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2005, ICFAI Center for Management Research. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means - electronic or mechanical, without permission. To order copies, call +91-40-2343-0462/63 or write to ICFAI Center for Management Research, Plot #49, Nagarjuna Hills, Hyderabad 500 082, India or email icmr@icfai.org. Website: www.icmrindia.org http://www.icmrindia.org This is an abridged version of the case The Indian Kitchen Salt Market - Brand Wars." Case Studies are intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.

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Branding Commodity Product Indian Salt Industry

Salt, once a commodity product, has now become an FMCG product with top business groups launching branded salt products with heavy promotions and unique positioning. At the end of the year 2000, the branded salt market had as many as seven players vying for consumer mind-space and a market share.

The salt market in India can be broadly classified into the branded and unbranded sectors. In the 1980s, the Indian salt market (both organized and unorganized) was estimated to be about 5 million tonnes per annum and was valued at Rs 5 billion. Salt penetration in India is estimated to be 93.8% (96.8% in urban areas and 92.7% in rural areas). The highest salt penetration levels were in big towns (98-99% penetration).

Till the early-1980s, most Indian households used either local brands of salt or unprocessed/unrefined salt that was sold loose (not packaged). The product was regarded as a commodity and the extent of user involvement in its purchase was extremely low. As a result, no national-level corporate ventured into this segment. However, one of Indias leading business houses, the Tatas, saw immense potential in this market and decided to launch a national brand of kitchen salt.

The product was launched in August 1983, and the company positioned it as a salt that was processed (cleared of all impurities) and refined, unlike loose salt. Emphasizing the fact that it was the first packaged salt, Tata Salt highlighted the issue of impurities in salt sold in the loose form or sold by local brands.

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The decision to enter the branded kitchen salt market paid off well and Tata Salt became a runaway success. The fact that there were no other brands to compete with at the national level helped Tata Salt a lot.

In 1991, DCW Home Products Ltd., launched its brand of salt under the name Captain Cook. The unique selling proposition of the Captain Cook salt was its free flow. Captain Cook was marketed through major advertisement campaigns, unlike Tata salt whose advertising support was negligible. Humorous TV commercials for Captain Cook emphasized the free flowing attribute of the brand, and compared it with the sticky, messy salt used hitherto (the reference to Tata Salt was rather evident). Thanks to Captain Cooks promotional efforts, customers actually began regarding the free flowing attribute as an important one, much to Tata Salts chagrin.

To counter Captain Cooks free flow campaign, Tata Salt launched a new campaign with a tag line stating that Tata Salt was the saltier salt. The company advertised and marketed it by showing that adding even a little Tata Salt to a dish was enough to get a good taste, unlike the salt manufactured by other brands. It emphasized that a packet of Tata Salt would last longer than those of other brands owing to its high salt concentration. Apart from this, Tata Salt also included the free flow proposition in its advertisements, although in a rather subtle manner.

While Tata Salt and Captain Cook fought it out in the market, HLL entered the fray with its Annapurna salt brand in 1996. Annapurna was the first brand that was positioned primarily on the health benefits platform. HLL highlighted the issue of iodine content in the salt and claimed that it was higher in Annapurna than in other brands. Analysts said that the fact that iodine content had not been used as a positioning plank till then was rather surprising, since a large number of people from developing countries such as India were found to be iodine deficient and iodized salt was as an easy way to offer this essential nutrient to them. Adding the minimum required level of iodine to salt was mandatory; a minimum of 15 parts per million of iodine is required for trading in salt. However, the penetration of iodized salt in the country was very low at 5%. Within a short period, the brand reached the second position in the branded salt market.

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Branding Commodity Product Indian Salt Industry

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In the late 1990s, salt began losing its commodity status in the country at least in urban India, which seemed to have taken to branded salt in a big way. Industry watchers noted that the market was following the global trend of commodities becoming brands as the markets for traditional brands reached saturation levels. However, even they were not prepared for the frequency with which new brands entered the segment in this phase. While there were only three brands in the market between 1983 and the mid-1990s, the market saw the entry of five national-level players in the late 1990s.

In January 1998, Dabur India Ltd., launched its salt under the brand Nutrasalt. Dabur advertised Nutrasalt as a salt with low sodium content and positioned it on the health platform.

In November 1998, Marico Industries, which owned the popular Parachute (hair oil) and Saffola (cooking oil) brands, launched Saffola salt. Marico joined the Nutrasalt category of premium salts by pricing Saffola salt at Rs 20 per kg. Saffola salt was packaged in a reusable jar and was also positioned on the health platform, being mineral enriched low sodium salt.

The launch of Nutrasalt and Saffola salt was viewed with skepticism by many analysts, who said that the pricing strategies adopted by Dabur and Marico did not make sense. They doubted whether consumers would pay Rs 20 for a kilo of salt when Tata Salt, Annapurna and Captain Cook were available at Rs. 6, Rs. 6 and Rs. 7 respectively.

Another Indian FMCG major, Nirma, entered the salt market with its brand, Nirma Shudh, in 2000. Nirma claimed that since the entire manufacturing process of Nirma Shudh was free from human intervention right from the pumping of seawater to the packaging of salt, it was of better quality.

Dandi salt was launched in October 2001 by the Kunvar Ajay Group of Industries (KAG) and was positioned on the purity platform with the focus being on the fact that it was triple refined. What set Dandi apart from other brands was the way KAG promoted the brand. The company seemed to have been the first one to realize the importance of frequent airing of short and strong advertisements to influence the buying behavior of consumers for a low-involvement product category like salt. KAG spent Rs 80 million on promoting Dandi and aired its commercials on almost all major TV channels in the country.

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The next company to enter the market was Cargill India Ltd., in December 2001 with the Naturefresh brand. Naturefresh was also positioned on the health platform the difference being that the salt was enriched with calcium and magnesium along with iodine. The company also claimed that its brand of salt was the most granular salt available and was processed to remain free-flowing under all weather conditions.

Though Tata Salt and Annapurna were well-established brands, they could not afford to turn a blind eye to the success of the new brands. Both Tata Salt and Annapurna realized that in order to hold on to their market shares, they would have to put in place measures to help their brands remain the salt of choice. Both Tata chemicals and HLL decided to reposition and relaunch their brands towards this end.

HLL re-launched Annapurna Salt in 2001 with a new patented technology that prevented the loss of iodine during all the stages storage, transportation and even cooking. Given the concern for iodine intake in the country, the brand was expected to benefit from this new salt processing technology. HLL also tied up with the International Council for Control of Iodine Deficiency Disorders (ICCIDD), a worldwide organization that educated people about the importance of iodine and the adverse effects caused by its deficiency. Annapurna salt was the first brand in India to have ICCIDD endorsement.

In late 2001 Tata Chemicals re-launched Tata Salt with a new advertisement campaign that added a patriotic angle to the purity issue. The new advertisements, released in August 2002, featured ordinary people performing their duties with integrity and commitment and saying Maine desh ka namak khaya hai.1 The campaign was used to reassure Tata Salt users of the fact that by using a pure salt he is a pure human being. The company also changed the packaging of the product, making use of bold orange stripes in place of the earlier green stripes.

1 A phrase that literally means Ive eaten the nations salt. However, in India, its use is usually in the

context of showing loyalty to someone. A person who has consumed someones salt is seen as being obligated towards the other person. Thus, the TVCs depicted Indians showing allegiance to their country by performing their daily duties in an honest manner, thereby paying back their obligations of having eaten the nations salt. Tata Salt acted as a metaphor in this context to evoke a purely emotional response.

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Despite the fact that the number of players in the branded salt market had increased by the end of the 1990s, 70% of the total market (17 million tonnes) remained in the hands of the unorganized sector even at the end of 2002. Except for companies like KAG, most of the organized sector players were FMCG giants with strong financial and marketing backing, and even they were few in number. Though the market has minimal production costs and entry barriers, not many seem to be willing to enter the fray. Questions for Discussion:

1. Analyze the evolution of the organized segment of the Indian salt market.

2. What marketing strategies did the big players adopt to transform a commodity into a branded product?

3. What set Dandi apart from other brands was the way KAG promoted the brand. Comment.

Additional Readings and References:

1. Narasimhan, S. Lakshmi. Marico Salt Rides Piggy-Back on Saffola. www.domain-b.com. 31, January, 1999.

2. Captain Cook Atta not to be Relaunched. www.financialexpress.com. 17, September, 2001.

3. Chatterjee, Purvita. Will Dandi Steal a March? www.blonnet.com. 29, November, 2001.

4. Cargill Foods Launches NatureFresh Salt. www.responservice.com. January 2002.

5. Bhushan, Ratna. Salts Sweet Success. www.blonnet.com. 20, June, 2002. 6. Bhatnagar, Mohini. Nirma Makes Mentative Efforts to Enter Premium End

Market. www.domain-b.com. 12, October, 2002. 7. Agarwal, Sujata. A Brand Worth Its Salt. www.tata.com. 02, December, 2002. 8. Chandran, Praveen. Thou Salt Sell More. www.domain-b.com.

09, August, 2002. 9. Shukla, Gouri & Jain, Shweta. Saying it With Salt. www.business-

standerd.com.