Now it's edible oils in chhota sachets
The small sachet, after a successful run with shampoos and toothpastes, is now finding takers in branded edible oil marketers, reports Saurabh Turakhia.india Updated: Nov 30, 2007 00:20 IST
The shampoo market did it long ago and did well with it. Rural consumers, attracted by the low unit prices, and travelling urban consumers who looked at the convenience of the packaging, lapped up the format. Some FMCG companies also extended the small sachet idea to toothpastes and did well with it as well. Same reasons.
Call it the famous bottom of the pyramid theory of management guru CK Prahlad or call it economic sense, more product lines appear to be buying into the small pack idea. Branded edible oils look like the most recent additions to buy into the small sachets idea. Recently, Bunge India, which acquired the Dalda brand from the Hindustan Lever (today Hindustan Unilever) in 2003, decided to offer it in mini packs, priced at Rs 5 and Rs 10. These minis pack Dalda in a blend of soya beans and palm oil. Of all edible oils, palm oil is the cheapest.
Videh Jaipuriar, VP, foods business, Bunge India, says, "The edible oils market is a big one, at 1.35 crore tons in volume and Rs 75,000 crore in value. However, close to 70 per cent of the market is catered to by loose oil. We are aiming to convert some of the loose oil users to branded oil through these small packs. The target segments are labourers and students staying alone, in areas like Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh and Andhra Pradesh."
Ruchi Soya Foods, with mass or value-for-money brands as well as premium offerings, also has small packs starting with a quantity of 100 ml. Amrita Shahra, head of business development, Ruchi Soya Industries Ltd, says, "The palm oil caters to the needs of the masses. We have a value-for-money brand, Ruchi Gold, which is doing well in the south and north-east markets, including Orissa. Our premium brand is Nutrela, which is for the health-conscious consumer segment."
Jaipuriar of Bunge is looking at doubling Dalda's current market share of three per cent to six per cent in a period of two years. He says that the price points for the small packs are slightly higher than that of the loose oil, thereby giving the target consumers an attractive proposition.
Additionally, retailers also benefit from small sachets when they have to sell small quantities to daily wage earners, he says. These people typically buy one or two days' worth of oil consumption at a time.
He does not plan to restrict the small sachets to the rural markets. He plans to launch it in metros as well. "However, since the metros have a branded oil penetration of 50 to 55 per cent, small packages for metros will be launched only in January 2009, after the launch in other areas," he explains.
Adani Wilmar's Fortune brand, which has a nation-wide presence, has also introduced smaller packs. But players such as Marico that operate in the premium segment with brands like Saffola, don't find a fit with the sachet strategy. According to a Marico spokesperson, "Certain players have experimented with sachets and have seen mixed results. We have not felt the need to get into sachets as it does not synchronise with our strategy. We will continue to operate in the premium cooking oil segment with our core focus being on 'heart care'."
Anand Shah, an FMCG analyst at Angel Broking, says, "The edible oils market will be close to Rs 60,000 crore, of which 90 per cent would be unorganised. However, a lot of consumers are upgrading from loose to branded oil and the branded oil segment is registering an impressive growth." He adds that sachets in oils have happened earlier, "but Bunge has done it at a bigger scale."
Evidently, with cooking oils, small sachet packaging would be for mass branded products where price is a driving factor. The other thing is that the edible oils market is a tough one with margins on branded oils' pricing wafer thin. Growing a brand or even the market is not easy.
Sachets for the mass consumers may just be a good idea for brands that, unlike Marico, are in the volumes game.