agencyfaqs! News Bureau
Small has always meant big volumes for Anglo-Dutch conglomerate Hindustan Lever Ltd (HLL). After taking the low unit packs (LUPs) route to volumes in the highly competitive shampoo market in India, HLL is now planning to employ a similar trick in the bakery market. Its latest acquisition, Modern Bread, will be made available in smaller pack sizes later this year.
Talking to newsmen in Mumbai recently, HLL executive director (foods), Gunender Kapur said that with the introduction of small packs, the company is hoping to achieve a substantial growth in volumes. The company hasn't decided on the pack size and pricing yet, which would be done "in due course".
The reason to move to small packs is simple. While the bread market is quite large, at Rs 1,800 crore, the consumer happens to be very price-sensitive. Which is why, close to half of the market is constituted by the unorganised sector. Therefore, there is a huge potential for conversion, which is obviously what HLL is gunning for.
Market observers feel that this move is the most logical since HLL hopes to be a serious player in the bakery market over the next couple of years. However, it is pricing that will play the key role in enabling conversions.
To put things into perspective, Modern Foods was acquired by HLL almost year ago, and the company set in motion a process of turnaround immediately after that. According to market estimates, the brand has achieved an over 100 per cent jump in sales turnover since then. This process is significant because Modern Foods marked the multinational's foray into the large-potential bread business. This also complemented HLL's existing business of branded atta.
As things stand now, in the organised segment, Modern Bread is the leader with a market share of about 7 per cent. Britannia, which has a share of about 2-3 per cent, follows Modern.
HLL is also working on a mammoth advertising and marketing plan for Modern Foods, which will run through the year. As part of this strategy, HLL is likely to stress on the quality aspect of the product while promoting the brand name. Distribution will also be revamped to ensure wider reach. Considering that delivery is the key to marketing bread, HLL has started the process of strengthening its current daily delivery system.
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