ITC battles Pepsico, offers more snacks for less money

ITC, the Kolkata-based multi-business conglomerate, has decided to take on rival PepsiCo in the ready-to-eat snacks market with extra offerings on the smaller price packs, sources said.

In an attempt to consolidate its market share, ITC plans to offer 33 per cent extra on its Bingo chips in the Rs 5-Rs 10 packs in the next four-six weeks. This move follows PepsiCo division Frito-Lay's 33 per cent extra in Lay's and Kurkure at the Rs 5 and Rs 10 price-points.

"The 33 per cent extra scheme by Frito-Lay's on Lay's and Kurkure got good trader and consumer response. In the next four-six weeks, a similar scheme will be offered by ITC," market sources said. However, an email to confirm the upcoming scheme did not elicit any response from ITC.

ITC has been able to capture 7 per cent of the chips and snacks sector in 2007 within one year of its launch. "The launch has already made a dent in Frito-Lay India's share. Besides, ITC has also gained market share from the unorganised market," according to a Euromonitor International study on sweet and savoury snacks in India.

"In the past, such promotional offers by Lay's increased its volumes in the short-term as it was received well by consumers (traders and end-consumer), besides giving it considerable market share from the unorganised sector," explains an industry expert who previously worked with PepsiCo.

The last two years have seen some aggressive advertising in the chips and snacks segment. "Bingo needed an effective advertising campaign to ensure high brand recall. With a number of variants and flavours, the Bingo range has a number of different advertisements, with all of them having a common theme of humour," an industry expert said.

While Lay's and Kurkure advertisements used endorsements from cricketers, movie actors, etc. Bingo has stayed away from celebrity endorsements but has still managed to create a strong impact.

Frito-Lay India launched a new advertising campaign entitled 'Chala change ka chakkar' or 'the phase of change has begun,' where it brought together all its snack brands and their brand ambassadors under one umbrella, and undertook numerous promotions, which enabled consumers to win various prizes ranging from cars to spending a day with the celebrity brand ambassadors," according to the Euromonitor International study.

This just could be the indication of the way things would shape up in these trying times of low consumer sentiments. "As FMCG purchases are usually impulse or emotional purchases, such promotional offers during tough market conditions make consumers happy. Consumers willingly spend on small indulgences while they postpone their larger purchase decisions," explains a marketing expert.

ITC's entry into the segment has forced PepsiCo to make subtle changes in its portfolio last year. Late last year, it launched its first Indianised flavours like Lay's Chaat Street, Mint Mischief and Wafer Style, which directly compete with Bingo's local regional cuisine style chips like Masti Chaas, Chatkila Nimbu Achar and Tandoori Paneer Tikka.