Larger packs scenario in FMCG

Consumer goods companies are going for larger packs and product bundling to keep price-sensitive buyers happy and ward off competition.

The latest to join this bandwagon is India's largest consumer goods maker, Hindustan Unilever, which launched an 8-kg pack of its popular RIN detergent in modern retail chains last week. The scale-up from its earlier 6-kg packs could well be a part of its strategy to keep rival brands out of the shopping basket.

Industry experts say large packs drive consumption as they increase the number of units purchased in one visit.

"For brands, it results in instant volumes and building loyalty. If planned well, it can also result in pantry loading and blocking rivals from entering the shopping basket," said Devendra Chawla, president for FMCG and food at Future Group, which runs Big Bazaar.

While bundled products have been popping up in stores for some time, the larger-pack route is the latest to catch the attention of firms such as HUL, L'Oreal, PepsiCo and Henkel. Not only is it helping them garner more value-seeking consumers, but is also making buyers procrastinate trials with other brands.

"Large packs are generally for family consumption, and bundling is done to block out competition, especially in this market, which is getting more competitive," said Satyaki Ghosh, director of consumer products at French cosmetics giant L'oreal.

L'oreal's Garnier Fructis shampoo hit shelves in 700-ml packs a few months ago, offering consumers almost double of what its large pack was offering earlier. The company now plans to follow a similar strategy for its L'Oreal brand shampoos.

Retailers say larger packs could help increase consumption in some categories.

"Consumers are trading up to larger value packs as it gives them the benefit of paying less per gm. From a retailer's perspective, too, the average selling price is higher," said Ashutosh Chakradeo, head of buying & merchandising at Hypercity Retail.

The strategy is beneficial for consumers, too. "Large packs offer longer usage period, allowing new consumers to judge the product well. It also help increase sales from geographies with higher disposable income, such as Kerala," said Ullas Kamath, managing director of Jyothi Laboratories, which acquired German firm Henkel.

The company retails 2-litre packs of Pril dishwashing detergent and a 30-coil pack of Maxo mosquito repellent in modern trade. In contrast, 750 ml is the largest size of Pril while Maxo is available in a 10-coil pack in 'kirana' stores.

Large packs are also relevant for consumers struggling with high interest rates and inflation. An online survey by market researcher Nielsen last year showed 46% of consumers preferred large, value packs.

According to food and beverage maker PepsiCo India, consumers shop more for home consumption in modern retail and, therefore, prefer large packs. Apart from its 2.5-litre beverage packs, the company late last year introduced 'Kurkure' in 200gm-ziplock packs and 'Lehar Namkeen' in up to 1 kg packs.

Viney Singh, managing director of Max Hypermarkets India, said companies are launching special packs because as the channel expands, they are reaping more sales. Max runs Spar Hypermarkets in India.

For instance, modern trade contributed 12% to HUL's Rs 20,000-crore revenue in 2011, up from 5 % four years ago.

Modern trade is gradually becoming an integral platform for a growing number of consumer goods makers, especially multinationals, to launch premium products for higher margins besides higher volumes.

"Small retailers, on the other hand, have physical constraints in displaying large packs on their shelves," Singh added.

(Courtesy- Economic Times, 27th Jan.2012)

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Coal India snatches RIL crown

Barely nine months after it listed on the stock exchanges, state-owned Coal India has mid-wived one of the most incredible stories on Dalal Street by toppling Reliance Industries from its perch and becoming the country's most valuable company.

The Calcutta-based hewer of coal today notched up a market capitalisation of Rs 2,51,296 crore, nudging ahead of Mukesh Ambani's flagship company which reported a value of Rs 2,47,129 crore.

The Coal India stock, which first listed on the bourses on November 4 last year, has risen 16.21 per cent till date, while Reliance has wilted 32 per cent during the same period.

Both are principally energy resource companies: one is the largest producer of coal, while the other is the biggest refiner of crude oil.

Coal India's push to the top came in just seven trading sessions since it burst into the sensex on August 8. That itself is a fairytale ride: no other company has leapt into the index in a short span of nine months since listing.

The change at the top, though not unexpected, is a reflection of the huge demand for natural resources such as coal in an economy that is projected to grow at 8 per cent.

The fortunes of the two companies ' Coal India and RIL ' seem to have diverged because of perceptions of investors in a market that has been extremely volatile lately.

RIL has been under-performing the markets over several months primarily because of disappointment over the company's inability to ramp up gas output at its famed KG-D6 block. Revenues from its oil and gas exploration account for just 5.7 per cent of its gross turnover of Rs 276,371 crore in 2010-11, but that doesn't seem to have weighed with investors at all.

In the trading today, the Coal India stock closed with a gain of 2.64 per cent at Rs 397.85, translating into a market capitalisation of Rs 2,51,296 crore. On the other hand, the RIL share ended lower by Rs 4.20 at Rs 754.80.

"The writing was on the wall. There were two reasons for Coal India overtaking RIL. While investors have been bullish over the prospects of the coal producer and this has only strengthened after its good first-quarter results, the RIL share price has been falling over the past few months," said an analyst with a foreign brokerage.

For RIL, the change in the pecking order is tinged with a little bit of irony: it had emerged as India's most valuable company nearly four years ago after dislodging another state-owned giant ' ONGC. It has now been beaten by a nine-month old PSU newbie on the market.

The RIL stock has also been pounded after a draft report of the CAG said the company had been shown undue favours by the Union ministry of petroleum and natural gas and the Directorate General of Hydrocarbons (DGH) in its Krishna-Godavari (KG) block.

Experts point out that there are many things that are going in favour of Coal India, which is the largest coal producer in the world.

Akhil Jain, analyst at Aditya Birla Money, said in a report that the company enjoyed a competitive advantage over its global peers on account of its large coal reserves, lower cost of mining and lower capital expenditure costs.

The availability of huge reserves in India will see many coal-based power projects coming up. Moreover, after the Fukushima nuclear power disaster in Japan, concerns over safety are likely to result in a slowdown of future nuclear projects.

Another analyst says Coal India has huge cash reserves and will not be affected by the current environment of high interest rates or the economic uncertainty overseas.

India- A promising business place for NRIs

    With the recession over weak economic situations in western continents, NRIs spread across the world , now see India as a promising business place. Many of the NRI businessmen from Canada, US, South Africa and UK who had come to Jaipur to attend the 'Pravasi Bharatiya Diwas' admitted that they are willing to return back to their motherland for business.
   Due to severe debt crises in US & UK, Indian businessmen are not finding the new ways to expand their businesses. They believe that this is the right time to invest in India with the falling Rupee to receive more rupee funds on conversion. They also think that India has the potential to grow at the rate of 7-8% which is highly promising them to return back to India.
    However, these NRIs have shown concern over the issue that Indian Government is not supportive to us. They said that Indian Government asks us why we want to do business in India..!!
They said that investment is a one-way process whereas business opportunities comprise of partnerships, join ventures and involving local industries and such ventures will be more viable in the present economic scenario in India.
(Courtesy- The Economic Times, 12th Jan. 2012)

European Economy will get rid of Recession

    For the past eighteen months, entire world is evident for worsening European economic situations, which is mainly due to sovereign debt crises. Even it has badly affected the world's developing economies specially South Africa. But it has been indicated by International Monetary Fund (IMF) that Europe as a whole may avoid a recession this year and there were reasons to be more upbeat about prospects for the region.

The main reason is that many of the European countries are growing at a faster rate which will reduce the overall impact of the European debt crises. Most of the EU countries have reduced or stabilized their increasing interest rates despite of dominating recession. It has been suggested to South Africa that economic powerhouse should be maintained supportive to monetary policy to ensure growth in the medium term.

(Courtesy- Reuters, 11th Jan. 2012)

Alta Moda, setting up premium priorities

    The only premium fashion magazine from Pune, Alta Moda, with its recent fall wedding issue has given a kick-start to the premium priorities of people. While featuring the premium pre-wedding sneaks, Alta Moda has uncovered the unbound expectation of today's sophisticated mindset.
    How a going-to-be bride wants to make her wedding the memorable one? How she prepares for it? How should a going-to-be married couple spend their highly sensual time? and lots of things to be taken care of before getting married..!! The German Supermodel Elena Kazan has revealed the gorgeous views of today's bride's fashion in Ilisia's outstanding collection with the help of Vivek Tickoo and Vishal Nale's lenses.
Overall, its a real premium magazine that is surely gonna set new trend in India for premium fashion.

Sales of Digital Music overtook Physical formats

From the references of Times Magazine and CNN Money, its been revealed that people are now highly interested in shopping music online. With the iTune music store trend, music lovers have become more sophisticated and opting for online music purchases.

According to a Nielsen and Billboard report, digital music purchases accounted for 50.3% of music sales in 2011. Digital sales were up 8.4% from the previous year, while physical album sales declined 5%.

Lady Gaga was found to be the most streamed artist whereas Adele's album 21 was the top selling album both online and physically, and her popular song, "Rolling in the Deep," was the bestselling digital song, with 5.8 million downloads.

Digital music selling have become the eco-friendly format over traditional plastic format which is not the optimal one. Mobile and Smartphone revolution have proved to be the catalysts for the Digi-music trend.

Traditional music magazines like Rolling Stone and Spin Magazine have now created apps that allow users to purchase music while browsing, and services like Spotify have partnered with Facebook to boost music discovery and sharing.
(Courtesy- The Times Magazine, CNN Money)

Nokia- Lost somewhere

      Till last, a year or two, it was the Nokia, that was ruling the Indian Mobile phone market. The extreme trust by customers and hence the strong hold in terms of market share had made Nokia as the most valued and trusted brand in the Mobile Handset market in India. But now, the picture has been completely changed. The brands like Samsung and LG which were considered to be the optional and easy on pocket hence, have thrown Nokia far away from the competition.
      The day since when Samsung and LG came up with easy on pocket Touch-phone models, Indian customers also have started passionately using these phones. In order to get in line with the Blackberry and other smartphone users, Indian customers have liked these brands beyond the limits and then the competition began between Samsung-LG and the outsiders leaving Nokia far behind.
Of course, Nokia was also having attractive touch-phones and still, but the trend that has been set by Corby Series by Samsung and the rising popularity of its Google Android phones led by the Galaxy range has vanished the ongoing Nokia dominance.
       Now both Samsung and Nokia are seen blaming each others on ambush marketing, but in reality it is the revolution in the Indian Mobile handset markets. The marketing war in India has intensified after Nokia rolled out its first Windows-based smartphone, Lumia, last month. Samsung has started pushing its own Windows smartphone Omnia, launched more than a year ago, but the fact is that Lumia has failed.
Some marketing experts believe Samsung is playing it smart. Competition is all about being opportunistic and scoring a goal when the rival is least prepared. And that's where Samsung has proved to be a better player.