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Coca-Cola may source orange pulp from India

LUDHIANA: Coca-Cola India on Wednesday said it is exploring the option of sourcing orange pulp for its juice drink, Minute Maid Pulpy Orange, from the country itself. “We are quite keen on sourcing the orange pulp and orange concentrate from India itself for our domestic market,” Coca-Cola India vice-president (franchise operations) Vikas Chawla told reporters here. At present, the company is importing orange pulp and orange juice concentrate from Florida and Brazil. It sources mango for Maaza from India.

Now, it’s the turn of diet vodka

IT’S SURREAL. First, diet been vanished off the shelves on the no-cholesterol spiel. This time, it’s diet vodka. The health & wellness platform is working overtime at United Spirits Limited (USL) as Romanov vodka becomes the latest recipient of its ‘diet’ tag, after Kingfisher diet (beer) and McDowell No. 1 diet (whisky).

The diet epithet to a beer or cola is understandable owing to the high carb-and-fat original versions, but Romanov Diet Mate, in UB speak, is experiment number 1. Within a year of unraveling a diet whisky, the category accounted for 8% of the mother brand’s (McDowell No. 1) volume. It’s now time for the most malleable of all drinks, vodka, to do the talking. The company now feels that diet Romanov vodka will make up 10% of Romanov’s total sales by next fiscal. In a first of its kind, with no global precedent, USL launched diet vodka two months back, and sent a strong message to the competition. All big global vodka brands, such as Absolute (owned by the Swedish Vin & Sprit), Smirnoff (Diageo) and Grey Goose (Bacardi) come in different flavours, but not in a diet category. “It’s more of a gimmick than anything else,” says a top executive of an MNC liquor major. “We’ll wait and watch. United Spirits may even burn its ringers with diet vodka,” was yet another refrain from a domestic producer. The category is all too new and not many would like to offer a comment upfront.

As the competition waits and watches, Romanov Diet makes inroads into the rest of the country from Punjab, Haryana, Delhi, Rajasthan and UP. “We’ll roll out nationally in two to three months,” points out Debashish Shyam, vice-president, marketing, United Spirits, and category head of Romanov. The diet vodka includes a herbal ingredient, Garcinia, and is priced at an 8-10% premium to the original Romanov vodka. It all began three years back when the UB-owned Vitthal Mallya Scientific Research Foundation filed for patent of the Garcinia herb, an extract from the kokum fruit, known to increase body metabolism and hep burn body fat, thereby helping in weight control. After bagging the patent, Garcinia-enriched vodka became the buzzword at USL last year. All this, since vodka is considered a youth drink, a segment drained by increasing stress levels and health fetish, “An increasing number of youngsters are looking for healthier alternatives that fit into their lifestyle,” adds Mr. Shyam. While McDowell’s No. 1 diet whisky has stabilized at 8% of its mother brand’s volume of 9.5 million cases sold last year, USL expects diet vodka to cover at least 10% of Romanov’s total sales within just a year of operation. Romanov vodka sold nearly 0.85 million cases last year, and is growing a tipsy 45% year-on-year. The domestic vodka market is about three million cases, of which brands from the UB stable, Romanov and White Mischief, control 70%.

Tata Tea makes open offer for 20% more in Mount Everest

W MUMBAI: Tata Tea has made an open offer for acquiring a further 20% stake in Mount Everest Mineral Water. Tata Tea intends to acquire 67.99 lakh shares at Rs 140 per share. The offer will open on July 27 and dose on August 16. On BSE, Mount Everest lost 0.21% on Wednesday to end at Rs 120.70.

Tata Tea can buy remaining & promoter stake in Mount Everest

MUMBAI: Tata Tea, which is in the process of acquiring 46% in Mount Everest Mineral Water, can buy the remaining stake of existing promoters after six years if the company’s net sales are less than Rs 200 crore. According to an agreement signed between the company and the promoters of Mount Everest, Tata Tea has the option to purchase 31.10 lakh shares of the mineral water company, representing 9.14% stake in the enhanced equity, after six years for a maximum of Rs 250 per share.

Colas drown in May showers

Worst summer in 5 Years for Coke, Pepsi as Sales Fall 15-17%

DON’T be surprised if soft drink companies are soon seen scampering for weather insurance while pushing their fizzy products. The May showers may have brought some relief to the heat-struck north, but for cola majors Coke and Pepsi, it was the worst summer in five years. Sales of the two companies’ flagship brands declined 15-17% in April-May over the same period last year as this summer has so far been unusually mild.

With consumer preferences shifting fast to functional beverages like juices, juice-based drinks and packaged water, the April-June quarter is the best period to sell aerated drinks such as Coca-Cola, Pepsi and Thums Up as nearly 50% of total sales happen then. “If April, May and June go badly, it’s curtains for the year/ said a bottler for one of the soft drink companies.

Declining to comment on the specific figures, PepsiCo executive vice-president (marketing), cola, Vipul Prakash said, “Weather fluctuations are factored in our plans. The CSD (carbonated soft drink) category exhibits a high seasonality in the summer months, accounting for a significantly higher percentage of annual sales.”

But Coca-Cola sources maintain that the all-India performance of its cola brands, Coca-Cola and Thums Up, have been more than satisfactory. “The cola segment, within the sparkling beverages category, is back on the growth curve. Both Coca-Cola and Thums Up have grown this season and maintained their leadership. This is complimented by growth in other categories such as flavours and still beverages.”

Tata Tea makes open offer for Mount Everest

MUMBAl: Tata Tea on Monday made an open offer to purchase an additional 20% stake in Mount Everest Mineral Water (MEMW) for Rs 95.19 crore. The Tata group firm will acquire up to 67.99 lakh equity shares at a price of Rs 140 each, to be funded through internal accruals, the company said in a public announcement. DSP Merrill Lynch is the manager to the public offer. On June 1, Tata Tea agreed to buy 25.74 per cent stake in Mount Everest for around Rs 115 crore through subscription of preferential shares from promoters of MEMW. It said it would acquire another 20% later.

FCI too may not get to import wheat

THE government is all set to scrap good Corporation of India (FCI)’s offer to buy up to 1 million tonne of Wheat in the near term from select overseas suppliers. This was FCI’s first attempt to import wheat directly is more than a decade. Food ministry officials, however, are none too displeased. Expected imports have already persuaded Indian farmers to bring their withheld grain to the market for the government to procure for the public distribution system and welfare programmes.

But the food ministry, which agreed with its commerce counter-part that the go ahead for issuing wheat import tenders for one million tonne through the STC, was against FCI’s import plans from the beginning, tending to agree with the commerce ministry that despite the FCI’ long track record in grain transport and buys, even imports in earlier times, the STC and other state agencies were currently more in the groove on imports.. The last date to respond to the offer was April 30 am the response to the FCI tender was very poor with only two parties, on from New Delhi and another Iron Mumbai, responding. Price quote; too, are believed to have been way higher than the lowest $263 per tonne quote for the STC wheat import tender for one million tonne. That tender, in contrast, was considered t have been more open and direct.

Ministry sources refused to divulge the specific reasons why the thumbs down signal was set to be given to the import move, but said a number of influences go into the government’s decision to not give its nod to the offer, a formal announcement is likely t come soon, within a week. Intrinsic flaws in the offer that led to tardy responses from wheat import majors could be one key reason. A special feature of the tender was that technically, the onus of hedging the price risk was passed on to the supplier. These developments had led to heavy speculation that FCI was non-serious about the tender and was primarily meant t strong-arm farmers into releasing hoarded wheat into the mandis.

More recently, there have bee healthy and optimistic developments for the Centre on the food grain procurement front that have paved the path all the more for the thumbs down to the FCI’s future option offer. The current procure merit trends have led to the conclusion that the Centre may not need t import more than two million tonne of wheat, at the most, to make up it four million tonne quota stock at the end of the year.

FMCG cots are now youth-oriented

Linking HR business strategies has been the greatest learning for companies across sectors. While it has been imperative for the services, others sectors such as FMCG, have learnt a great deal from it. Milind Sarwate, chief, HE and Strategy, Marico Industries, discussed with Shreya Biswas about the trend, and how the], 700-employee strong FMCG major has matured as an employer brand.

IT-ITeS have been at the forefront of innovation in HR during the last 10 years. What has the FMCG sector learnt from it?

The most visible retention tool deployed by IT/ITeS companies is wealth building through stock options (ESOPs). ESOPs have also been in the limelight because the rating of the IT industry itself has moved up on the stock market over the years. There have been many start-ups, which have made their employees wealthier because of ESOPs. For the FMCG sector, the prospects of wealth building through re-rating of stocks may be low, but many have initiated wealth-building measures to compete with the IT/ITeS brigade. The IT/ITeS industry has been one of the first beneficiaries of Indian youth arriving on the global stage. Spurred by this, FMCG companies too have become more youth oriented.

When did you actually start linking your HR strategies to business strategies?

The trigger came after an intensive workshop in 1999-00 with Professor Wayne Brock bank from the University of Michigan. During that session, we identified sources of competitive advantage for Marico-branding, distribution, cost management and innovation, besides technology, as the group entered skin care services through Kaya. We decided to focus organizational energies, especially HR efforts, on these areas of competitive advantage. In the years to follow, most of our HR initiatives centered around the four areas. We ensured competitiveness in terms of people (remuneration and quality) and HR team was involved with business projects in these areas. HR initiatives not connected with business strategies were scrutinized for relevance and dropped if not relevant.

How is empowerment defined at Marico?

Empowerment is a philosophy practiced in Marico across levels. Decisions are taken at the lowest level possible. To cite an instance, last year, our acquisition team comprising International Business and Finance staff could conceive and execute our second acquisition in Egypt (Hair-Code) in just about 3 months, without any direct personal involvement of our chairman and man-aging director. This is quite rare for an entrepreneur-owned and managed company in India.

We have heard a lot about the attrition of white-collar workers a lot, how have the blue-collar staff fared on that front?

The attrition rate for the backroom has moved up in recent years. Currently, it would be around 25% against 15-18% about 3 years ago. The attrition is somewhat higher at higher levels of management because the broader skill set at that level enables greater mobility.

Tata Tea plans to take cuppa of home

AFTER a slew of acquisitions in tea and non-tea spaces, Tata Tea is now weighing the pros and cons of entering the out-of-home format for its tea business in India. The company, the second largest branded tea manufacturer, is also planning to enter the mass market with a new brand.
For international markets, too, the company has lined up major marketing initiatives to increase its share of the global business. The company has some of the leading global brands within its fold — Tetley, Good Earth, Eight o’clock, Jemca, Vitax and Flosana.

“In India, we are not present in the out-of-home format and vending segments. Right now, we are evaluating these two sectors. If we find there is some business sense, we may explore these avenues,” Tata Tea managing director Percy Siganporia told ET. Tata Coffee has made a small entry in the out-of-home format and has set up a few retail stores in south India.

Mr Siganporia described Tata Coffee’s entry into retail format as an ‘experimentation’ and added: “The board of Tata Coffee will take a decision on this in due course.”

In India, tea consumption is growing at a compounded annual growth rate of 3.3 %. Elsewhere in the world, black tea consumption is either stagnating or declining and the demand for alternative green, specialty, fruits and herbs and other infusion teas is showing a rapid growth. “We are also evaluating the possibility of introducing liquid tea in the domestic market. We are expecting the dynamics of tea marketing to change in India depending upon the transformation of consumer preference over time,” Mr Siganporia said.

In the mass-market segment, the company is present with its lone brand Agni. “We are evaluating an entry into this segment,” he indicated.

In the global market, Tata Tea is planning to come out with new variants of tea-based products, specialty teas, green tea, white tea and herbal teas. Tetley has emerged as the No. 1 player in the UK with 30% market share. “The ready-to-drink {RTD) category is gradually finding its way in the UK. We have already launched RTD in this market,” Mr Siganporia said.

In the US, Good Earth Corporation, a specialty tea company acquired by Tata Tea in 2005, is showing signs of growth. “Nearly 60% of our top line growth comes from our global business,” he said.

Bisleri sells Maaza brand for global markets to bottlers

Group Shuts International Operations Headquartered In New York

THE Bisleri group (Park Exports)-promoted soft drinks company, Maaza Beverages, has sold the trademark rights of Maaza for the international markets to its bottlers, Infra Beverages in Europe and House of Spice in the US for a substantial undisclosed sum.
The group has also shut down the international operations headquartered in New York, Coca-Cola, which owns the trademark in India, is believed to have been interested in buying the rights for the international markets but failed to clinch the deal.

“The operation abroad was largely dependent on the support services of Bisleri’s domestic operations. It was a bit of strain since we had to draw out support staff from the local operations and send them abroad,” Ramesh J Chauhan, promoter and chairman of Bisleri International said.
Maaza was launched in 1976 and was the brain child of Mr. Chauhan who sold it to Coke in 1993 along with Thums Up, Citra, Gold spot, Rim-Zim and Limca. Back then, Mr. Chauhan was also too dependent on franchisee bottles given that of the sixty-two bottling plants, only four were owned by the company.

Bisleri had earlier sold its mango processing business, which supplied pulp to the Maaza business, to Jain Irrigation.

Popularly known for it’s positioning,” Mango in the Bottle“, the brand’s primary consumers are children. Although Pepsi tried to break into this market with its Slice brand, it was not able to make a mark due to the lack of clear positioning.

Market analysts say that Coke has not really built the brand well in the Indian market. “I did not think Coke would have wanted to do much with the Indian brand in the international market, and therefore, I did not seem them as a prospective customer,” Mr Chauhan said
The brand, which is now 30 years old, has an iconic status in the segment.

The Indian soft drinks market is huge, valued around $2 billion, the non-carbonated drinks constitute only 10% of the total market.

Cola majors are keen to push non-carbonated and health drinks at a time when health-conscious consumers are moving away from carbonated drinks in India and global markets.

After taking over the brand, Coke has been unable to dilute the brand’s core values. It did try to change track was in 2001 by launching orange and pineapple variants, which were rejected by consumers.