Having put the home & personal care business in order, HLL is reviving its ailing food brands. Kissan is slated for a major relaunch by the year-end while Annapurna atta is likely to gain national status once again with improved formulation and packaging.
Sources say HLL is anticipating tough competition from ITC in jams and sauces. The latter is expected to enter the category shortly and Lever fears aggressive pricing and innovative products from it in this category as well.
The tobacco company has already made rapid inroads into large categories such as atta, biscuits, spices and ready-to-eat food, eating away shares of market leaders. ITC's Aashirvad atta is the largest selling brand with a marketshare in excess of 35%.
Asked about the impending makeover of Kissan, the HLL spokesperson said, “It will not be possible to give specific comments due to competitive pressures. However, we would like to clarify that salt and atta have been relaunched with a new, contemporary packaging and significantly improved mix. Product improvement is an ongoing effort.'' Sources, however, pointed out that HLL has plans to make Annapurna atta a national brand once again.
It's in the process of identifying new manufacturing locations and ironing out glitches in the supply chain. They say atta is a low margin business and an efficient supply chain is crucial to profitability.
Hindustan Lever had withdrawn atta from the north Indian markets, where it sells the most, because of extremely low margins. At present, it sells atta in some select markets of the south where it charges a higher premium owing to subdued competition.
Analysts say HLL's failure in understanding local tastes and identifying fast growth categories has resulted in losses in recent years.
Attempts to launch products such as atta and salt under the Annapurna brand had failed to take off. Most of HLL's innovations in the ready-to-eat segment and instant foods never left the test-marketing stage. Max confectionery and Modern biscuits also failed to make a dent in the market.
Foods constitute around 55% of Unilever's turnover while it contributes just around 6% to HLL's revenues. The overall revenues from the foods business dropped between 1998 and '04 from Rs 2,731 crore to Rs 1,565 crore. For the quarter ended June '05, however, the foods business experienced a turnaround.