Eighteen months after it integrated and relaunched the world's largest biscuit brand Oreo under the merged Cadbury-Kraft in India, American packaged foods major Kraft will kick-start the second leg of the exercise by launching a chocolate cream variant shortly.
Consumers of Oreo are familiar with the vanilla cream that is sandwiched between two dark biscuits. Now, they will also have the option of a brown filling. The company is in the process of rolling out the product at retail outlets. A big-bang communication exercise will be unleashed next month, along the lines of what the company did in March 2011, when it had announced the relaunch of the classic Oreo.
Chandramouli Venkatesan, director, snacking & strategy, Cadbury-Kraft, says the new launch will help consolidate its presence in the cookies and creams segment of the Rs 12,000-crore biscuit market in India. This segment by value stands at 40 per cent, higher than the staple glucose category, which constitutes 30 per cent of the market. Volume-wise, of course, glucose is the bigger category at about 45 per cent.
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In recent years, however, most players, including Parle Products, makers of Parle-G, Britannia and ITC, have focused their attention on the creams and cookies segment, as higher disposable incomes have resulted in consumers opting for better products.
While inflationary pressures have seen biscuits as a category suffer in recent months, on account of lower discretionary spends, analysts say the tide will turn as sentiment improves on the back of the reforms push announced last week.
Kraft has priced the chocolate cream variant of Oreo at a slight premium to its classic vanilla flavour available at Rs 5, Rs 12 and Rs 25. The Rs 5 price point has been done away with for the new variant, with the company opting instead for price points of Rs 15 and Rs 30.
While Oreo is still comparatively smaller than Parle's Hide & Seek, Britannia's Pure Magic and ITC's Sunfeast Dark Fantasy, it has managed to grab a share of about six-seven per cent in eighteen months, says Venkatesan. "The endeavour is to try and build on this momentum with the new launch," he says.
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The company is expected to push the product aggressively at 0.7 million outlets in the country, where the Oreo vanilla variant is currently available. Of these, 0.12 million stores are in rural areas, says Venkatesan. "So, we are not leaving out rural areas, despite it being priced at a slight premium," he says.
But with the absence of a Rs 5 price point, analysts are questioning whether the product will work in semi-urban and rural areas, where low-unit packs do well.
Venkatesan says a chocolate variant is expensive to produce in comparison to a vanilla variant, making the Rs 5 price point unviable.
While the price of sugar has softened in recent months, wheat and cocoa - inputs for chocolate biscuits - have remained volatile. Wheat alone has climbed up 22 per cent in the last six months, say commodity experts.