We haven’t reached the true potential of Rasna, says Piruz Khambatta

Piruz Khambatta, chairman and MD of the Rs 325 crore company, Rasna Ltd, is aiming at a 30% turnover growth this year. The company is looking at setting up a management institute near Ahmedabad at an investment of Rs 40-50 crore. In an interview with DNA, Khambatta discussed the road-map on keeping the brand Rasna relevant to today’s consumer, foray into the food retail business and ambition to acquire mid-sized snacks and confectionery companies. Excerpts:

How is Rasna doing? Are you losing sheen?
We do 400 crore plus glasses every year. Across categories in FMCG, the market leader is always a multinational, but in our category (concentrate or powder drinks), Rasna is the market leader. As per A C Nielsen estimates of March 2010, we have a 97% market share. There were three major competitors to us in the last few years — Coca Cola’s Sunfill that has stopped manufacturing, Tang (Kraft Foods), and Kissan’s Fruit Kick. So there aren’t any players left in the Indian market to compete with us. Even if you include dilutables like Rooh Afza (Hamdard), we have over 75% market share. Nobody has shown the amount of leadership and innovation we have shown in the category. You would be surprised to know that even after 10 years now, we have kept prices almost the same.

How have you managed to keep the prices stable, especially in the times of high input cost pressure?
By not earning too much and keeping less (money) with us. Because Rasna’s core strategy is to reach out to the masses, who seek good quality at a good price. So we have to keep our prices low. Our prices start with 50 paise a glass and we end at Rs 3.50 a glass, while our competition starts only at Rs 3 a glass and go up to Rs 15 a glass. At any given time, we are five times cheaper than the competition. We have decided to keep prices as low as water and be as freely available as water. Ours is a product that kids with Rs 5 in their pocket go running to kirana stores and buy and make and drink. That is the typical Rasna moment. That is where volumes come from. So we ensure we are widely available. In our coinage products of Re 1, Rs 2 and Rs 5, we have not taken a price increase in 10 years. With other SKUs (stock keeping units) too, we do not take price increases at one go. In some SKUs we have reduced prices, on others we have taken a nominal increase.

Is there scope for further expanding distribution for a product like Rasna?
Yes, there is a lot of scope. It is said that the top most distributed product in this country is Colgate (toothpaste) that reaches 3 million outlets. We are at 1.8 million outlets today. And the joke today is people say that Colgate has penetrated only 30% population of this country. We (the FMCG industry) are yet to reach towns and honestly we all haven’t reached the villages really. Even in towns there are lots of gaps and misses for a simple reason that we are not yet as organised in distribution as abroad. The panwallahs and nook and corner shops have increased so much in these years that it is not possible to cover all of them. The biggest concern for FMCG today is reach. We are bringing money out of advertising and putting it in distribution. Advertisements no longer work. One can no longer predict how far the television will take you. We make sure that at least our boys are in the market, distributing Rasna so that it sells. There is emphasis on physical distribution and we are sending people to small towns. We are identifying hub-towns in rural markets. We have stockists who are assigned to cover a particular region a day.

The most important thing for any big brand like Rasna is to remember that it’s a heritage brand and has to keep itself relevant to consumers of that day. There is a very fine line between value and delivery. If you don’t keep that balance and go a little wrong, consumers leave your brand.
Your recent campaigns suggest an effort to change the brand perception…

In 80s our main job was concept selling, where our mascots were small girls. As we moved into the 90s, we introduced a Rasna character and several contests because we wanted to enthuse kids with more than the ‘I Love You Rasna’ lines… Then we moved on to roping in celebrities like Karishma Kapoor, Hrithik Roshan and that went on for five years. Last two years we experimented with slightly older kids. And in the last two years, we also concentrated on communicating the ‘health’ factor, that our product contains vitamins, calcium, minerals. In 2010 we wanted to change the brand personification. For this, we did a research across 600 families. We wanted to evaluate the consumer mindset of the mothers and children across the user, the rotator (who shifts between brands) and the non-user segments. Most of our old ads actually did not reach out to modern mothers and her independent, extrovert kids. To appeal to them we have launched new campaigns. We have also changed our product packs to look more contemporary, both in sugar and non-sugar category.

What is next on Rasna’s agenda? Are you happy with just a single brand in FMCG?
In volumes we have been growing by 25% in the last three years. This year our target is to achieve 30% growth. There is a question that I am always asked — why not candies or chocolates or soft drinks? Today, to put another brand, the cost would be very high. We haven’t reached the true potential of Rasna itself.

You had plans to acquire mid-sized snack companies. Are you still interested?
We have a plan. Rasna in India is too generic to soft drinks. Years ago we had Rasna candies, which we had to discontinue. I do not mind going the inorganic route but in the last two years we haven’t found any brand that fits the bill. I am looking at two sectors — biscuits and confectioneries, and snacks. We are also looking at regional fast food brands to expedite our retail expansion.

Your brand and products are only targeting kids. Given that, you cannot have a foothold in a consumers’ household for long. Is that a disadvantage?
In a typical Indian household that has at least two kids, we are able to remain a part of their lives for at least 10 years. We are now trying to appeal to the kids of tomorrow. We are using kids as influencers to get the family to use the product. They are the mascots of the family.

What was the idea behind venturing into the retail fast food business with Devil’s Workshop?
If you see the purchasing power or how the upper-income individuals use their wallets, the highest spend is happening on entertainment needs. A lot of volume growth is thus coming from the food retail business, which has immense scope. Instead of getting into packaged food, we decided to venture into food retail. A small extent of this business in India today is controlled by the organised national or international players. Most of it is still driven by the local and small players, which do not have a national brand.

There is a gap between these two that a few players are exploring.

But aren’t you affected by the competition in beverages? Consumers may not necessarily want to have powder or mix-based beverages…
In the last two years all beverages have grown. Last downfall was when the pesticide issue happened. Since then, all aerated and non-aerated drinks have grown. Highest growth is in juice drinks. Today, we are all gaining because more and more consumers are consuming soft drinks and beverages. The biggest challenge we all have is how to increase the per capita consumption, which will rise as incomes rise and people think beverages are an important part of their lives.