It is perhaps among the most challenging markets to crack. It is crowded with local brands calling the shots, making it difficult for national brands to gain a foothold. Also, the industry is heavily regulated, requiring brands to comply with strict safety and sanitation standards, which can be costly and time-consuming. And at the end of the day, margins are simply too low.
So why does ITC want two brands in its spice box? Aashirvaad and Sunrise are the two handles of ITC’s hyper-local strategy in the Rs 30,000-crore branded spices market. Mind you, this Rs 30,000 crore is just about 37% of the overall spices market in India. The lion’s share is with unbranded products sold “loose” by mom and pop stores. But the shift to branded products is gaining pace, says a report by Avendus Capital. Branded spices are projected to grow at 25% CAGR to reach Rs 50,000 crore and occupy 50% of the total market in five years. Little wonder that companies such as Dabur, Emami Agrotech, Wipro Consumer Care and Tata Consumer have thrown their hat into the ring.
Of its two brands, Sunrise — which ITC acquired during the pandemic in May 2020 at Rs 2,150 crore — is well over a 100 years old. Launched in 2005, Aashirvaad Spices is a relative newbie in that sense. Piyush Mishra, business head for spices at ITC, says, “ Spices, being an important component of Indian cuisine, offer a big opportunity for us. We have been witnessing positive conversion of consumers from loose to branded spices across markets.”
Experts observe that though the spice category holds great potential for growth, there is tremendous diversity across regions, with food preferences changing every 100 km. This is also why there is no national category leader though brands such as Everest, MDH, Eastern Condiments and MTR have high recall.
To address this, ITC is curating unique spice blends that fulfil local requirements. For example, it has launched the Sunrise ‘Swaad Bihar Ka’ range in limited edition packs featuring ‘Madhubani’ artwork. This range offers four different blended spices that bring alive the flavours of Bihar’s local dishes. The company has also launched Aashirvaad Masala Karam, which is inspired by Andhra’s culinary heritage, in markets like Telangana and Andhra Pradesh.
Gautam Reddy, founder at PAD, the agency that manages the marketing mandate for Aashirvaad Spices across Karnataka, Andhra Pradesh and Telangana, says the two spice brands cater to consumers in different regions. While Sunrise is dominant in the East, Aashirvaad Spices focuses on the South. “In every market, the nuances and challenges are different. Therefore, we approach these challenges in a tactical manner, so the brand communication is hyper-localised with a culturally rich tone and appeal,” says Reddy.
Changing dynamics
The pandemic accelerated the trend of everyone being a bit more sophisticated in the kitchen but now the segment that is growing fastest is that of blended spices. According to Rishav Jain, managing director, lead, consumer, internet, retail and agribusiness at Alvarez & Marsal, “Among the demand levers are the need for convenience among consumers, which is leading the movement from whole to blended spices. There is also the move towards health and hygiene and hence the demand for packaged products as well as an increase in at-home cooking, necessitating the introduction of new blends. On the supply side, factors like distribution expansion with better availability in more outlets, creating more shelf space and visibility, brand spending by large, organised players and new product introduction across cuisine underpin the growth for the spices sector.”
Category analysts also say that blended spices offer much higher margins — to the tune of 40% —than regular spices. Plus people are becoming more au fait with food from different regions.
While hyper-localisation is an important peg in ITC’s spice market strategy, convenience is the other big talking point for the two brands in its portfolio. Mishra states, “Our spices are convenient to use, while retaining authentic flavours and taste. To share an example, earlier this year, we launched Sunrise Haah Salkumura masala, an easy-to-use blend to make a traditional Assamese duck curry. This dish is usually made with a complex set of spices, but this single masala blend makes the cooking process quick and simple.”