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Titan goes for Indian hinterland

Leading Indian watchmaker Titan Industries Ltd is pushing forward into small towns to capture first-time buyers in a vastly underdeveloped hinterland market, a senior company official said.

Bijou Kurien, vice-president for sales and marketing, told Reuters in an interview on Tuesday that Titan would add retail outlets in about 300 towns this year, mainly by entering towns with less than 25,000 people.

That will boost the number of towns and cities where its watches are sold to 1,800. The number of dealers is expected to rise to 7,500 from 6,800.

Kurien said the drive into India's interior market should boost sales of Sonata, a brand for price conscious first-time watch owners living in smaller towns -- called "C and D" categories by market researchers. Sonata now accounts for nearly 50 per cent of the company's watch sales by volume but only 30 per cent by revenue.

The flagship brand Titan, which is aimed at more affluent, metropolitan, educated users -- the A and B categories -- generates 70 per cent of revenue.

"We see Titan driving multiple ownership and replacement among A and B categories and Sonata driving first-time owners among C and D category customers," Kurien said.

By 2005 the company expects Sonata's sales to account for around five million of the 18 million watches costing less than Rs 1,000 ($21.3) expected to be sold nation-wide that year.

In the past year to March, Sonata accounted for around three million of the 15 million low-cost watches sold in India, he said.

TARGETING NEW GROUPS

Titan Industries sold about 6.6 million watches in 2000-01, up 11.9 per cent from 5.9 million the previous year.

In addition to the two main brands, the company also makes a Raga range of "dressy" jewellery-like watches for women, FasTrack watches aimed at youths and Dash brand watches aimed at children aged six to 14.

Founded about 15 years ago by the Tata industrial group, Titan entered a market 90 per cent dominated by mechanical watches and offered a quartz range. The market is now 90 per cent quartz.

Titan, with its emphasis on designs, variety and marketing has dethroned state-run Hindustan Machine Tools Ltd.

Kurien said the total Indian market for watches was around 22 to 24 million pieces. About 15 million are watches costing less than Rs 1,000.

Sonata has a 20 per cent share of the low-end watch market. The company has 25 per cent of the entire watch market.

The Indian market includes a big unorganised sector of small producers that assemble watches from imported components. In the organised segment, Titan has a 50 per cent share, Kurien said.

VAST POTENTIAL

Titan makes watches in a huge price range from Rs 600 to Rs 32,000, but the bulk of its sales come from watches priced between Rs 1,000 and Rs 3,000.

Kurien said only 22 watches were sold per 1,000 people per year in India, the world's second most populous nation with one billion people.

The comparable figure was 40 watches in China, and 120 globally. And only one in five Indians currently owned a watch, he said.

"In both cases, we seem to still have significant potential to tap new segments," Kurien said.

The company also has a separate jewellery division.

Titan Industries sales grew to Rs 7 billion in 2000-01 ($148.9 million), up from Rs 6.3 billion the previous year. Watches accounted for Rs 4.54 billion, up from Rs 4.44 billion. Around 10 per cent of revenue was derived from exports.

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