After grabbing a 45 per cent share in the Rs 200-crore premium rice (basmati) market, Rs 325-crore Satnam Overseas joins the growing ranks of brand marketers targeting the urban middle-class in the basic foods category. It's offering Trophy, a brand of basmati rice that aims to give middle-class rice eaters an appetite for branded rice.
At Rs 42 a kg, Trophy is almost half the price of Satnam's flagship brand Kohinoor. But it's still more expensive than unpackaged rice. Packaged rice is not an unknown quantity. Surprisingly, it's been around for over two decades (the oldest known brand being Lal Qilla, from an Amritsar-based company) and the market is fairly substantial at 2 lakh tonnes a year. But it's still a product that is restricted to the premium reaches of urban India. For its mid-priced offering, then, Satnam's challenge is to cultivate a wider base for packaged rice.
Why is Delhi-based Satnam, which is mainly an exporter, working so hard in the domestic market? Mainly because global rice markets have been unstable for some time. For one, the Food and Agriculture Organisation predicts a worldwide slump in rice exports so prices are expected to tumble. For another, intellectual property disputes over exclusive rights to the basmati tag for India and Pakistan erupt far too frequently. Trophy, in fact, was launched a year ago. The current marketing push is because Satnam wants to accelerate the growth of its domestic business from 20 per cent last year to 50 per cent this year.
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The first issues are the size and nature of the market for a mid-priced offering. A study carried out by Satnam in Bangalore, Mumbai and Delhi showed that nuclear families with monthly incomes over Rs 50,000 prefer to buy packaged rice in small quantities (5 kg or 1 kg packs). Says Puneet Mahajan, general manager, advertising and marketing: "We found that double-income, no-kids families were going in for branded basmati."
The study also revealed that both the need for a medium-priced product and awareness about branded rice were on the rise. This was mostly due to changes in purchasing habits. Till a few years ago, the average housewife would spend ages at the local kirana store agonising over which rice to buy. She would inspect the grain, smell it and then sampl