Saturday, November 04, 2006

Parry's Sugar : Branding A Commodity

Brand : Parry's Sugar
Company: EID Parry
Agency: JWT

Brand Count : 152

Indian sugar industry is worth a whopping Rs 25000 crore. Although India is the second largest producer of sugar in the world, the percapita consumption is low at 18 kg.Unlike the Salt industry which saw many successful branded players, the branded sugars were not that successful.

Sugar branding was initiated around 6 years ago by players like Mawana sugars and Dhampur sugars. The first movers got the advantage and these players now have a 30 percent market share in the branded sugar segment. November 2004 saw EID Parrys launching their brand Parry's Sugar in TamilNadu which is traditionally a big market for sugar.

Although the market size of sugar industry is large, 75% of the sugar is consumed by large buyers like bakeries, Soft drink manufacturers and confectionery players. Hence most of the marketing is business to business.

The sugar industry has two types of pricing models. One is the free market pricing and the other regulated pricing through public distribution systems. The sugar prices are monitored by the government which sometimes intervene in the market and regulate prices through imports ( if the price increases )

Sugar is viewed by consumers as a commodity and there has not been any initiative from the part of sugar companies to create a differentiation compared to what marketers have done with Salts. Parry's has launced its branded sugar with focus on its quality and purity. It is known fact that the best way to brand a commodity is to focus of these two attributes. Parry's claims to be better refined and pure than the unbranded sugar. Packed in attractive pet bottles, the brand sells at a premium of Rs 4- 6 over the unbranded ones.

The market for sugar is a highly price sensitive one. While in the case of salt, the presence of Iodine was a sufficient differentiation for establishing the brand. The Iodine deficiency could cause thyroid and customers were educated by the government and the salt marketers to prefer iodised salt . But in the case of sugar, those differentiation opportunities were absent. According to a report in Business Today there are different factors that caused the slow start of branded sugars . They are
a.Seasonality : sugar production is seasonal and the entire years productions should be completed within 5-6 months. Hence there is no time for product or process innovations.

b. The sugar play is high volume low margin game. Hence whether marketers are interested in exploring the value added game is another factor that slows down the growth of branded sugar market. While branding involves promotional costs, it will be a tough tradeoff since margin pressure will prevent aggressive brand promotions.
c. The large format retailers have also started selling packed sugar with a premium of 50 paise to Rs 1 making the consumers think that the packed sugars are better refined than the other one.

The main factor behind the branded sugar becoming less popular is the lack of differentiation. The reasons are not compelling for consumers to shell out a premium for branded sugars. Even though Quality and Purity is an issue with the unbranded sugars, even affluent consumers are shying away from paying a premium for branded sugars. More over some branded sugars use sulphur dioxide to refine which is harmful and this type of refining is banned in European countries. It is said that in the west, marketers try to value add this commodity by enriching it with vitamins .
Branding a commodity always has been a challenging task for marketers. Parry's Sugar is a brand to watch and it will be interesting to see how this brand breaks into the consumer psyche.



  1. I think this story is 5 year old now trend has changed just think about 10 years back everything was in commodity shape but now there is attractive packaging for rice, wheat, spices etc. Now the times comes to Sugar, which is more pure whiter and regular in grain sizes. Main problem in bulk open sugar is dust see all branded sugar is dust free, other side sugar is most attractive of bacteria but in branded it is hygiene packed and untouched by hand. Now technology also upgraded and most sugar is free from chemical and other residue.
    For further details please contact me Deven s Khatri (9810339693)

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  3. Anonymous11:57 AM

    I am also exploring Jaipur, Rajasthan for the same but now trend is going to change from loose sugar to packing sugar. In rural areas or urban area where labour class or lower middle class or lower class is residing has no charm for quality or brand they just compare loose sugar to packed sugar and if price difference is beyound 0.50 or 1 Rs per Kg they prefer to buy loose sugar from Kirana stores. There are segmentation in consumer base. if we talk about A &B classs of consumer they are more likely to buy packed sugar. here no difference or significance is for brand. it should be packed for them. Quality should be bold crystal and whiteness. for Packed sugar trend is changing in metro cities in A, B class locations and shops but rest population dont want to spend even a penny higher for packed sugar.

    May be this will take time to switch or if there is any law which will enforce for packed sugar or products then only we can say India is going towards quality and packaging.

    Such data whether collected by any agency they just target a specific class and based on their limited story they predict all things for whole India basis.

    Still 70% population of India residing in Rural area , In villages and totally depend on agricultural activities. Those who are in Urban area has their own limits for expenditure.

    This is more or less a propaganda by Multinational companies to sale there product in India by manipulating data. this way they want to make entry in a systematic way. gradually by attending space, changing trend , selling at par or sometime at loss. but, India's retail sector is not so easy to dominate. 95% retail business is handled by Grocery stores. Those Kirana stores (Grocery) has tradition of business, they are attached with consumer since long and has emotional touch. No one can eradicate them from retail Industry.

    Walmart, Metro , Carrefour etc. has made their best by investing million of dollar but ultimately they have to close their shops.

    Lets hope for the best and watch the trend. there is 10 % business for branded edibles like sugar, atta, and rice. I can see big competition among brands in coming days bcz market side is not going up for branded food items and specially packed sugar. Mawana and daurala sugar is more likely a specific consumer base hotel industry. Madhur, Titawi & Dhampur does not made any big influence in local market. for them Branding of sugar is not a cup of main activities., only they are just advertising themself and may be to fulfill bank's obligations.

    for more information on branding of sugar business you can write to me:

    Balwant Singh Rana
    Agri business cosultant
    Rice Trader- Ruchi Group of Companies.
    whatsapp 9968313005


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