our business and our new identity will help us confidently position ourselves in every aspect of our business."

Unilever began operations as an entity in 1885 when its founder, William Hesketh Lever, launched Lever Brothers in England. Lever Brothers soaps were sold for the first time in India in 1888. The company started its first manufacturing subsidiary in India in 1931 under Hindustan Vanaspati Manufacturing Company and a second subsidiary Lever Brothers India Ltd was established in 1933.

Two years later, in 1935, a third subsidiary, United Traders Ltd, was floated.

In 1944, the three Unilever companies in India were put under a common management and in the year 1956 the merger of the three subsidiary companies led to the formation of Hindustan Lever.

Nilgiri''s to set up popular ad premium segment bakery chains
Bangalore-based retail and dairy major Nilgiri Dairy Farm under retail brand Nilgiri''s is setting up two new bakery formats, Masala Bread, a mass market bakery chain and Blue Oven offering premium range of breads and patisserie.

The retailer is planning to go for aggressive promotion of Masala Bread and would open 30-40 outlets in the next one year across South India.

Masala Bread offers about 400 SKUs (stock keeping units), including packaged and open products and would essentially target customers of `local bakeries.'' Three Masala Bread outlets have been launched in Bangalore and in a couple of locations in Tamil Nadu.

Blue Oven would be promoted in a phased manner (about five-six outlets this year), as the premium foods segment is still a growing market in the country. Both the chains would source products from company-owned local bakeries. Nilgiri''s is also promoting a chilled foods section in its retail outlets. Called the Nilgiri''s Chef''s Range, the product category has Indian, Chinese and Continental recipes.

Thomas Cook brings in franchise model
Thomas Cook is bringing in the franchisee model and will open its first franchisee outlet at Ullasnagar early next week. The company plans to open 35 such outlets across India by December.

According to company officials, the network of franchisees, called Thomas Cook Gold Circle, will be an endeavour to fulfil the needs of discerning Indian travellers through a network of branded travel shops with a common look and feel.

The company''s product range of card, travel insurance, forex and other end-to-end travel solutions will be available at these outlets.

As part of the business model, the partners will use the brand and logo of the company.
Thomas Cook will share 50 per cent of the basic salary of two staff, including training of all in product, services and sales.

Thomas Cook caters to the travel requirements of one million customers in India annually and is looking at substantial growth, said Ms Gupta.

Apeejay Tea to introduce new retail brands
The Apeejay Tea Group that has 17 tea gardens under two companies, Apeejay Tea Ltd and Empire & Singlo Tea Ltd, producing about 21 million kg (mkg) of teas annually, is planning to launch new retail brands next year.

Right now, the group has two brands, "Mantra" and "Maha Mantra" which sell in Tamil Nadu, Karnataka, Rajasthan, Punjab and Jammu & Kashmir.

The company plans to push its existing brands in new markets like Uttar Pradesh and Himachal Pradesh. With several retail chains emerging in the market, the group is also exploring opportunities like pushing its teas in various ways, including under various brand names not necessarily owned by it.

The proposed retail drive also presupposes the launching of the "Typhoo", the UK''s third largest brand acquired by the group, in India.

The group hopes to get Rs 7-8 per kg more for its teas this year because of quality upgradation and higher production of orthodox varieties.

Pepsi moves towards health drinks, juices
Pepsi is moving towards health drinks from colas in a bid to cater to the changing tastes of consumers. Pepsi thus is coming out with juice-based drinks, which promises to new battle ground for the cola majors.

The branded juice market in the country is estimated at of Rs 1,200 crore in value terms, and is is broadly shared among Coca-Cola, Pepsi and Dabur Foods.

The cola giant may launch its juice-based drink in either western or southern region. Coca-Cola recently launched its new products in Andhra Pradesh, Tamil Nadu and Karnataka.

Danone to exit biscuits market
Groupe Danone is considering exiting from the biscuits category in India, due to low margins and intense competition from small manufacturers.

With the exception of Europe, the share of biscuits in the company''s global portfolio has been dwindling. Europe accounts for 80 per cent of the company''s biscuit sales.

Groupe Danone started operations and consolidated its holdings in 10 countries in 2006. At the time it focused on biscuits only in the Algerian market. This is because of its proximity to France where Danone leads the category with its Lu brand.

In Indian the company is likely to exit from Britannia, where it holds a 25.5 per cent stake through a holding company, Associated Biscuits International Holdings.

Executives said that in the event of an exit, Groupe Danone would sign a non-compete agreement with its Indian partner and stay out of biscuits in the country.
Danone''s biscuits division''s has been contributing less and less to its global sales. In 1996, nine categories, including pastas and glass containers, contributed to the company''s turnover, but biscuits contributed a mere 20 per cent.

However, a refocused portfolio in 2006 included only three categories-beverages, fresh dairy products and biscuits.

The biscuits portfolio contributes only 15 per cent to the total sales. In 2000, biscuits contributed ¤2.3 billion to the group''s global sales, while in 2006, the contribution of biscuits was ¤2.1 billion, even as the company''s biscuits portfolio grew by three per cent last year.

In 2006, the beverages portfolio of Danone, which includes renowned brands such as Evian and Volvic, grew at nearly 15 per cent, while the yogurt business grew in excess of 30 per cent.

In the last three years, Groupe Danone has exited the biscuits category in some parts of Latin America and Europe.

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