MARKETING CASE CHALLENGE

PREMIUMISING THE BEVERAGE CATEGORY AND

IMPROVING TRADE PRACTICES

By TEAM SPARK PLUG

ARGHA DAS- 80512100432

PRASHANT PANJWANI- 80512101005
SUDIPTA GHOSH- 80512100255
ROHIT CHOWDHURY- 80512100650
PURBAYAN BHATTACHARYYA- 80512100104

Case brief
ITC’s foray into Foods category has been a successful feat, reaching a revenue of
8000+ crores in just 15 years. It has built brands such as Aashirvaad, Sunfeast, Bingo,
Yippee! etc. that combinedly reach 50 % of all Indian households. Despite that, a gap
persisted with its absence from the beverage industry.
Considering the category attractiveness in terms of opportunity and scalability in Juice
and Nectars and dairy beverages, ITC entered this category with B Natural and
Sunfeast Milkshakes respectively. It even set up a facility, first of its own kind in Asia,
in Punjab that offered Aseptic packaging and the ability to offer inclusions in its
beverages.
While the industry suffered a downturn during COVID 19 crisis in 2020 and 2021, the
industry is expected to see favorable buoyancy in the coming years.
As a challenger brand, ITC wishes to premiumise the category and bring about
disruption. It has to choose whether to pursue alternate institutions or focus more on
partnerships. Also, it would like to utilize its expertise on inclusions to command higher
premiums and ensure the next phase of growth.

Methodology
A secondary research was conducted to understand the consumer pattern of non-
alcoholic beverages in India. A segment ranking, based on consumer preferences,
suggested potential in the dairy beverages and Juice&Nectar segment. Further,
primary research was carried out keeping taste, packaging, demand and availability as
key indicators. This primary research entailed market visits of 10 MT and GT stores,
interviews with 8 industry experts and insights gathering from stakeholders in this
segment of over 10 distributors, retailers and third party logistic providers.
Based on all research, it is recommended that ITC should enter the RTD coffee drink
category and proceed further into its dairy and juice segment through line
extension,i.e.RTD smoothies.
A competition benchmarking was performed for top performing brands in the RTD
coffee and RTD smoothie segment with the 4Ps as the key parameters. Subsequently,
a target and need gap analysis was also done to find the target market and user
personas for our new premium offerings.

Solution
The solution focuses on premiumizing ITC’s juice and beverage segment to usher in
the next wave of growth. Line extensions have been proposed to the Sunfeast and B
Natural brands: Sunfeast Blueberry Yogurt Smoothie with Roasted Granola and B
Natural Berry Smoothie with Dates and Gooseberry dices, making full use of ITC’s
inclusion technology to create a strong POD with other brands in the market in
alignment with ITC product synergy and strong distribution channel. Also, to enter the
ever growing RTD dairy based coffee drink market, a new brand ITC Kafa - premium
range of Dark Roasted Arabica RTD coffee products (3 options) should be launched
catering to the needs of the identified target user personas and creating a niche for
ITC in the market.
With the products in place, the aim is to build synergistic alternate institution
partnerships for ITC for our newly launched products for each of the products
providing thorough reasoning for the same. This is extremely important to increase the
sales of these premium products and boost its usage in many alternative ways
leveraging ITC’s strong brand equity and image.
As per the questions at hand, implementable strategies have been suggested to
increase revenues and profitability in modern trade after recognizing several problems
that were noticed in e-commerce and MT channels.
To expand the profitability of ITC in the general trade channel, existing models have
been studied and two practical solutions have been recommended to decrease the
intermediaries in the process without impacting the effectiveness of the strong
distribution network that already exists.
Furthermore, various digital promotions campaigns for the new line of products as well
as a viable roadmap for the entire execution of our idea in a phased manner is also a
part of the solution. Finally, a few strategies to counter any competitor's move have
also been added so that ITC stays ahead in this segment for times to come.

Financial implications and Feasibility

Towards realizing the financial feasibility of our ideas, a TAM(total addressable
market) was reached and analysed for all of our offerings. Industry reports, research
papers, data points from primary and secondary research helped us estimate the
exact market share that ITC can aim to achieve. A cumulative revenue that can be
generated from these extensions will be INR ~666 crores, with a cumulative profit of
INR ~154 crores. These projections are risk averse, keeping in mind the reality of
things and any black swan events.
Towards the cost, ITC's current and past annual reports have been analysed to find
trends and corresponding line entries. Once achieved, relevant pointers were plugged
in. Also, the exact cost factors out there in the market have been taken to accordingly
normalize our calculations.
Finally, a cost revenue analysis shows that, in the early quarter of the 3rd year, a
breakeven is expected and by the end of 5 years, ITC will be able to get a 30% ROI,
significantly higher than the industry average.