In 2009, when most companies were cutting back on expenses due to the economic slowdown, Parle Agro forged ahead to launch as many as three new brands?LMN, Saint Juice and Hippo. The joint managing director and chief marketing officer of Parle Agro, Nadia Chauhan, and the youngest daughter of the Chauhan family, was sure of her brand strategy. In an interview with FE?s Pritha Mitra Dasgupta, Chauhan talks about how to beat the recession, upcoming plans and why Parle Agro doesn?t advertise on IPL. Edited excerpts:
Last year, you launched lemon drink LMN with a high decibel ad campaign, while for Hippo it was restricted only to retail activation. What was the idea behind this?
LMN was launched last year and it?s within our beverage division and it was a national launch. And therefore, we launched the mass media campaign almost immediately.
In case of Hippo, it was our first venture into the foods division and we did not launch the product nationally. We wanted to set up our manufacturing capacity across the country before we could take it nationally. In our country, transportation is a very expensive factor and that is the reason why a company like ours has manufacturing units across the country. So when we launched Hippo we had a factory in the western region and therefore it was easier for us to launch the product in this market first. And then eventually we rolled out the product in North, South and East. And that is the reason why it took so much time for us to introduce the mass media campaign.
Why don?t you advertise on IPL?
Do you know how many brands are advertising on IPL? There are almost 94 brands that are advertising on IPL. Do you remember anything that you have seen besides Vodafone and Pepsi? Unless you are the number one advertiser on IPL or among the top three, it?s not worth it. I wonder what the 94th brand is doing by spending so much money, what is it getting out of it? I think any marketer who invests in IPL and is not one of the top three advertisers, is a fool. He is definitely losing money. And that?s why it?s a challenge. The second challenge is really at the distribution level. Holding your position in the retail space is so important. Because space is very limited and there are way too many brands launched everyday literally.
Tell us about your advertising and marketing plans for the beverage business this year?
IPL always makes it a challenge from a media planning perspective. It?s been so in the past few years and every year it?s getting wilder as to how to tackle it. For the beverage business, advertising starts from the month of March but we will get a lot more aggressive post-IPL. And during the IPL we are a lot more aggressive in the market with our below-the-line (BTL) activities as compared to ATL (above-the-line). And a number of our creatives will break post IPL.
What triggered the launch of LMN last year?
We just didn?t change our plans with the recession. It was more like a market connection. We continued with our plan of brand introduction. Also, it is important to note that the FMCG (fast moving consumer goods) segment was not as badly affected as a lot of other categories. So the decision to go ahead with what was planned was actually befitting.
What are your plans for Hippo?
Hippo is our first brand in the food category. And if you look at Parle Agro historically, we don?t really just go on launching sprees. So even within the foods division we are going to invest a lot on Hippo and we will grow it for a while before we introduce any new brand. Ofcourse, snack food dynamics being the way it is, we cannot continue without constantly introducing new variants and new flavours. The foods business is about constantly having something new. So it?s very important for us to continue doing that and we will. But, for now, foods division will be only Hippo.
But with Hippo you not only entered the snack category, you entered the health snack category which is niche. What triggered this?
It happened by default. We didn?t sit in the boardroom and said ?let?s enter the health food segment?. It came as a bonus to Hippo. Purely because of the kind of product experience we wanted people to have. Hippo has been launched to compete with all the mass snack food brands in the country. It is not trying to create a niche. If you look at our advertising we have not used that as a selling proposition. If you look at our packaging that?s not our selling proposition.
Our primary proposition is fantastic taste in a snack food brand with a different product experience because of its different format. So it?s a great bonus to a consumer who?s indulging in Hippo to know that it?s not fried. But we are not pushing that as our key selling point.
Hippo is now available nationally. Which are the markets where it is doing better?
If you just look at the snack food category, the North and West are very huge markets compared to South and East. Our trends are primarily and currently showing the same thing. But South and East are recent launches for us so as time goes by I am sure we will have a better comparison.
And coming to the third business vertical, the confectionary business, what are your plans this year?
We are more into the one rupee category than the 50 paise category. And we also had a recent launch which is also currently undergoing a national roll out?Softies Mithai, which is basically a range of toffees with mithai flavours. For confectionaries, we are not into any kind of mass advertising. We feel that the return on our localized investments is far greater. We initially did some television advertising. But soon realized that this category needs investments in distribution and localized advertising.
Do you plan to increase your annual advertising budget this year?
We have been increasing our advertising budget year on year. This year alone we have got marketing spend of about Rs 45 crore only for the ATL advertising, which is almost 25% higher than last year. And we are doing this one because of newer realms. And two, this environment is getting very competitive. Over the last couple of years our advertising budget has seen tremendous growth and that is because we have launched so many new brands.
Currently beverages are your largest business. Do you think it will remain the same five years down the line?
I think the food and the beverage division together would be as strong as each other. Beverages continue to growth because there is a huge opportunity that continues to exist within the category. Of course, traditionally colas have been huge and now declining and that creates a bigger opportunity for beverage brands.
And for us foods is growing quite rapidly. We have got strong plans for the division. Water or packaged drinking water business has been very successful for us. It?s been two years since we launched that business vertical and we are still growing at a triple digit growth rate. I definitely see that as a huge opportunity.