From Sack To Shelf

Mawana, Trust and Daurala are not household names. Not yet. But the only sugar brands being marketed in the country hope to be there soon. They have already broken ground by creating shelf space in the over-crowded food products market. And the three pathbreakers, SIEL Ltd, Simbhaoli Sugar Mills and DCM Shriram, manufacturers of the three brands respectively, are convinced that their products have a huge potential.

As yet, the brands have registered their presence only in north India. Thats because the factories are based in Uttar Pradesh and Haryana so they are concentrating on markets closer to home. The Trust and Mawana brands have actually been in the market for three years.

 

Mawana is available in Calcutta and Delhi. It has less than one per cent market share of the 20,000-tonne-a-month sugar market in Delhi. But it now intends to enter other metros. The other brands have an even lower market share. Trust is available in Delhi, Chandigarh, Punjab, Himachal Pradesh and Uttar Pradesh. It is manufactured by the Rs 131-crore Simbhaoli Sugar Mills based in UP.

Rising incomes and the general trend towards branded food products first prompted these companies to stick out their necks and brand sugar. If it could be done with salt, why not with sugar, they reasoned. Eventually, everything will be branded. So we are building the foundation for the future, says Krishna Shriram, director of SIEL Ltd, which markets the Mawana brand.

The players point to the success in the last few years of branded salt and wheat flour. Captain Cook and Tata Salt have become household names, Hindustan Levers Annapurna brand is making inroads in this segment and NEPC Agros Trupti flour is also doing well.

However, unlike salt, flour and rice, sugar is a difficult commodity to brand. This is because of the web of controls that the industry is caught in. Companies have no say on the inputs or the output, either in terms of quality or quantity. Nor can they devise strategies to sell their product since the supply is regulated by monthly quota releases and prices are controlled.

The other problem is that the consumer has no concept of quality as far as sugar is concerned. Most urban consumers, who are the target audience, buy sugar from the public distribution system at heavily subsidised rates. Or else, they have the option of buying at a marginally higher price from the neighbourhood grocer. So sugar brands have to compete with both levy and free sale sugar to make it to the consumers shopping list.

On an average, sugar is available for around Rs 10.50 per kg under PDS and for between Rs 12 and 15 per kg in the free sale retail market. In contrast, Mawana and Trust are available at Rs 18 per kg. So the price differential ranges from Rs 3 to Rs 7.50. Daurala has priced sugar cubes at Rs 21.95 for 500 grams and double refined breakfast sugar at Rs 19.55. Thats because packaging costs are high at Rs 1.50 per kg. Also, the branded price has to take into account supply fluctuations. Depending on the supply, free sale prices fluctuate but the branded price cant keep changing accordingly.

So the sugar brands are relying on product differentiation. Daurala is selling sugar cubes while Mawana and Trust are marketing sugar crystals. The positioning is that the product is 100 per cent pure and hygienic. It is manufactured and packaged without being touched by human hands.

Daurala is double refined to increase purity. Mawana uses a different process, the double carbonation process, for a superior quality. And Trust claims to be the only sugar which is sterilised by ultra-violet rays and packed in an environment-controlled room. A Japanese colour sorting machine has been installed by it to weed out foreign elements.

Yet, brand positioning is difficult in sugar since there is no substantial value addition. For instance, in the case of salt, it could be iodized. And packaged flour offers convenience. Shriram says that the nutritional value of sugar could be enhanced by adding vitamins and minerals to it so that it moves up from being a sweetener to a nourisher.

But even after three years, none of the brands have really taken off or been able to build substantial volumes. Right now, we are not looking at profitability, says SIELs Shriram. Mawana is banking on its premium quality as well as the wide distribution network it has built for its oil business, which includes the brand, Rath vanaspati. But Shriram believes that even if the branded segment can grab a small percentage of the commodity market, it could translate into huge gains. SIEL now sells around 350 tonne a month but in a couple of years, it hopes to sell nearly 2000 tonne a month.

Whether the players can successfully rewrite the rules of the market and convince consumers to shift to branded sugar remain to be seen. But the fact that they are selling and surviving is a good enough sign, they believe. And if sugar is decontrolled, they could well reap the benefits of an early start.

GN

Mawana has less than 1 per cent market share of the 20,000 tonne-a-month sugar market in Delhi.