Impulsive Sellers
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IMPULSIVE SELLERS
Kremmer Foods had made a name for itself in dairy products and processed foods. Could it repeat its success in an impulse purchase category like fruits?
PRATAP Rao was excited as he rummaged through his files and cupboards. He was looking for data on Funsip, the once successful but now dead fruit drink brand of Kremmer Foods. Rao, who was head of marketing at Kremmer, was determined to bring Funsip back from the grave.
His determination was rooted in research that had indicated that the processed foods sector was poised for phenomenal growth. Kremmer wanted to tap this opportunity. Raos objective was to expand the processed foods category by introducing ready-to-use products. While such products would remain niche items, he was also researching other products that would be accepted by the mass market.
Mass market products like processed milk, packaged atta (flour) and bakery products were identified as major opportunities in the foods business — high-growth products that promised big volumes. Reports said rising income levels had changed the food consumption patterns of the rich as well as the not-so-rich. At one level, the lower middle class was emulating the eating habits of the rich by laying greater stress on nourishment and quality. At another level, as choices increased, the high-end consumer was getting more adventurous when it came to eating. Funsip was targeted at this segment.
Rao was happy when Kremmer decided to expand its processed foods division, particularly the biscuit and frozen vegetable categories. That was when he hit upon the idea of introducing processed fruits. A fruit-based drink would be ideal, he reasoned, because it would fit snugly into the entire portfolio of food products. Simultaneously, the brand could be extended to other fruit intermediates like squashes, cocktails and concentrates.
Funsip had caught Rao’s fancy after he came across media reports which said that fruit drinks could grow into a multi-billion rupee business in India over the next eight years.
That Funsip had failed 10 years ago did not deter him. Rao felt that the company had, in fact, learnt a lot from the brand’s failure. The research and investment that had gone into Funsip had helped Kremmer ascend the learning curve on fruit drinks.
“A fruit drink is just what we need to complete the portfolio,” he told his managing director, Vidyut Saraf. But the sales director, Anshu Vaid, did not like the idea one bit. Funsip’s debacle had left an indelible mark on him.
Vaid was funsip’s product manager when it was launched in 1984. The soft drinks market then was roughly 600,000 tonnes, of which the tetrapack segment was a mere 10%. But the tetrapack segment was growing very rapidly at 15-20% a year. The strong brands in this segment at that time were Frooti, Volfarm and Tree Top.
Funsip was conceived and positioned as a natural fruit drink that offered convenience, hygiene and variety. It came in three flavours — mango, apple and orange. The tetra packaging was franchised to third parties and plans were underway to add newer franchisees in different markets.
Kremmer was predominantly a dairy products company with substantial dairy operations that gave it synergies to produce milk powder, butter and a small range of milk-based Indian dessert mixes. In the 80s, processed dairy products were not a fast-growing segment, though Kremmers milk-based drink RevvUp was a leader in many markets.
It was Saraf’s foresight that led to a strategic entry into vegetable and fruit processing. In the early 80s, Kremmer bought GreenFoods, a small company that made jams, pickles and chutneys and marketed them under the same name. GreenFoods came with a large plant for processing and freezing vegetables, which fitted in well with Saraf’s vision of expanding Kremmers food business.
The synergies derived from its own dairy products business and GreenFoods jams gave Kremmer greater distribution strength and catapulted it into the limelight as sales grew. Suddenly Kremmer was a company to watch out for. That was when Kremmer decided to launch the Funsip range of fruit drinks. In fact, Funsip was a brand being researched at GreenFoods when the company was acquired by Kremmer. Given the sourcing and processing advantage Kremmer gained from its new acquisition, the move to launch Funsip was natural.
Funsip had a great start. The test market in Gujarat was opportune since the Navratri festival had just begun. Kremmer held promotional Ras Garba festivals in Ahmedabad and Baroda, which resulted in a very good trial rate. Driven by the Gujarat success, Kremmer decided to launch Funsip in Chennai. There too, the response was very good, thanks to the funky, young and festive advertising. By the year-end, Funsip was available in all the metros and was posed to enter mini metros.
Buoyed by the exemplary launch results, Kremmer targeted a 50% marketshare over the next three years. In the second year of the launch, Funsip had gained a 25% marketshare which was very heartening. The euphoria over the brands success was naturally very high and Saraf congratulated the sales force on what he called “one of the biggest successes” at Kremmer. He clearly saw Funsip as a forerunner to a bigger foray into the foods and processed foods business.
By then, Kremmers vegetable processing plant had been refurbished and tailored to processing tomato ketchup. Research had commenced on the proposed frozen vegetables project and other value-added food products. All these were to be marketed under the Funsip brandname.
More good news was in store. By the close of the second year, Funsip had garnered a 33% share of the fruit drinks market. The brand recall was very high and it seemed that Funsip was on its way to market leadership. If the brand was gaining strength, so were Kremmers expectations. The company doubled the production and sales targets, appointed more packaging franchisees and stepped up advertising.
And then the first blow hit Funsip. Studies showed that Funsip was not easily available to the consumer. Advertising visibility existed, but not shopshelf visibility. Funsip was just not available at outlets where there was an opportunity to cater to an impulse purchase. At outlets where consumers could choose from a menu of fruit and soft drinks, the menu did not include Funsip.
The problem was rooted in Kremmers distribution strategy.