ITC Bingo!

According to a study by McKinsey & Co, the Indian food market will grow two fold by 2025 with the rapidly growing Indian economy and improving lifestyles of Indians contributing in a big way to this growth. Quoting the study by McKinsey & Co, a report by the US Department of Agriculture stated "The market size for the food consumption category in India is expected to grow from US$ 155 billion in 2005 to US$ 344 billion in 2025 at a compound annual growth rate of 4.1 per cent."

 

The Indian snacks market is worth around US$ 3 billion, with the organized segment taking half the market share, and has an annual growth rate of 15-20 per cent. The unorganized snacks market is worth US$ 1.56 billion, with a growth rate of 7-8 per cent per year. There are approximately 1,000 types of snacks and another 300 types of savouries being sold in the Indian market today. Indians in the western regions eat the maximum amount of snacks, followed by the people in northern region.
"Consumers are willing to pay a premium for both value-added private and branded products, creating immense opportunities for manufacturers and retailers,' the report stated.

Potato chips and potato-based items are the most popular products with more than 85 per cent share of the salty snack market, the report said. In the organized potato chips market, some of the leading players are Pepsi, Haldiram's, ITC, Britannia, Bikano, Balaji, Marico, Dabur etc.

Bingo was launched in India on Mar 14, 2007 during the world cup time. Main aim of ITC Bingo advertisements was to create buzz among customers. Most of the advertisements of Bingo were considered vague and stupid but I feel that was the best form of communication any marketing company has ever done. Within a month of launch of initial advertisements, 70% of the viewers could recall the brand and that was their main aim. Brand recall along with 16 flavors in three SKUs helped ITC to capture 16% of market share in just 18 months.

This is the latest advertisement

 of Bingo chips, though it is very early to say that whether ITC could sustain such a growth in long term with so many flavors. The major problem with so many flavors is that if a person does not like any of the flavor, he will not even try other flavors. So much diversification might come in the path of ITC’s growth in snacks business. 

The initial offerings from Bingo include an array of products in both Potato Chips & Finger Snacks segment. The Potato Chips offerings comprise of four innovative variants inspired by the snacking habits of different parts of the country as well as Masala, Salted and Tomato flavours. Additionally a south-inspired dairy option has also been introduced under the potato chips offering. 

The offerings under the Finger Snacks segment are equally unique presentations with innovative finger foods like the pakoda inspired Live Wires, Khakra inspired Mad Angles and the specially developed time pass snack in the form of Tedhe Medhe. Each offering under this segment is available in two variants making it a total of 6 products in the Finger Snacks portfolio. 

The segmentation was mainly done on basis of the age of the people. The primary target for Bingo is 18-30 year old people, who are willing to try out new flavours more easily than the small kids. Bingo is positioned as a youthful and innovative snack.

In a survey done by ITC, it has been found that 70% of respondents liked Indian flavors like bhel, golgappas etc. Initial pricing of ITC bingo is directly frontal attack on Frito lays with pricing of Rs 5,10 and 20. Now Frito Lays has launched small packs of Rs 3. Let us see whether ITC can leverage upon its huge distribution network covering panwaalas to small kiryana shops with a similar small pack of Rs 3.

The Company distributed more than 4 lakh large racks, to display the brand at all points of sale. The racks created so much impact that even competitors like market leader Frito-Lay's introduced its own version of wafer racks. Within six months of launch Bingo was available in more than 2, 50, 000 retailers across the country. ITC made a strategic alliance with Future group according to which all retail stores of Future group like Food Bazaar, Big Bazaar, and Kishore Biyani’s Fair Price etc will store only ITC Bingo. HORECA (hotels, restaurants and cafes), entire cigarette distribution network including pan shops.

Bingo site (www.bingeonbingo.com) is a very different site with information about Bingo and its flavors. Even initially Bingo sponsored many Bingo Remix nights in various clubs.

ITC with bingo adopted a Market Challenger strategy and chose a combination of flank and frontal attack against the market leader Frito Lay’s. 

With the rise of ITC bingo in no time, Lays has revamped its branding strategy with new promotions featuring actress like Juhi Chawla, Kareena Kapoor etc. About 35 AC BEST buses in Mumbai and metro in Kolkata are now branded by Kurkure.Frito Lays again launched a new consumer promotion campaign, Chai Time Achievers campaign in which consumers could send their recipes using Kurkure. Now with the growth of ITC Bingo, Lays has launched Indian flavors like Lay’s chat street, India’s Mint  Mischief, Wafer Style etc.

 Ravi Naware, chief executive officer of ITC Foods said, “We are getting ready to launch a media-blitz for ‘Bingo’ next month. We forayed into this sector in March 2007 and our market share today stands at 16 %. Our goal is to capture a 50 % share in this sector.”

As of now Indian snack industry is about 2500 crore. Frito Lays has 48%, Haldiram has 25% market share and ITC bingo has 16% share. Rest of the market is dominated by few regional players like Balaji.

It seems to be very difficult goal. There seems to be potential problems like huge competition by Frito Lays and Haldiram. Players like Balaji might expand into national terrotiry or it could be bought over by players like Lays. The other major threat could be preference of people toward healthy snacks.

These are some of the hypothetical problems that might erupt in recent times but as of now ITC Bingo has a happy story to state.