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The crackle of ITC's snacky foray
Hindustan Times - 28 Mar 2007

ITC Foods gets snack-happy with its all-new Bingo!, challenging Lays and Kurkure

That ITC'S new snack foods brand, Bingo, will outlive India's excitement around the ICC World Cup and its subsequent fizzling out when the team failed to enter the Super 8, is certain. Despite the fact that ITC Foods timed Bingo's launch to coincide with the World Cup, of which ITC Foods is an associate sponsor.

Well, the Indian fervour on the World Cup is mostly over, but ITC's snack foray cannot possibly go unnoticed by big competitor PepsiCo's FritoLays and the Indian consumer. A multi-media campaign for Bingo, including the use of new media and a spate of onground promotions will move beyond Bingo's World Cup launch communication.

The stage seems set for a big clash in snack foods. The reasons are many The organised snacks category, growing at a healthy 30 per cent annually, is sub-divided into the traditional segment (bhujia, chanachur), western segment (potato chips, cheese balls) and the newly established finger snacks segment, an adaptation of traditional offerings to the western format.

Industry observers feel that though currently, there are a number of players in the Indian snacks market, there is little or no differentiation Santosh Desai, MD & CEO, Future Brands, says, "The market seems to be similar to the confectionaries market: commoditised, with hardly any differentiated offerings."

Ravi Naware, divisional chief executive, ITC Foods, feels that Bingo will change all that. "The Bingo products are crunchier and crisper The differentiation also extends through varied shapes, textures and a different consumption experience."

Adds Hemant Malik, head marketing, ITC Foods, "Consumers have not had too much choice and our understanding of the Indian consumer and the Indian palate have helped us develop different offerings."

The initial Bingo offerings include products in potato chips and finger snacks. The potato chips have four variants and a south-inspired dairy option. There are three finger snack products, each with two variants. Bingo's pricing, at Rs 5 and Rs 10, matches current levels in the industry.

According to Nikhil Vora, partner, SSKI Securities Limited, the move is well aligned with the broader corporate philosophy of ITC to grow its noncigarette businesses.

Desai also feels that ITC may take more than two years to dent in the market. He points to ITC's previous success in building brands from scratch in staples, confectionaries and biscuits.

ITC has big investment plans for the snacks project. Naware specifies, "In two years, we will invest Rs 150 crore; Rs. 60-70 crore has already been invested in the initial rollout." The target too, is aggressive. "We are eyeing a 25 per cent share of the Rs 2,000 crore organised packaged snacks market in the next four-to-five years."

A robust distribution network across India is also a big plus. Malik puts the number at two million outlets. Since its cigarette brands are available at most paan shops, market penetration into the hinterlands too will be easy.

Naware says another added advantage is the strong farm linkages that ITC has developed for sourcing the selected grades of potatoes for the chips. The revenue breakup between metros and non-metros is 45:55.

Naware also insists that attractive merchandising racks will help to get the requisite trade support and better offtake from the shelves.

The Indian consumer is surely set to see crackling action this summer on the snack foods front. It is unlikely that PepsiCo will remain unresponsive to ITC's challenge on Lays and Kurkure, though till the time of going to the press on this story, Pepsi was still to respond to our queries. That it will respond in the market place is almost certain. So watch this space!