The Indian Kitchen Salt Market - Brand Wars

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Case Details:

Case Code : MKTG044
Case Length : 10 Pages
Period : 1991 - 2002
Pub Date : 2003
Teaching Note :Not Available
Organization : Kuwar Ajay Group of Industries, HLL, Tata Group
Industry : FMCG
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Branded salt is a large market, and dominated by two major players -Tata and Annapurna. There is room for more."

- Jagdeep Kapoor, MD, Samsika Marketing Consultants, in June 2002.

Introduction

In March 2002, a legal notice was served to the Kunvar Ajay Group of Industries (KAG), a Rs one billion company involved in the garments and fast moving consumer goods (FMCG) business, by the Gandhi Peace Foundation (GPF). GPF, named after the father of the nation Mahatma Gandhi, was unhappy over the fact that KAG had used, the Dandi movement¹, an event in India's struggle for independence, for commercial purposes by using the name 'Dandi' as a brand for its kitchen salt venture. GPF asked the company to withdraw the name and a related illustration on the packaging or face legal action. However, this development seemed to have actually 'helped' the Dandi Salt brand by increasing consumer awareness about it.

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The brand had already become very popular in the country, thanks to its high-decibel advertisement campaign on leading satellite television (TV) channels. Dandi Salt created a history of sorts in the Indian branded salt market by reporting a turnover of Rs 1.25 billion within² a year of its launch.

The turnover of KAG increased from Rs 1 billion in 2001 to Rs 2.5 billion in 2002 -and 125% of this increase was attributed to Dandi Salt (the rest of the turnover was accounted for by the group's flagship product, sarees³, and the detergent brand, Friendly Wash; refer Exhibit I for a brief note on the company). Within a year of its launch, Dandi salt managed to garner a market share of 0.97%. According to Industry observers, this was a commendable achievement, considering that the market was dominated by MNC giants such as the Unilever subsidiary Hindustan Lever Ltd. (HLL, with its Annapurna brand), the Tata group (with the Tata Salt brand) and other popular brands such as Nirma Shudh and Captain Cook.

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1] The 'Dandi March' was a significant event in India's struggle for freedom from over two centuries of British rule. Mahatma Gandhi opposed the British government's decision to impose tax on salt and urged people to defy this unfair law. Followed by a large group of people he walked 240 miles to a beach in Dandi (a place in the North-Western state of Gujarat) and symbolically defied the British by making salt on the beach. The controversy involving Dandi salt died a natural death soon after it arose.

2] In January 2003, Rs 48 equaled 1 US $.

3] Saree is a traditional attire worn by Indian women. KVG was one of the very few companies in this market, which was dominated by the unorganized sector. The saree was the most favored and the highest selling women's apparel in India. According to a KSA-Technopak study, around 197 million women purchased roughly 315 million sarees in 2001. Rs 1 billion of KVG's turnover in 2001 came from sarees.