Why ITC thrived while Levers sighed
I am waiting with bated breath for the impending launch of mass-market soaps from ITC Ltd.
While that might give Ekta Kapoor of Balaji Telefilms one more big sponsors for her family dramas on television, I would rather watch a corporate soap opera, as Yogi Deveshwar’s boys take on the entrenched soap leader Hindustan Unilever Ltd (HUL), not very long ago known as Hindustan Lever Ltd (HLL).
I go back to a time more than a decade ago, when HLL acquired what was then Tomco, the Tata stable that had brands like OK and Hamam. One would have thought then that HLL was a towering brand monopoly which no one could shake. But history does not like entrenched bureaucracies. Apart from Gujarati warhorse Nirma, which showed multinational might is passé in soaps, the boys at Levers also faced tough battles all over. CavinKare from Chennai stole some of its thunder in the south, while even a humble brand like Garhi detergent struck blows in Uttar Pradesh.
Levers also faced a challenge from Procter & Gamble’s Ariel, which was a decidedly stronger detergent product based on research and development. Levers responded characteristically, relying more on confusing the consumer with a spate of brand re-launches for everything from Rin and Surf to Wheel. It bet more on the advertising than on product innovation.
ITC, once known for is cigarettes, went from paper and edible oils to more and more of new branded products, managing production, supply chain and brands all at once. We have over the past decade seen from ITC the rise of Ashirwad as a household brand in flour and salt, and Sunfeast as a biscuit brand. We have heard of the e-choupal through which ITC connects to farmers with information technology, while trendy youths connect to Wills Lifestyle and John Players as fashion brands.
Both ITC and Levers have their origins in British companies that reduced their stakes during the licence-permit raj days. After 1991, Levers went back to its global roots and its managers like Keki Dadiseth went to become global managers in the Anglo-Dutch Unilever group. But ITC’s Indian managers successfully played the nationalist card to keep away the people from the former British American Tobacco (now simply BAT) from acquiring control.
The managers in ITC were empowered to become entrepreneurs within a company system. We have had a slew of launches, with varying degrees of success. ITC even exports agarbattis (incense sticks) today.
Time was when Hindustan Lever owned a brand called Dalda, which it sold in Indian village fairs as a substitute for ghee. While the managers at Levers “regressed” to a city-based multinational bureaucracy with their suave talk, their counterparts at ITC were steadily pushing new frontiers in the interiors of India. By and large, stock markets have responded well by rewarding a tortoise called ITC than a hare called Levers.
My two pennies for the top brass at Levers: Wake up and smell the agarbatti!