The COVID jolt to the market turned out to be a boon for the corn based snack brand as it strives to find a market beyond the top cities.
For years, Cornitos, the Indian brand of Mexican tortilla chips (nachos), has been trying to crack the small town markets in India without much success. The challenges have been many – from developing taste buds for foreign flavours and corn-based chips, to getting the product right for the Indian palate. The COVID jolt to the market has come as a boon for the brand.
With work from home (WFH) getting mainstream and physical workplaces taking a backseat, people employed in the top cities moved back to their homes in smaller towns. Jagjot Singh Maan, national sales manager, Cornitos, tells afaqs! that the city dwellers also ferried their consumption habits back to their native towns.
"City dwellers ferried consumption habits to their native towns causing a spike in nacho consumption in smaller towns."
This, in turn, caused a sudden spike in the consumption of Cornitos nacho chips in Tier-2 and 3 cities like Ranchi, Bhopal, Patna, etc., and Chhattisgarh.
“We had no presence in Bihar in the last decade. We launched in the state last month and have received a phenomenal response. We thought that the smaller packs will be consumed more there but, surprisingly, the bigger and premium offerings are seeing higher demand,” Maan says.
He says that unlike the extremely `massy’ potato chips, Cornitos nacho chips are targeted at the niche uptown consumer segment. Similarly, instead of selling Rs 5-10 packs in every nook and cranny of retail space, Cornitos is sold in larger packs of Rs 20/35/85 in standalone stores and supermarkets.
Until a few years back, the Cornitos too had a mass approach, it had to be changed. Driven by on-the-go consumption, the fastest selling units today are the Rs 35 packs. And, Cheese is the most preferred flavour.
Cornitos started with Rs 10 packs to generate trials and with an assumption that the habit for eating nachos would transcend from the habit of eating potato chips. Maan reveals that while customers purchased initially for discounts, etc., they never returned.
“We redefined our TG to niche customers, who want to experiment with taste, have travelled abroad and are aware of global tastes. We removed the Rs 10 pack and introduced the Rs 20, Rs 35, Rs 85 and institutional packs. Also, we can’t sell it through a paan shop. We identified the smart cities which have features like high education, high mobility, Internet penetration and outdoor entertainment options, like PVR/cinema halls, etc.”
"We had to make thinner nacho chips for Indian consumers."
Apart from getting the distribution right, the biggest challenge was to develop the taste buds of consumers and match it with the product. “Indians were not habituated with corn chips. Also, tortilla chips are naturally thicker than potato wafers. Indian consumers found it hard to eat. We had to make it thinner and crispier,” says Maan.
The Indian snacks market is valued at around Rs 14,000 to Rs 15,000 crore. The share of namkeen/traditional snacks is around 40 per cent. The chips market is around 25 per cent. And the tortilla chips/nachos market is close to four per cent. Among the successful non-potato chips formats in the organised snack market are KurKure sticks, Mad Angles’ wafers and certain other corn based snacks.
“Cornitos’ share of the nachos market is close to 45 per cent.” The segment in India is growing, with several new entries like Balaji, Haldiram’s, PepsiCo (Doritos), etc.
As per market research firm Grand View Research, the global tortilla chips market was valued at $20.28 billion in 2018 and was expected to register a CAGR of 4.41 per cent from 2019 to 2025. The US, which is the largest market, is dominated by PepsiCo’s nacho brands like Tostitos and Doritos.
PepsiCo launched the brand Doritos and its local manufacturing in India in June 2017. The snack-cum-beverage giant resorted to aggressive pricing and put its deep-rooted distribution network into motion to rapidly grab share. Doritos now sells across retail channels and is often seen beside the Lay’s brand on the snack racks in stores.
Until late 2015, Doritos was being imported to India by PepsiCo from its global manufacturing units. The packs manufactured in India are priced lower than the imported variants and are available for Rs 25, Rs 50 and Rs 100.
“They (PepsiCo) are pushing Doritos even in those outlets which aren’t selling. They are getting bounce-backs, it’s what we learned from our on ground teams. Unlike the competition, we haven’t changed the pricing. Last year, they reduced the prices and some of the product quantity to grab market share. Soon, they’ll struggle with the pricing and won’t be able to increase prices. It’s not a good long-term strategy. Retailers are resorting to the original imported variant of Doritos for both quality and margins,” says Maan.
"PepsiCo’s deep distribution for its nachos has actually helped Cornitos grow its business."
He reveals that PepsiCo’s style of distribution for its nachos has actually helped Cornitos grow its business. “The lower priced Doritos packs (Rs 10) have played an important role in building awareness in previously unexplored markets. Now, when consumers look for better quality and taste, they shift to our brand. I have seen this phenomenon in important markets like Kolkata.”
The pandemic has (albeit unwillingly) helped Cornitos on two key fronts. First, it helped with the entry into lower tier cities. And second, it has driven in-home consumption, an important focus area for Cornitos for 2020.
“Our plan this year was to drive in-home consumption and we had planned our marketing strategies around it. It happened automatically without much effort and our larger packs are seeing good traction. The in-home snacking habits have grown significantly due to COVID,” reveals Mann.
“We’ve grown exponentially in the COVID months."
“We’ve grown exponentially in the COVID months. Our western markets, especially, are growing by 60 per cent over last year. We are also into products tortilla wraps, jalapenos, tacos, etc. The sales of these products have grown 10x. We also launched our online store and all the non-nacho products are in high demand there,” he added.
"We are looking for ways to sustain the nacho consumption in lower tier markets once the WFH phase ends."
A major cause of concern for Mann is to find a way to sustain the demand in Tier 2/3 cities once the WFH phase ends and people return to their work cities. “The lower tier markets can’t collapse. We are looking for ways to sustain the habits once the phase ends. We have plans for local activations and are looking at distributors who have deep reach and access in the smaller markets. We are also busy studying the consumers there.”
Cornitos is exported to 30 countries and the struggle is to maintain a uniform taste across markets. “While the US market demands a less spicy product, Indians want a spicier version. Again, while the North-East wants a strong mustard punch for wasabi flavour, north India wants a milder version. We have launched Indian flavours like tikka masala and have mixed acceptance for both our global and Indian flavours.”
A major share of marketing involves on-ground activation in retail outlets and schools. The latter because the product has a young TG - children help penetrate households and reach adults. The corn-based nachos are also projected as a healthier alternative to potato chips because they are gluten-free, have less cholesterol as well as oil.
Campaigns are mostly run on digital mediums and are backed by POS material and activations.