In a bid to garner higher market share and sustain long-term growth, fast moving consumer goods (FMCG) companies such as Coca-Cola, Nestle, PepsiCo, Dabur, Marico and Godrej have adopted a brand extension strategy amid negative factors such as high inflation and the global financial crisis.
According to marketing research company IMRB, the FMCG companies launched 251 products (223 variants and 28 brands) in calendar year 2007 as against 191 (173 variants and 18 brands) in 2006. The industry pegs the number of variants and extensions launched this year to be in line with 2007.
“There has been evidence of downtrading in the FMCG sector, especially the mid-level brands. Companies are likely to leverage their strong brands by introducing variants across high-end and low-end ranges,” says Ramesh Srinivas, KPMG India’s national industry director (consumer markets).
For instance, Nestle launched a record number of variants this year — from its Maggi Cuppa Mania (the instant cup noodles), Maggi Pichkoo (a tomato ketchup pouch pack) to Maggi Bhuna Masala (a readymade cooking aid). It also introduced NesVita Pro-Heart, a fat-free packaged milk product in Delhi/NCR region.
Other FMCG leading players such as Marico had launched Saffola Functional Food for ‘diabetics management’ and Britannia launched NutriChoice 5 Grain, a biscuit made from five “healthy cereals”.
Dabur too unveiled a pudina variant of its popular Hajmola brand apart from extending its Gulabari skin-care range.
Beverage company Coca-Cola India introduced apple flavour for its ‘Fanta’ brand as its rival PepsiCo chose to introduce apple flavour for its ‘Tropicana Twister’ range. PepsiCo’s food wing, Frito Lay, extended its Kurkure range with Desi Beats apart from introducing new flavours for Quaker Oats.
Godrej Consumer Products (GCPL) stretched its Ezee brand as a daily wash liquid detergent under the new variant, Bright & Soft, and it intends to further extend it to the post-wash category.
“While the year has been tough for manufacturers, we must keep in mind the long-term benefits of introducing a new brand even in tough times than putting your plans on hold,” says V Suresh, vice-president (marketing), GCPL.
Among the other launches, GlaxoSmithKline Consumer Healthcare India introduced Eno Orange, while Reckitt Benckiser chose to relaunch Clearasil brand.
Soup was another category which witnessed a lot of action. While HUL launched a range of Knorr soups targeted at mass markets, Nestle launched a slew of local variants of its Maggi soup. Rising income and growing aspirations, coupled with lower penetration levels, have fueled strong demand for lifestyle and value-added products.
“Brand extensions provide a more economical and risk-free approach of sustaining growth in the present economic environment as against launching a new product for FMCG players,” says Srinivas.
Industry observers also feel that for most of the brand variants, manufacturers need to marginally tweak the production line to accommodate the new product as against a new brand which may require more infrastructure.
In terms of categories, brand extensions in personal-care, household-care and processed foods drove growth in the FMCG sector.
Analysts believe that most of the new launches next year will also happen under these categories.
In the processed foods segment, ‘health and wellness’ has been the major theme playing out, with most players rolling out products around this platform.
