Sunfeast : Spreading the smile

Brand : Sunfeast Company : ITC Ltd Agency " FCB Ulka Can a cigarette manufacturer succeed in marketing Biscuits? What do management thinkers say about unrelated diversification? Unrelated diversification will succeed if it is based on the core competency of the firm. So What is the core competency of ITC that is being leveraged when it decided to enter the Foods market. ITC relies on three core competencies 1. The depth of distribution 2. Its brand building capabilities. 3. The ability of Quality outsourcing. Sunfeast has been a success because of these three competencies of ITC. Sunfeast was launched in 2003 was one of the diversification forays of ITC which wanted to establish itself as a serious FMCG player from its position of Tobacco products leader. ITC had the advantage of the well entrenched distribution setup which is matched only by HLL. Indian biscuit market is estimated to be around 4500 - 5000 crore. The market is dominated by Parle and Britannia. Parle is the volume leader with brands like parle- G, Krackjack and Monaco while Britannia is the value leader with brands like 50: 50, milk bikis, Tiger, Goodday etc. The biscuit market has now moved from the core Glucose base to more value added categories. The key markets are UP, Maharashtra, and Tamilnadu. The percapita consumption of biscuits in India is only 1.2 kg per annum while the

percapita consumption is 15 kg p.a in developed nations. While the glucose biscuits are popular in Rural India , Urban market prefer Cream biscuits.

To est

ablish a brand in this tough market was never easy. Sunfeast

using heavy promotion and careful brand building have already garnered 10% market share in this market. Sunfeast is positioned as an exciting brand. This platform is supported by a series product launches. Since Biscuits are convenience goods , new tastes and new products are essential to built excitement in the market. Sunfeast have maintained continous series of new launches like Milky Magic, Coconut, strawberry, pineapple cream etc. Recently Sunfeast launched a product for the premium segment named " Dark Fantasy" with chocolate flavour and cool advertisements. Sunfeast have used the baseline " spread the smile" as the brand essence and the brand is endorsed by Shah Rukh Khan. The use of SRK makes sense since the TG is mainly kids . SRK have the energetic persona that goes well with the brand. The mascot of Sunfeast is the Animated Sun which is the symbol of contentment, satisfaction and Pleasure. This mascot has been well received by the TG. The ad campaigns are catchy and full of colors and excitement. The product is also of very high quality. Thus Su

nfeast has managed to get all the winning combinations in the right mix. Sunfeast is also trying to garner more share in the Marie category which is estimated to be around 600 crore. It launched the Marie with different flavours that has enabled it to

gain a strong foothold in that category. To expand the brand in to the snack category Sunfeast has launched Pasta Treat which talks of a healthy snacking option for kids. Sunfeast also uses lot of Below the line promotions for brand building. It sponsors Sunfeast Open, a recent initiative aiming at the school kids by providing them an opportunity to enhance creativity through painting competitions, " Hara Bano " campaign which set a world record in planting maximum number of saplings etc. The constant product launches and careful promotions have enabled Sunfeast to move to the top league in the biscuit market with in a span of 3 years. We may see this brand expanding to many categories .Hope they don't mess the brand by extending it to underwears. Sunfeast : A marketing success story.

Brand Update : Sunfeast

In a unique marketing move, FMCG major ITC has launched a new range of Sunfeast Biscuits: Sunfeast Sachin's Fit Kit. The brand's uniqueness lies in the fact that first time in India a product is being co-created by the company and the brand ambassador. In a

world cup Googly , Sunfeast has not only r a brand ambassador but also bought in a variant of a

oped in Sachin as different kind.

Sunfeast Sachin's Fit Kit is the first Indian brand where the celebrity has been actively involved in the product development. Sachin has shared his dietary regimen which has helped him to stay in top fitness for more than 17 years ,with the company and the product was developed taking inputs from the dietary regime. The new variant is branded as Sunfeast Sachin's Fit Kit.

Sunfeast foray into Biscuits

Major players in biscuits who dominated the industry long back were Parle and Britannia. With that there were smaller brands in various regions. Instead of all this ITC took a bold step to hit on these biscuit mammoths making 8.2% of industry (in 2004) Now the important question at hand is the reason why ITC entered into this product category. Let me enumerate some reason: 1. Food segment is Rs. 550,000 crores (112 b$) 2. 6% is FMCG (Branded and packaged) Rs. 33000 crores 3. In developing markets, the above percentage is as high as 95%. So looking into future, Indias will have more organized and branded food product categories. It will lead to dual effect: Increase in base of biscuit segment and Increase in % of branded food categories 4. ITC has a great scope to be a branded player 5. Branded Biscuits industry come out to be around Rs. 4000 crores 6. Increasing at the rate of 12 to 14% yoy 7. Synergies with ITC core competencies (value addition to wheat with Aashirwad Atta brand) 8. Biscuits as a segment positively effects the bottom line Threats for ITC: Behemoths like HLL tried their hand in this segment but unsuccessful (Max brand exit in 2005) Reason for Entry into Biscuits 1. Innovation: Research revealed that the category had gaps which ITC could settle into. Findings revealed that consumers wished to taste new and innovative products. That was precisely what the competition had not done in a big way. Glucose was Glucose and same is the case with Marie. The company decided that this could be its biggest point of attack. In 2003, ITC launched Sunfeast with six ranges. But it was a calculated risk. ITC stuck to category

favourites like Glucose, Marie and Bourbon cream. Along with that, it also launched innovations such as orange-flavoured Marie, Marie light and butterscotch-flavoured cream biscuits. In 2004, Sunfeast followed this up with the launch of Sunfeast Milky Magic. More recently, it also has launched the Sunfeast Snacky and Sunfeast Golden Bakes. The biscuits industry had not witnessed any major product innovation in years. Consumers were just waiting for something new, something fresh, when Sunfeast happened 2. Distribution: Distribution is the key for FMCG products. In biscuit category, distribution and visibility is extremely important as it's partly an impulse purchase product. Priya Gold, which entered the western region in 2000, is struggling to find its feet even five years later. However, in this regard, Sunfeast did not stumble. The main credit goes tobacco business its understanding and deep grasp in distribution. But it was not limited to just panwaris, but looked at the grocery stores and other retail formats. The company says the brand is now available in nearly 1.8 million outlets. Britannia claims it has a superior distribution clout with its presence in nearly 3.3 million outlets. Parle, the seasoned player itself, says it is available in 1.5 million outlets. Sunfeast's next step was to step up its branding and promotion 3. Promotion: In August 2003, a month after its launch, the company undertook a major sampling exercise to promote the product. For two years then, the brand did all the usual rounds - riding behind buses, blocking television spots, corner space in newspapers P 4. Pricing: The biscuits industry now has two clear models. Parle products plays the low price game at all varieties of biscuits from glucose to cream. Parle plays a high volume, low margin game. But Britannia and Sunfeast look at a two-pronged strategy. High margins in cream variants and volumes from the Marie and Glucose segments. For instance, cream biscuits from both Britannia and Sunfeast cost Rs 10 for 100 grams. Parle, however, only charges Rs 5 for its cream variants. Except for Hide & Seek, all of Parle's products lie in the price range between Rs 4 and Rs 6 for 100 gram packs. Biscuit consumer is willing to pay more only when he sees a clearly differentiated product. Hence companies have little choice in terms of pricing. No wonder all the Glucose and Marie variants straddle price points of Rs 4-6 (for 100 grams)

Results 1. Volumes: In March 2006

y

Britannia's shares have dropped from 35.8 per cent in 2004-05 to 30.5 per cent in May 2006 Parle's shares have also dropped from 42.2 to 38.4 per cent in the same period Priya Gold has seen a minor dip from 6.4 per cent to 5 per cent ITC's Sunfeast has been a big gainer with its share increasing from 2.7 to 6.7 per cent

y y y

2. Value
y y y

Britannia leads the market with 37 per cent market share Parle's 31.3 per cent ITC's 6.3 per cent

www.business-standard.com/india/...sunfeast/241455/
As part of its efforts to expand its product portfolio in the foods division, ITC is planning to launch new varieties of cookies, sweet and salt crackers and a number of other differentiated products. The company has signed up Tamil film actor Surya as the brand ambassador for its biscuit brand Sunfeast in Tamil Nadu. Devarajan Iyer, brand manager, ITC Ltd (Foods Business), said Tamil Nadu was one of the largest markets for biscuits in the country and the biscuit market in the state was valued at around Rs 550 crore. The entire southern market was worth about Rs 2,000 crore. The company plans to capture a market share of 20-22 per cent in the state in a years time, according to a press release

IN a bid to reinforce its brand on kids, ITC Foods Ltd will soon cover more than 1,000 schools across the country as part of its Sunfeast school programme. "Our learnings corroborate the fact that brands register better among kids compared to adults. Learnings from our biscuits track revealed that spontaneous recall of Sunfeast among kids is about three times more than their mothers," said the ITC Foods Division Chief Executive, Mr Ravi Naware. Considering the need to garner visibility among kids, the company has earmarked around Rs 20 lakh for this below-the-line project and their target is to reach 1 million kids across these 1,000 schools The Sunfeast school programme focuses on building the children's creativity through an opportunity to paint and win prizes. The interest in such programmes are introduced by leveraging the Sunfeast mascot and by conducting magic shows

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Since the Rs 9,000-crore biscuit market witnessed a growth of 20% last year and is slated to sustain its growth this fiscal, ITC is looking at enhancing its biscuit manufacturing capacities by at least 15-20%, primarily to manage supply chain costs and improve profitability. We plan to set up additional capacities in such areas where we have developed a significant front-end scale, but are limited by proximate capacities. Attempts are being made to create new biscuit variants in segments that are relevant to the consumer. The positioning of the marketing mix is also being worked upon to drive consumption by creating convenient price points or by differentiating product propositions, Mr Chitranjan Dar, chief operating officer, ITC Foods Division, told ET. For starters, ITC plans to drive growth by vitalising its brand Sunfeast through product innovation, contemporary packaging and targeted brand communication. A huge investment is also being planned for brand building and product development. At the same time, the company is looking at investments in building trade loyalty across channels and markets. Elaborating further, Mr Dar said, while ITC per se has no plans to rationalise its biscuits portfolio, we review the basket from time to time. Additions or deletions takes place on the basis of the market feedback and actual sales. The idea is to strengthen the winners and replace the average performers with potential winners from the biscuits stable. As of now, there is no product which does not contribute positively to the overall pool of contributions. Incidentally, a large proportion of the growth in the biscuits segment is coming from the midprice offers growing at 35%. The mid-price offers is the non glucose segment and includes cookies and sandwich cream products. There are clear indications that consumers are upgrading to mid-price offers in line with the growth of packaged foods in the country. Since consumers are ready to pay for good quality and tasty products, we find a growing value for product quality and hygiene. Hence, our capacity additions will partly be in line with these requirements Mr Dar pointed out. The basic product glucose, however, continues to be largest category in terms of volumes.

http://www.moneycontrol.com/india/news/advertisingmarketing/marketingconsultantfo undernobbynabankurgupta/brandsthatprick/market/stocks/article/259806

A case in point is the Rs 16,000 crore ITC, that ran their CSR campaign, about putting India first for its e-choupal initiative two years back. Cut to the present. The company has linked the Sunfeast brand to its social forestry campaign, where the company chips in with 25 paise for every pack of Sunfeast biscuit and pasta sold, and consumers who buy the atta brand, Aashirvaad, contribute towards ITC's rain harvesting campaign. Divisional Chief Executive, ITC, Ravi Naware says, "Consumers like to connect with the brand, if the brand is seen as a responsible brand, then consumers get an emotional connect thats far beyond just usage of the brand and consuming it. It's this higher level of connect that we are attempting to create through this campaign. So, in an attempt to connect with consumers at several levels, we will run this campaign, parallel to other campaigns, that talk about differentiated innovative products under the Sunfeast brand."

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The FMCG & others business reported a strong growth of over 50% yoy to Rs. 7.4 bn with an increase in revenue contribution by 3.2% yoy to 16.7%. The segment witnessed a strong growth of 57% yoy in the branded packaged foods (biscuits 53%, Aashirvaad atta 43%, and confectionery category 40%), 72% yoy in the stationery business, and a rise 26% yoy in the domestic sales i.e. lifestyle retailing. However, operating loss further rose by 143.9% yoy to 1.2 bn due to heavy investment made in new Strong performance by Non-Cigarette FMCG business Please see the end of the report for disclaimer and disclosures. -3-

ITC LIMITED RESEARCH

EQUITY RESEARCH July 10, 2008 product launches, which is dragging down the overall profitability of the Company. Aashirvaad and Sunfeast crossed the annual sales of Rs. 10 bn each, with Aashirvaad spices grew by 49%, leveraging the in-house agri-sourcing and crop development skills. Moreover, Bingo acquired a double-digit market share within one year of launch. Further, the Sunfeast range of buiscuits was expanded with the launch of special edition of Sachins Fitkit multi grain biscuits and Golden Bakery premium cookies. The Company is constantly focusing on improving its product mix, and we believe that with more launches in future, the top line will show a robust growth. However, the expenses related to new launches, coupled with the increased prices of commodities will keep margins under pressure.

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FMCG Others _ Aashirvaad and Sunfeast brands have achieved sales of Rs 10 bn each.