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Parlaying the Parle brand

Purvita Chatterjee

With a cache of funds to play with, Parle Agro is extending the brand to a host of new food categories where MNCs dominate.

Parle Agro's Chairman, Prakash Chauhan, is brimming with ideas these days. Flush with funds after selling his portfolio of soft drink brands, Thums Up, Limca and Maaza and bottling facilities to Coca-Cola, Chauhan is now trying to establish himself in th e growing foods business in the country.

The Mumbai-based beverage company has decided to make a foray into new food categories such as milk and noodles, a move that marks its entry into MNC-dominated turf. At the same time, it has also embarked on stretching the franchise of its existing brand s -- Frooti, Appy and Bailley mineral water.

But, this is not the first time that Parle Agro has decided to be adventurous and sally forth into new brand launches. In the past, there have been experiments with new brands (such as Joly Jely and Pingo) and categories. This time, however, the beverage company is eyeing joint ventures to get an edge in its new businesses. As Chauhan told Catalyst, ``We are looking at the possibility of a joint venture, both in terms of technology and fresh equity and are now looking at various proposals.''

The Indian beverage company is now seeking an alliance with a veteran noodle manufacturer in the south east Asian region which makes ``the best noodles in South-East Asia''. ``A player who would bring in the best-tasting noodle for the Indian palate,'' s tresses Chauhan, who is still not willing to disclose any names.

In fact, the Parle group had dabbled in noodles with its cup noodles brand, Bisca. This was before it sold its soft drink brands to Coca-Cola. However, at that point of time, the business was directly under elder brother Ramesh Chauhan and his company (P arle Exports). The noodles brand has since been hived off.

Roping in his eldest daughter, Schauna Chauhan, to head the noodles business, Chauhan is hoping to bring in a new brand with lots of flavours. Says Schauna Chauhan, Operations Executive, Parle Agro, ``We will give our noodles a fresh look and intend draw ing from the expertise of our joint venture partner.''

While there is no hurry for a joint venture deal in the milk business, the possibility of one cannot be ruled out. With most food players in the country, such as Amul, Vijaya, Britannia and Nestle aggressively marketing their brands, Parle Agro will poss ibly watch this market before launching its own milk brand.

Industry watchers feel Parle should stick to its core strengths of fruit drinks and mineral water. But, for the company, a foray into new food categories is an attempt to piggyback on its well-knit distribution network and success in the packaged drinks business, mainly Frooti. As Chauhan claims, ``Today, we are constantly looking at other products in packs.'' Leveraging its existing strengths is thus a natural move.

Says Gaurav Narain, anaylst with SG Securities, ``It's logical to get into these high-growth categories. It knows the market and has sustained its brands in spite of the huge unorganised segment. Besides, the company will use its existing distribution ne twork to get into the new categories. At the moment, its only advantage is its distribution strength.''

However, riding on the success of its packaged drinks and distribution network will not guarantee the same degree of success in other categories. Cautions Anil Naik, CEO of management consultancy firm Sudit Consultancy Services, ``Parle's distribution ma y be strong, but the question here is the feasibility of exploiting the distribution channel with customer pull.''

A product such as noodles would require a different channel of distribution as compared to a typical fruit drink such as Frooti or Appy, says Naik. Also, milk in packs cannot survive in a non-refrigerated environment and would come with an expiry date. T he existing channels would thus work better for its water or soda but not for milk and noodles, he adds.

But today, Parle Agro boasts of a franchise network which few can match. It has two different sets of franchisees for its packs (11 franchisees) and mineral water (18 franchisees) who manufacture and distribute its brands. It has also attempted to ventur e into direct distribution by engaging special trucks to transport its brands to retail outlets. For instance, in Mumbai, it has 50 trucks plying between its factories and the outlets. Besides, future plans include introduction of the same direct distrib ution system for its franchisees across the country.

Parle Agro also plans to allow MNC brands to leverage its distribution network. Says an industry observer, ``The company has enough cash and this is evident since it has not got listed. It also has a massive distribution network to reach its end consumer . Besides, the goodwill of the Parle brand should help it venture into these new categories. However, the packaged milk market will still take some time to grow.''

Apart from getting into new food categories, Parle Agro is busy developing its existing brands. For instance, its mineral water brand, Bailley, was extended to sodas in PET bottles. Though the Bisleri soda brand from Ramesh Chauhan's stable was available in glass bottles before the Coca-Cola sell-out, the product has been revived under the Bailley name and is `simply explosive' (as the tagline suggests).

Highlighting the USP of the product, Chauhan says, ``It has a higher gas content than the others as its hand grenade-like shape suggests.'' Though priced on par (Rs 15 for 750 ml) with its competitors (Kinley from Coke and Duke's from Pepsi) in glass, it is the consumer friendly `PET' packaging, which might do the trick (the company, after all, has the inherent advantage of making its pre-forms at its Silvassa factory).

``Soda is a natural extension of its water business, which Parle is already in. However, there has to be some differentiation in terms of price and packaging to make customers distinguish its brand,'' says Naik.

The `fresh 'n juicy' Frooti brand, dominating the packaged fruit-based drinks category since its launch in 1985, will get more variants. Larger pack sizes (one litre) and more pure juices (such as orange and pineapple) would soon appear under the Frooti brand, taking on the existing competitors in these flavours and sizes - brands such as Tropicana, Real and Onjus.

Meanwhile, Parle Agro is planning to tap the rural markets with its strongest brand, Frooti. There are plans to set up a separate distribution network catering to these pockets with modifications leading to value addition in the product itself. States Ch auhan, ``We want to penetrate rural India not only in terms of the number of outlets but also with regard to frequency of coverage. After all there are people out there who want to copy city folks.'' This should ensure that the Frooti brand covers a tota l of one million outlets nationwide.

Today, as Chauhan sits in his Andheri office overlooking the Western Express Highway in Mumbai, new ideas are constantly being thrashed out in his office. ``There are no saturated markets, just marketers who have run out of ideas,'' says Chauhan. He coul d well find out when his new products hit the shelves.

A BAROMETER FOR RETAIL CHANGE

A system of corporate intelligence, the Parle Agro Retail Barometer (PARB) is an information gathering network monitoring sales at approximately 21,000 outlets among 300 towns in the country. It gives a monthly indication of outlets covered by the distri bution network, simultaneously identifying strong and weak zones. Stock and display levels of the company's brands as well as competitive brands are determined for each monitored outlet. Corresponding sales figures are tracked on a daily basis, as is off take speed. This helps in calculating the average time spent by the products on the shelves.

A direct fallout of such research is that retailers can maintain an optimal inventory, guaranteeing movement of only the freshest stock. The company network then relays feedback to Parle Agro, which immediately goes for the relevant corrective measures, whilst incurring the least possible lead time.

The system keeps tabs on pricing and promotional activities thus allowing the company to preempt and nullify competitive moves and generally facilitating a quick reflex mechanism. The qualitative and quantitative texture of PARB's intelligence thus makes it the backbone of Parle Agro's marketing structure.