Pitch | March 2011

Competition: Del Monte is playing in a cluttered market with players like Nestle, ITC, Dabur and HUL

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Branding: An Italian name makes it difficult to believe that the offered flavours will really suit the Indian palette

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Communication: The brand lost on getting a top of mind recall value due to lack of comprehensive advertising

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Price: The pricing strategy hardly adds to overall marketing as the products are overtly priced

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Place: Supply chain yet to have pan-India presence

The weak links?All 4Ps for Del Monte go edgeless in a competitive and cluttered market

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March 2011

Branding: An Italian name makes it difficult to believe that the offered flavours will really suit the Indian palette

Communication: The brand lost on getting a top of mind recall value due to lack of comprehensive advertising

Place: Supply chain yet to have pan-India presence

Pitch | March 2011

that the offered flavours will really suit the Indian palette

Communication: The brand lost on getting a top of mind

A big mealDel Monte aims to make it to the top ten F&B companies by 2014. But, will it be able to challenge brands such as Nestle, ITC, Dabur and HUL?

By Ruchika Kumar

It’s close to two and a half years now since Del Monte, a brand owned by FieldFresh Foods a joint-venture be-

tween Bharti Enterprises and Del Monte Pacific, launched it products in India, yet it has not been able to make it to the top of mind recall of the consumers. Think of names from the F&B sector, and Nestle, ITC, Dabur and HUL float generously.

For Del Monte, which has a product portfolio of fruit drinks, ketchup and sauces, Italian range and corn, there are challenges ahead before it can reach its

goal of being in the top ten F&B compa-nies’ list of India. The market for processed F&B in India is predominantly an urban phenomenon. Additionally, the consump-tion expenditure on processed food is low due to high availability of fresh food at low costs. Marketers, obivously, need to retain consumer interest through aggressive pricing and communication strategy.

Will Del Monte cut ice in the industry? Pankaj Gupta, Practice Head – Consumer & Retail, Tata Strategic Management Group (TSMG), states that for any new entrant the

key challenges in an already cluttered mar-ket are product differentiation, consumer awareness and distribution. “While these are true for any product category, a new entrant faces higher entry barriers. This includes significantly higher A&P spends to create awareness for a brand. Moreover, the challenge to set up a new distribution network to service the fragmented retail trade is greater,” he says.

Reaching outDel Monte has opted for a step-by-step na-

COVER STORY DEL MONTE

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Pitch | March 2011

tionwide approach in India, with launches in select markets followed by region-wise roll out. Yogesh Bellani, Business Head, Del Monte Foods Business, FieldFresh Foods, shares that in September 2008, Del Monte product range was launched in select markets through a few chosen partners. By May 2009, it reached 15 more cities and spread its product range across North and South regions and parts of the Western region. “Once the initial roll out happened and we were able to make a foothold into these regions, we then shifted our focus to the Eastern market in 2010,” he adds. The company boasts of presence in 70 cities and more than 35,000 modern trade and traditional retail outlets. But will that suffice the objective of Del Monte? For any new entrant to make noise in the market the marketer should offer products with meaningful and valued differences vis-à-vis competition. Mar-keting Guru Philip Kotler in ‘Marketing Management’ says that being the first to introduce valued new features is one of the most effective ways to compete.

It’s differentHence, as part of its product differentia-tion strategy, the company hopes to differ from competition in terms of taste as re-flected in its tagline – ‘Taste’s like never be-fore’ and easy to use packaging. Thus, Del Monte has launched two original flavours of ketchups, namely Zingo and Twango in easy to squeeze bottles. The two sauces contain tidbits of real fruits and vegetables and Indian spices to offer a differenti-ated product. Currently, the leaders in this category are Nestle’s Maggi, HUL’s Kissan and Heinz with flavours catering to In-dian taste buds. However, Bellani believes, “Ketchups and sauces was a relatively undifferentiated category and had not seen any major brand launches for the last several decades. Del Monte ketchup was launched to address this need gap.” Here Gupta cautions that often new entrants fail to understand consumers and this gap is reflected in both product formulation and brand communication. He also adds that it is important to back the innovation with adequate communication spends to drive

awareness within the TG. However, the TVC for the two ketchup

brands was introduced as late as 2010. Bel-lani reasons that by early 2010, the com-pany had its distribution network in place in all regions of India. “It was therefore a conscious decision on our part to launch our TVC at this point.” Currently the TG for Del Monte includes the youth and young householders in the 15-35 years age bracket.

The big basketThe company has 100 SKUs in the four categories of products in which it operates. It has gauged the growing interest towards Italian food and offers pastas, pasta sauces, olive oil, olives and jalapenos. Currently, the big players in the instant pasta market,

which is estimated at 5 per cent of the more than Rs 1,000 crore instant noodles market, are ITC’s Sunfeast and Nestle’s Maggi Pazzta. Hence, is there a scope for palate diversification in a hyper competi-tive market where well-established brands still dominate the market? TSMG’s Gupta informs that palate diversification is a slow process. Hence, the new entrant needs to be ready for the long haul until the market develops to a significant size. “They could alternatively explore entry opportunities into existing product categories in the market for quicker scale-up,” Gupta adds.

Bellani shares that in both the B2B and retail space, its products have proved to be very popular and were considered ‘value for money’.” However its portfolio is perceived as premium. With that, will the new entrant stay relevant to the mass consumer? Bellani opines that acceptabil-ity of a product depends on both pricing

and value; however, the larger challenge is the greater acceptability of processed food and beverages in the marketplace.

Moreover TSMG’s Gupta suggests that price based market entry can lead to price wars and lower overall industry profit-ability. This can work only if the entrant has a source that gives it a cost advan-tage over competitors. Bellani confirms that Del Monte products are extremely competitively priced with respect to the market competition, and the company is able to offer better quality at practically the same prices. The brand is working strongly on its supply chain and logistics. It has invested approximately Rs 115 crore in its domestic R&D facility in Hosur, Tamil Nadu. Additionally, it banks on Del Monte’s international network for supply and

manufacturing tie ups with select players to optimise logistical advantages.

Singled out?With a complete focus on the ketchup range in its communication strategy, how will Del Monte create a buzz for the rest of its portfolio? Bellani reciprocates that in the inception stages of a business, BTL activi-ties like sampling are very important to sup-port the launch effort. Thus the company strongly believes in extensive sampling activities and for each product launch, it chooses a likely set of early adopters of the brand to encourage higher WOM. It also uses internet heavily through its website worldfoody.com to promote its products.

At retail Del Monte has tried to engage and ‘take the taste to the consumer’ with sampling exercises for its Italian range, beverages, and ketchups and sauces.n

-ruchika@pitchonnet.com

“With its ketchups, Del Monte aims to address the need gap in an undifferentiated category which witnesses few launches ”

Yogesh Bellani Business Head, Del Monte Foods Business,

FieldFresh Foods

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