Sunfeast : Spreading the smile

Brand : Sunfeast
Company : ITC Ltd
Agency " FCB Ulka

Can a cigarette manufacturer succeed in marketing Biscuits? What do management

thinkers say about unrelated diversification? Unrelated diversification will succeed if it
is based on the core competency of the firm. So What is the core competency of ITC that
is being leveraged when it decided to enter the Foods market. ITC relies on three core
competencies

1. The depth of distribution

2. Its brand building capabilities.

3. The ability of Quality outsourcing.

Sunfeast has been a success because of these three competencies of ITC. Sunfeast was
launched in 2003 was one of the diversification forays of ITC which wanted to establish
itself as a serious FMCG player from its position of Tobacco products leader. ITC had
the advantage of the well entrenched distribution setup which is matched only by HLL.

Indian biscuit market is estimated to be around 4500 - 5000 crore. The market is
dominated by Parle and Britannia. Parle is the volume leader with brands like parle- G,
Krackjack and Monaco while Britannia is the value leader with brands like 50: 50, milk
bikis, Tiger, Goodday etc. The biscuit market has now moved from the core Glucose base
to more value added categories. The key markets are UP, Maharashtra, and Tamilnadu.
The percapita consumption of biscuits in India is only 1.2 kg per annum while the
percapita consumption is 15 kg p.a in developed nations. While the glucose biscuits are
popular in Rural India , Urban market prefer Cream biscuits.

To est ablish a brand in this tough market was never easy. Sunfeast
using heavy promotion and careful brand building have already garnered 10% market
share in this market. Sunfeast is positioned as an exciting brand. This platform is
supported by a series product launches. Since Biscuits are convenience goods , new
tastes and new products are essential to built excitement in the market. Sunfeast have
maintained continous series of new launches like Milky Magic, Coconut, strawberry,
pineapple cream etc. Recently Sunfeast launched a product for the premium segment
named " Dark Fantasy" with chocolate flavour and cool advertisements.

Sunfeast have used the baseline " spread the smile" as the brand essence and the brand
is endorsed by Shah Rukh Khan. The use of SRK makes sense since the TG is mainly
kids . SRK have the energetic persona that goes well with the brand. The mascot of
Sunfeast is the Animated Sun which is the symbol of contentment, satisfaction and
Pleasure. This mascot has been well received by the TG. The ad campaigns are catchy
and full of colors and excitement. The product is also of very high quality. Thus Su

nfeast has managed to get all the winning combinations in the right
mix.

Sunfeast is also trying to garner more share in the Marie category which is estimated to
be around 600 crore. It launched the Marie with different flavours that has enabled it to
gain a strong foothold in that category. To expand the brand in to the snack category
Sunfeast has launched Pasta Treat which talks of a healthy snacking option for kids.

Sunfeast also uses lot of Below the line promotions for brand building. It sponsors
Sunfeast Open, a recent initiative aiming at the school kids by providing them an
opportunity to enhance creativity through painting competitions, " Hara Bano "
campaign which set a world record in planting maximum number of saplings etc.

The constant product launches and careful promotions have enabled Sunfeast to move
to the top league in the biscuit market with in a span of 3 years. We may see this brand
expanding to many categories .Hope they don't mess the brand by extending it to
underwears.

Sunfeast : A marketing success story.

Brand Update : Sunfeast

In a unique marketing move, FMCG major ITC has launched a new range of Sunfeast
Biscuits: Sunfeast Sachin's Fit Kit. The brand's uniqueness lies in the fact that first time
in India a product is being co-created by the company and the brand ambassador. In a

world cup Googly , Sunfeast has not only r oped in Sachin as

a brand ambassador but also bought in a variant of a different kind.

Sunfeast Sachin's Fit Kit is the first Indian brand where the celebrity has been actively
involved in the product development. Sachin has shared his dietary regimen which has
helped him to stay in top fitness for more than 17 years ,with the company and the
product was developed taking inputs from the dietary regime. The new variant is
branded as Sunfeast Sachin's Fit Kit.
Sunfeast foray into Biscuits
Major players in biscuits who dominated the industry long back were Parle and
Britannia. With that there were smaller brands in various regions. Instead of all this
ITC took a bold step to hit on these biscuit mammoths making 8.2% of industry (in
2004)

Now the important question at hand is the reason why ITC entered into this product
category. Let me enumerate some reason:

1. Food segment is Rs. 550,000 crores (112 b$)

2. 6% is FMCG (Branded and packaged) – Rs. 33000 crores
3. In developing markets, the above percentage is as high as 95%. So looking into
future, India’s will have more organized and branded food product categories.
It will lead to dual effect: Increase in base of biscuit segment and Increase in %
of branded food categories
4. ITC has a great scope to be a branded player
5. Branded Biscuits industry come out to be around Rs. 4000 crores
6. Increasing at the rate of 12 to 14% yoy
7. Synergies with ITC core competencies (value addition to wheat with Aashirwad
Atta brand)
8. Biscuits as a segment positively effects the bottom line

Threats for ITC: Behemoths like HLL tried their hand in this segment but unsuccessful
(Max brand exit in 2005)

Reason for Entry into Biscuits

1. Innovation: Research revealed that the category had gaps which ITC could
settle into. Findings revealed that consumers wished to taste new and
innovative products. That was precisely what the competition had not done in
a big way. Glucose was Glucose and same is the case with Marie. The company
decided that this could be its biggest point of attack. In 2003, ITC launched
Sunfeast with six ranges. But it was a calculated risk. ITC stuck to category
 favourites like Glucose, Marie and Bourbon cream. Along with that, it also
launched innovations such as orange-flavoured Marie, Marie light and
butterscotch-flavoured cream biscuits. In 2004, Sunfeast followed this up with
the launch of Sunfeast Milky Magic. More recently, it also has launched the
Sunfeast Snacky and Sunfeast Golden Bakes. The biscuits industry had not
witnessed any major product innovation in years. Consumers were just waiting
for something new, something fresh, when Sunfeast happened
2. Distribution: Distribution is the key for FMCG products. In biscuit category,
distribution and visibility is extremely important as it's partly an impulse
purchase product. Priya Gold, which entered the western region in 2000, is
struggling to find its feet even five years later. However, in this regard,
Sunfeast did not stumble. The main credit goes tobacco business – its
understanding and deep grasp in distribution. But it was not limited to just
panwaris, but looked at the grocery stores and other retail formats. The
company says the brand is now available in nearly 1.8 million outlets. Britannia
claims it has a superior distribution clout with its presence in nearly 3.3 million
outlets. Parle, the seasoned player itself, says it is available in 1.5 million
outlets. Sunfeast's next step was to step up its branding and promotion
3. Promotion: In August 2003, a month after its launch, the company undertook a
major sampling exercise to promote the product. For two years then, the brand
did all the usual rounds - riding behind buses, blocking television spots, corner
space in newspapers P
4. Pricing: The biscuits industry now has two clear models. Parle products plays
the low price game at all varieties of biscuits from glucose to cream. Parle
plays a high volume, low margin game. But Britannia and Sunfeast look at a
two-pronged strategy. High margins in cream variants and volumes from the
Marie and Glucose segments. For instance, cream biscuits from both Britannia
and Sunfeast cost Rs 10 for 100 grams. Parle, however, only charges Rs 5 for its
cream variants. Except for Hide & Seek, all of Parle's products lie in the price
range between Rs 4 and Rs 6 for 100 gram packs. Biscuit consumer is willing to
pay more only when he sees a clearly differentiated product. Hence companies
have little choice in terms of pricing. No wonder all the Glucose and Marie
variants straddle price points of Rs 4-6 (for 100 grams)
Results
1. Volumes: In March 2006

 Britannia's shares have dropped from 35.8 per cent in 2004-05 to 30.5 per cent
in May 2006
 Parle's shares have also dropped from 42.2 to 38.4 per cent in the same period
 Priya Gold has seen a minor dip from 6.4 per cent to 5 per cent
 ITC's Sunfeast has been a big gainer with its share increasing from 2.7 to 6.7
per cent

2. Value

 Britannia leads the market with 37 per cent market share

 Parle's 31.3 per cent
 ITC's 6.3 per cent

www.business-standard.com/india/...sunfeast/241455/

As part of its efforts to expand its product portfolio in the foods division, ITC is planning to launch new varieties of
cookies, sweet and salt crackers and a number of other differentiated products. The company has signed up Tamil
film actor Surya as the brand ambassador for its biscuit brand ‘Sunfeast’ in Tamil Nadu.
 
Devarajan Iyer, brand manager, ITC Ltd (Foods Business), said Tamil Nadu was one of the largest markets for
biscuits in the country and the biscuit market in the state was valued at around Rs 550 crore. The entire southern
market was worth about Rs 2,000 crore. The company plans to capture a market share of 20-22 per cent in the state
in a year’s time, according to a press release

IN a bid to reinforce its brand on kids, ITC Foods Ltd will soon cover more than 1,000
schools across the country as part of its Sunfeast school programme.

"Our learnings corroborate the fact that brands register better among kids compared to
adults. Learnings from our biscuits track revealed that spontaneous recall of Sunfeast
among kids is about three times more than their mothers," said the ITC Foods Division
Chief Executive, Mr Ravi Naware.

Considering the need to garner visibility among kids, the company has earmarked
around Rs 20 lakh for this below-the-line project and their target is to reach 1 million
kids across these 1,000 schools

The Sunfeast school programme focuses on building the children's creativity through an
opportunity to paint and win prizes. The interest in such programmes are introduced by
leveraging the Sunfeast mascot and by conducting magic shows
http://retailnu.wordpress.com/2009/05/11/itc-bites-off-11-of-biscuit-market/

Since the Rs 9,000-crore biscuit market witnessed a growth of 20% last year and is slated to
sustain its growth this fiscal, ITC is looking at enhancing its biscuit manufacturing capacities by
at least 15-20%, primarily to manage supply chain costs and improve profitability. “We plan to
set up additional capacities in such areas where we have developed a significant front-end scale,
but are limited by proximate capacities. Attempts are being made to create new biscuit variants
in segments that are relevant to the consumer. The positioning of the marketing mix is also being
worked upon to drive consumption by creating convenient price points or by differentiating
product propositions,” Mr Chitranjan Dar, chief operating officer, ITC Foods Division, told ET.

For starters, ITC plans to drive growth by vitalising its brand ‘Sunfeast’ through product
innovation, contemporary packaging and targeted brand communication. A huge investment is
also being planned for brand building and product development. At the same time, the company
is looking at investments in building trade loyalty across channels and markets.

Elaborating further, Mr Dar said, “while ITC per se has no plans to rationalise its biscuits
portfolio, we review the basket from time to time. Additions or deletions takes place on the basis
of the market feedback and actual sales. The idea is to strengthen the winners and replace the
average performers with potential winners from the biscuits stable. As of now, there is no
product which does not contribute positively to the overall pool of contributions.”

Incidentally, a large proportion of the growth in the biscuits segment is coming from the mid-
price offers growing at 35%. The mid-price offers is the non glucose segment and includes
cookies and sandwich cream products.

“There are clear indications that consumers are upgrading to mid-price offers in line with the
growth of packaged foods in the country. Since consumers are ready to pay for good quality and
tasty products, we find a growing value for product quality and hygiene. Hence, our capacity
additions will partly be in line with these requirements Mr Dar pointed out. The basic product
glucose, however, continues to be largest category in terms of volumes.

http://www.moneycontrol.com/india/news/advertisingmarketing/marketingconsultantfo
undernobbynabankurgupta/brandsthatprick/market/stocks/article/259806
A case in point is the Rs 16,000 crore ITC, that ran their CSR campaign, about putting India first for its e-choupal
initiative two years back. Cut to the present. The company has linked the Sunfeast brand to its social forestry
campaign, where  the company chips in with 25 paise for every pack of Sunfeast biscuit and pasta sold, and
consumers who buy the atta brand, Aashirvaad, contribute towards ITC's rain harvesting campaign.  
Divisional Chief Executive, ITC, Ravi Naware says, "Consumers like to connect
with the brand, if the brand is seen as a responsible brand, then consumers get
an emotional connect thats far beyond just usage of the brand and consuming
it. It's this higher level of connect that we are attempting to create through this
campaign. So, in an attempt to connect with consumers at several levels, we
will run this campaign, parallel to other campaigns, that talk about differentiated
innovative products under the Sunfeast brand."

http://www.business-standard.com/pdf/TU567%20ITC%20Ltd%20080710.pdf

The ‘FMCG & others’ business reported a strong growth of over 50% yoy
to Rs. 7.4 bn with an increase in revenue contribution by 3.2% yoy to
16.7%. The segment witnessed a strong growth of 57% yoy in the branded
packaged foods (biscuits – 53%, Aashirvaad atta – 43%, and confectionery
category – 40%), 72% yoy in the stationery business, and a rise 26% yoy
in the domestic sales i.e. lifestyle retailing. However, operating loss further
rose by 143.9% yoy to 1.2 bn due to heavy investment made in new
Strong performance by
Non-Cigarette FMCG
business
Please see the end of the report for disclaimer and disclosures. -3-
ITC LIMITED
RESEARCH
EQUITY RESEARCH July 10, 2008
product launches, which is dragging down the overall profitability of the
Company.
‘Aashirvaad’ and ‘Sunfeast’ crossed the annual sales of Rs. 10 bn each,
with Aashirvaad spices grew by 49%, leveraging the in-house agri-sourcing
and crop development skills. Moreover, ‘Bingo’ acquired a double-digit
market share within one year of launch. Further, the Sunfeast range of
buiscuits was expanded with the launch of special edition of ‘Sachin’s Fitkit’
multi grain biscuits and ‘Golden Bakery’ premium cookies. The Company is
constantly focusing on improving its product mix, and we believe that with
more launches in future, the top line will show a robust growth. However,
the expenses related to new launches, coupled with the increased prices of

commodities will keep margins under pressure.

http://www.valuenotes.com/ksl/ksl_ITC_26May08.pdf

FMCG – Others

_ ‘Aashirvaad’ and ‘Sunfeast’ brands have achieved sales of Rs 10 bn each.