 "Ramesh Chauhan seeks to recreate his cola magic")
“Cola sales are declining, so it makes no sense to be investing in them,” says Chauhan from his Mumbai office located in the western suburb of Vile Parle. “There is a definite need for a new, exciting beverage that tastes good, and that is what we have attempted to do.”
The Rs 500-crore energy drink segment, currently led by Austrian brand Red Bull, is growing at 25 per cent annually. Urzza, which took five years to develop, is being positioned as a mass-market energy drink devoid of caffeine, an essential ingredient of these products. “Besides having no caffeine, Urzza does not have stimulants such as guarana and taurine that are used in energy drinks,” says Chauhan. “We have instead infused it with vitamins B and C as well as other ingredients (like sugar and citric acid) aimed at charging the body up.”
Though the functional drinks category (it includes beverages such as juices, fortified water and energy drinks) remains relatively small, Chauhan hopes to make a mark here by pricing his drink 41-44 per cent below the average price of a 250-ml can of energy drink. While a can of most energy drink brands costs between Rs 85 and Rs 90, Urzza is priced at Rs 50. “The endeavour is to make it affordable for consumers,” says Chauhan.
Timing it right
Chauhan has always been quick to spot an opportunity. In 1977, soon after Coca-Cola exited India leaving a gap in the market, he launched Thums Up. He got it so right that even today Thums Up remains the largest selling cola brand in India with an estimated share of 15.5 per cent of the Rs 14,000-crore carbonated beverage market. Realising its potential, Coca-Cola bought it from Chauhan in 1993. Today, India is the only market where Coca-Cola, the world’s largest beverage company, has two cola drinks in its portfolio: Coca-Cola and Thums Up. And interestingly, the flagship trails its local compatriot. Last year, Sprite (also from Coca-Cola) briefly knocked Thums Up off the perch as the country’s most-selling drink, but now both brands are neck and neck. (See chart).
Coming back to Urzza. Chauhan has carefully avoided any reference to the famed Parle brand name in this drink. This was something he did earlier with Bisleri too, the bottled water brand he controls and which competes with Kinley from Coca-Cola and Aquafina from PepsiCo. There is a reason he did so. Chauhan’s brother, Prakash, runs Parle Agro, the owner of brands Frooti, Appy and Bailey, while his cousins Vijay, Sharad and Anup Chauhan are the promoters of Parle Products, one of the largest biscuit manufacturers in India that sells Parle G, Hide & Seek and Monaco.
Following a split with Prakash over the sale of Thums Up in 1993, Chauhan took control of the bottled water division (of the original Parle company) called Parle Bisleri. He renamed it Bisleri International a few years ago to avoid any linkage with other branches of the Chauhan family. That trend continues to this day. Parle, for the record, comes from Vile Parle, where the Chauhan family has been traditionally based.
To retailers, Chauhan is pushing a pack of six bottles of Urzza for Rs 270 or a can for Rs 45. This competitive pricing is intended to lure kirana stores, hotels, restaurants and canteens to stock his product. Competitor Red Bull is pushing hard in these channels too. The battle for shelf space, therefore, say market experts, is expected to be fierce between the two.
Besides this, Chauhan is also launching 300-ml PET bottles of Urzza (apart from the 250-ml cans), a first for an energy drink manufacturer. Typically, an aspirational product such as energy drink, which is targeted at younger consumers in urban areas, is available in cans to ensure that its premium imagery is not affected. But Chauhan is clear why he is also looking at PET bottles. “A PET bottle allows you to see the drink. The bottle is also recyclable. Second, it aids consumption. That is because it is easy to carry. Besides, when you have a PET bottle sitting with other PET products in a shop, the chances are people will pick it up.”
Chauhan is using his Bisleri distribution network to push Urzza. Shops and other trade channels that stock Bisleri will be roped in to sell Urzza. In the first year, Chauhan says, he is targeting 4-5 lakh outlets for Urzza, which is nearly half of Bisleri’s cumulative reach of 10 lakh outlets.
The product will be manufactured at seven factories — five owned by the company (at Bangalore, Rudrapur, Ludhiana, Kolkata and Mumbai) and two by third-party manufacturers (at Pune and Indore).
Besides, Urzza is also being promoted as a liquid charger — something that can be consumed every day — with the help of a 360-degree campaign involving all key media: print, outdoor, digital, social media and TV. “There is a special emphasis on the digital and social media given that the target group is between 18 and 35 years,” says Chauhan.
This is clearly among the veteran businessman’s biggest bets in recent years. The market for functional drinks (including energy drinks, sports drinks, fortified and flavoured water) is pegged at around Rs 700 crore in India and is growing at 30 per cent annually. Most companies like Coca-Cola, PepsiCo, Danone, Dabur, Tata Global Beverages, Parle Agro and smaller firms such as Gurgaon-based Hector Beverages (the maker of Tzinga and Paper Boat) are marking their presence in this space, though volumes are a fraction of what categories such as colas, bottled water and juices attract.
Chauhan says that while he realised the need to get into newer segments, he also realised that he would have to work on how to lead in these categories. “To achieve that, even if you have one unique flavour in that category, it would be enough. With Urzza, we believe we have found that one unique flavour that will click with consumers, the way Thums Up did.”
In the first year, he is looking at achieving 8 per cent of Bisleri’s volume sales for Urzza. “I have told my regional (sales) managers that they have to work in this direction, otherwise the product will get lost within our system, forget even reaching the marketplace,” he says. “Products fail not because of the consumer, but because they account for an insignificant amount of sales to justify the kind of dedication they need. I have told my managers that they have to achieve a minimum of 8 per cent of sales for Urzza in the first year, if the product has to go anywhere.”
Chauhan is clearly charged with energy. What needs to be seen is whether his new drink is too.