To: Marketing Director From: Reahan Machado

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Contents
1 2 EXECUTIVE SUMMARY................................................................................................................... 4 INTRODUCTION ................................................................................................................................ 6 2.1 Industry Analysis .......................................................................................................................... 6 Fruit Juice & Cola Industry Overview .................................................................................. 6 Industry Growth Forecast...................................................................................................... 7 SWOT ANALYSIS OF THE INDUSTRY........................................................................... 8 Key Trends and Developments ............................................................................................. 9 Soft Drinks ............................................................................................................................ 9 Key Player in the Indian Beverages Industry. ..................................................................... 10 Comparisons of the Fruit Juice and Cola Industries. .......................................................... 11

2.1.1 2.1.2 2.1.3 2.1.4 2.1.5 2.1.6 2.1.7 2.2 3

Economic Implications ............................................................................................................... 11

DEMOGRAPHIC ANALYSIS ................................................................................................................... 14 3.1 Demand Analysis ........................................................................................................................ 14 Demand Share ..................................................................................................................... 14 Demand by income ............................................................................................................. 16 Demand by age group ......................................................................................................... 17

3.1.1 3.1.2 3.1.3 3.2

Elasticity Analysis ...................................................................................................................... 18 Price Elasticity of Demand .................................................................................................. 18 Cross Elasticity of Demand .................................................................................................. 21 Income Elasticity of Demand. ............................................................................................. 22

3.2.1 3.2.2 3.2.3 3.3 3.4 4

Indifference Curve Analysis ....................................................................................................... 23 Marginal Utility Analysis............................................................................................................ 24

INTERPRETATION OF RESULTS ............................................................................................................ 25 4.1 Summary of findings................................................................................................................... 25

Minute Maid........................................................................................................................................ 26 5.1 Introduction ................................................................................................................................. 26

Marketing Mix ..................................................................................................................................... 27 6.1 6.2 Product ........................................................................................................................................ 27 Price ............................................................................................................................................ 29

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6.3 6.4 7

Promotional Strategy .................................................................................................................. 30 Distribution Strategy ................................................................................................................... 31

Competitor Analysis ........................................................................................................................... 33 7.1 7.2 7.3 Competitor Grid .......................................................................................................................... 33 Competitors Strengths and weakness .......................................................................................... 34 STP - (Segmenting, Targeting and Positioning) ......................................................................... 35 Brand Positioning................................................................................................................ 38 Survey on Consumer Preference ......................................................................................... 39

7.3.1 7.3.2 8 9

Recommendations ............................................................................................................................... 41 Bibliography ........................................................................................................................................ 43

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1 EXECUTIVE SUMMARY
The Indian beverage market which is worth Rs7000 Crores is on the brink of a beverage revolution. If you look at sheer opportunity across categories in beverages (including packaged water), only about 4% of beverages that people in India consume is packaged. There is incredible opportunity across categories, be it still or sparkling. Two years ago, only 10% of juices consumed in India were packaged. That number has gone up to 16-17% today. The soft drinks industry which is well established is facing increased competition from fruit juice industry. The Organized Juice market growth rate per annum is estimated to be around 20-25% P/A whereas the Overall juice market which is worth Rs 1200 Crores is growing at a rate of 10 15% P/A which indicates that the Unorganized Juice market is been tapped into by the major players in the industry. It is also evident through research that the demand for soft drink in the industry is relatively price elastic where as the demand for fruit juice is relatively price inelastic. Since fruit juice consumption is linked to health benefits as well as providing refreshment, a slight change in price does not force consumers to change their spending patterns on fruit. Research also shows that Fruit juices are a relatively strong substitute for soft drinks in this industry. The Organized juice market is estimated at about Rs 535 Crore. Leading brands in this category include Maaza from the cokes table which leads the pack with a market share of 37%, followed by Frooti from Parle and Pepsi Cos Slice.

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Minute Maid Pulpy Orange, which has been advertised with the Slogan refreshingly Orange, Surprisingly Pulpy Currently has a market share of 3 % and is made available in two PET bottle sizes, 400ml and one liter. The drink is targeted at young adults (20-34 years age group) and is getting good response from other segments as well-children and housewives. The positioning of the product is based on the Pulpy Orangy characteristic and the benefit that this Orange Pulp gives to the consumer. The brand promise is that Minute Maid gives you an Uplifting Feeling when consumed. The Future for Minute Maid orange in India is looking extremely promising and since the product will bring in better contribution that the carbonated drinks segment, Hindustan Cola can be expected to turn in substantial profits in the coming years thus endorsing India as a key market in the Groups performance.

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INTRODUCTION

2.1 Industry Analysis

2.1.1 Fruit Juice & Cola Industry Overview

The beverages industry in India has been recently witnessing huge advertisement spending, awareness campaign about the products and brands, and an improvement of the distribution network to make strong presence in the market. Key factors to success are distribution (in rural markets) and advertising (in urban markets). Innovation and launching of new brands are being adopted by the companies to grab the market. PepsiCo and Coca-Cola are the major players in the Indian cola industry, which is witnessing heavy growth in urban markets. The distribution channel plays an important role in the success of the cola industry. The companies previously adopted a centralized distribution system, in which the product was directly transferred from the bottling plant to retailers. However, this proved to be very costly due to the long distances involved. So now a hub-and-spoke distribution strategy is adopted, where the product is transferred from the bottling plant to hubs in cities, and from there to spokes in small towns. The spokes feed the retailers catering to the demand in rural areas. The organized natural juice market is currently in a nascent stage-though it is growing at a healthy 20-25 percent rate per annum. Fruit juices in the unorganized segment are considered cheaper and fresher by the consumers, even though they are often relatively unhygienic. Large MNCs, such as Coke, Dabur and Pepsi Foods operate in the branded fruit juice market.

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Some market leaders have introduced age-specific market segmentation with a new sub-brand, Real Junior targeted at children below 6 years, claimed to be a first of its kind initiative in the country. With the changing life styles of the consumers and rising disposable income of the growing middle-income group, the fruit juice industry is growing rapidly at a healthy 10%-15%.

2.1.2

Industry Growth Forecast

Sales of soft drinks in India are expected to increase by an enormous 57.7% over the forecast period from 2008 to 2012. However, this increase will still only result in industry value sales of US$2.79bn in 2012 - a modest total given the country's vast population, and a consequence of the comparative immaturity of many of the soft drink industry's most profitable sub-sectors, namely health drinks. The real driver of growth to 2012 and beyond will be the increased interest in the noncarbonated, healthy drinks category. Sales of fruit juices and bottled waters are expected to soar. This will be a consequence of growing consumer interest in healthy living, but also thanks to the promotional, product launch and marketing efforts of the industry's major players, with sales of these higher priced, higher profit margin products much greater contributors than carbonates to financial performance. By 2012, bottled water sales in India are expected to increase by an enormous 123% to reach US$893mn, with double digit annual sales growth are highly likely to be sustained beyond the existing forecast period.
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2.1.3 SWOT ANALYSIS OF THE INDUSTRY

Juice and Beverage Industry SWOT Strengths

Foreign beverage companies have invested heavily in manufacturing plants in India.

Brand association with film stars and sports, especially cricket has led to very high brand recognition across the country.

Weaknesses

Logistical and distribution problems especially in rural markets. The country's agricultural industry, suffers from a lack of investment and dependency on erratic climatic conditions, affecting the fruit juice industry.

High rates of taxation across different states, making it difficult to maintain uniform prices throughout the country.

Opportunities

Rising disposable incomes and increasing urbanization mean higher value beverages and branded juices experience strong growth rates

Extreme heat during summer ensures significant demand. Large rural market yet to be tapped fully. Urban consumers becoming more health conscious, hence leading to increased demand for branded fruit juices.

Threats

Ground water in India is heavily polluted, this is reflected in colas and juices too hence they fail quality standards.

Heavy negative effect of the pesticide controversy still remains. Ground water depletion in many parts of India, due to which plants can no longer operate e.g. Cokes plant at Plachimada, Kerala

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2.1.4

Key Trends and Developments Consumers are turning to healthier beverages. Rise in spending power spurs on-trade sales. Sales of soft drinks via supermarkets/hypermarkets will increase. The power of celebrity endorsement remains undiminished. Soft drinks players expand their product portfolios.

2.1.5 Soft Drinks

2.1.5.1 Soft Drink Production Area The market preference is highly regional based. While cola drinks have main markets in metro cities and northern states of UP, Punjab, Haryana etc., orange flavoured drinks are popular in southern states. Sodas too are sold largely in southern states besides sale through bars. Western markets have preference towards mango flavoured drinks.

Diet coke presently constitutes just 0.7% of the total carbonated beverage market.

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2.1.5.2 Type Soft drinks are available in glass bottles, aluminum cans and PET bottles for home consumption. Fountains also dispense them in disposable containers Non-alcoholic soft drink beverage market can be divided into Fruit Juices and soft drinks. Soft drinks can be further divided into carbonated and non-carbonated drinks. Cola, lemon and oranges are carbonated drinks while mango drinks come under non carbonated category.

The market can also be segmented on the basis of types of products into cola products and noncola products. Cola products account for nearly 61-62% of the total soft drinks market. The brands that fall in this category are Pepsi, Coca- Cola, Thumps Up, diet coke, Diet Pepsi etc. Non-cola segment which constitutes 36% can be divided into 4 categories based on the types of flavors available, namely: Orange, Cloudy Lime, Clear Lime and Mango.

2.1.6 Key Player in the Indian Beverages Industry. The country's soft drinks sector is dominated by the major multinational players Coca-Cola and PepsiCo. Coca-Cola acquired Thums-up, the leading Indian cola brand in 1993. As per a study conducted by ORG-MARG, Coke has around 52% whereas Pepsi has around 45% of the Indian cola market share, with the remaining held by local market players.

The fruit juice market is mostly dominated by local players and roadside vendors. However, due to increasing health consciousness, more Indians are turning towards branded fruit juices. The major players in the market are Pepsi under the brand Tropicana, Dabur Foods with its brand Real and Coca-Cola with the brands Maaza and Minute Maid.

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2.1.7 Comparisons of the Fruit Juice and Cola Industries. Sales of soft drinks in India are expected to increase by an enormous 57.7% over the forecast period from 2007 to 2012. However, this increase will still only result in industry value sales of US$2.79bn in 2012 -- a modest total given the country's vast population, and a consequence of the comparative immaturity of many of the soft drink industry's most profitable sub-sectors, namely health drinks.

The juice market, in terms of volume, has a market size of 500 million unit cases, of which, packaged juice accounts for just 50 million unit cases. So the beverage majors are eyeing the potential of unpackaged juice market for conversion.

2.2

Economic Implications

According to Pepsi's India head Rajiv Bakshi, the soft drink/juice industry has the following economic implications: 2.2.1.1 Pricing Models (Penetration-pricing Vs premium-pricing)

Penetration pricing can deliver only single-digit growth, or at most growth in the low teens. Today, with an 8 per cent GDP growth, there is a huge growth in the number of families in the upper income segment. The number of car-owning households (10 million households and 50 million people in them) is the best way to look at this. These people can now afford to buy more expensive drinks. Gatorade, Diet Pepsi, Tropicana, Cafe Chino. . . they're all targeted at this group. For achieving 20-25 per cent top line growth, the old one-size-fits-all pricing strategy cannot be effective. In the 1990s, most FMCG companies focused on value pricing.

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There was no room to do more. But in this decade, FMCG companies should have developed premium categories. FMCG firms need to develop a business model of premium pricing in the mass-luxury segment. The reason why this couldn't be done earlier is that we didn't have mass in this market. Today, we have the mass. Today, the growth in the upper income classes is faster than in the lower income ones -- that's the difference that FMCG companies need to react to. It would be difficult to find a Tropicana drinker in an Indian family 10 years ago, today it's a different matter.

2.2.1.2 Consumption Behavior

Consumption behavior isn't that dependent upon prices. It has to do with income, with ambience. They pay Rs 7-8 per bottle of Pepsi on the road but Rs 25 in a multiplex, They pay Rs. 20 for a can of Diet Pepsi, Rs 12 for a non-returnable glass bottle of Diet Pepsi. So, once someone get into a multiplex, he consumes more (just 5 per cent of those going to the traditional cinemas bought cold drinks versus 70 per cent in multiplexes) and pays more too.

2.2.1.3 Rural Market Rural markets have higher distribution costs but lower discounting, so the margins are probably the same as urban areas. In rural markets, the amount sold is limited by the surplus available with families. So they are important, but cannot give high growth.

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2.2.1.4 Relationship with Income and GDP

Basically, there's enough data to show that as incomes rise, people spend more on cold drinks, whether they're carbonated or non-carbonated doesn't matter. The elasticity is not related to price, but to GDP, and the multiple is three. The trickle-down effect of economic growth is happening. So, let's say, the economy's growing at 5.5 per cent and Pepsi sales are growing at 12 per cent. Now, if the economy grows at 8 per cent, Pepsi's growth is now 12 per cent plus 2.5 (the incremental GDP growth) into 3, or 19.5 per cent. And that happens because the GDP growth is accompanied by a sharper rise in the number of rich families which have more disposable income to spend on, say, cold drinks. This multiplier of three is not a hypothesis, it is tested with real figures for economic growth and Pepsi sales.

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DEMOGRAPHIC ANALYSIS

The following analysis is based on a survey that was conducted in Lucknow (Sahara mall) using a one page, 13 item questionnaires that takes the various constraints into consideration that would enable such an analysis to be performed

3.1 Demand Analysis

3.1.1 Demand Share

Market Demand Share

49%

51%

Soft Drink Fruit Juice

Fig: 51% of the sample population preferred soft drinks and 49% fruit juices

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3.1.1.1 Demand by sex

No. of bottles per person per week

Demand by Sex
6.0 5.0 4.0 3.0 2.0 1.0 0.0 Soft Drink 3.6 5.0 Fruit Juice 3.8 3.3

Male Female

Fig: Number of bottles consumed per person per week

Soft Drink by Sex

46% 42% 58% Male Female

Fruit Juice by Sex

54%

Male Female

Fig: Distribution of demand for soft drinks and fruit juices by sex

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3.1.2

Demand by income

Demand by Income
No. of bottles per person per week 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 <20000 20000-50000 >50000 Soft Drink 2.7 3.6 3.2 Fruit Juice 4.6 4.6 7.2

Fig: Per capita per week demand for soft drinks and fruit juices by income

Soft Drink by Income

33% 29% <20000 20000-50000 >50000 38% 44%

Fruit Juice by Income

28% <20000 20000-50000 >50000 28%

Fig: Distribution of demand for soft drinks and juices by income

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3.1.3

Demand by age group

No. of bottles per person per week

Demand by age group

7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 16-25 26-35 36-55 >55 Soft Drink 4.5 4.0 1.5 1.0 Fruit Juice 4.1 2.6 5.8 1.0

Fig: Per capita per week demand for soft drinks and fruit juices by age group

Soft Drink by Age Group

14% 9% 41% 36% 16-25 26-35 36-55 >55

Fruit Juice by Age Group

8% 30% 43% 19% 16-25 26-35 36-55 >55

Fig: Distribution of demand for soft drinks and fruit juices by age group

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3.2 Elasticity Analysis

3.2.1 Price Elasticity of Demand
The following information was collected regarding the demand for soft drinks at different prices: Average Quantity demanded per week 10 13 15 3.88 3.04 2.27

Price of soft drink in Rs.

The results can be plotted graphically as below:

Elasticity of demand for soft drinks

16 14 12 10 8 6 4 2 0 0 1 2 3 4 5 Price in Rs.

Price in Rs.

Weekly demand

Fig: Elasticity of demand for soft drinks

From the above values, price elasticity of demand for soft drinks over the entire price range can be determined using the arc elasticity method is calculated to be 1.315.

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Since elasticity of demand is greater than unity, demand for soft drinks can be said to be elastic. i.e. A reduction in price of soft drinks will lead to some increased demand for soft drinks. This can be corroborated from the actual market analysis as well. Demand for Pepsis 200 ml bottle increased when its price was slashed to Rs.5/- and hence Coke had to follow suit. The following information was collected regarding the demand for fruit juices at different prices:
Average Quantity demanded per week 15 18 20 3.71 3.34 2.92

Price of fruit juice

*The results can be plotted graphically as below:

Elasticity of demand for fruit juices

25 20

Price in Rs.

15 10 5 0 0 1 2 Weekly demand 3 4 Price in Rs.

Fig: Elasticity of demand for fruit juices

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From the above values, price elasticity of demand for fruit juices over the entire price range can be determined using the mid-point approximation method is calculated to be 0.834. This shows that the demand for fruit juices is relatively inelastic. Since fruit juice consumption is linked to health benefits as well as providing refreshment, a slight change in price does not force consumers to change their spending patterns on fruit juices. Also, apart from the branded fruit juices, the market for unbranded fruit juices approximates a perfect competition market in many cities. So a single vendor charging higher rates will see a drop in sales to the extent that he will be forced to cut prices again to maintain his sales. Likewise, since the supply of fruits is a huge market, no single vendor can afford to cut prices heavily to increase sales. Hence the demand for fruit juices is relatively inelastic. However, it should be noted that demand for soft drinks and fruit juices is highly seasonal, more so in the case of soft drinks. Any reduction in prices of soft drinks during winter would not have a major effect on the demand. Cola companies therefore put into effect aggressive pricing plans mainly during summer, to take maximum advantage of the increased demand during this period. The demand being elastic, even a small reduction in price increases the demand and hence increases sales during summer.

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3.2.2 Cross Elasticity of Demand

From the consumer survey, we can observe that when price of fruit juices is doubled, demand for soft drinks increases from 3.88 to 4.18 per week. Cross elasticity of demand for soft drinks against price change in fruit juices = 0.3. The cross elasticity is positive but much smaller than 1. This shows that soft drinks are a weak substitute for fruit juices. This is mainly because the consumers of fruit juices are generally older people and people consuming juices for health benefits. These consumers are unlikely to switch to soft drinks when price of fruit juice increases. On the other hand, when price of soft drinks is doubled, demand for fruit juices increases from 3.71 to 4.34. Cross elasticity of demand for fruit juices against price change in soft drinks = 0.63 The cross elasticity in this case is positive and relatively higher. This shows that fruit juices are a strong substitute for soft drinks. The consumers of soft drinks are mostly youngsters with limited income. Since they would not be able to afford soft drinks when price doubles, they are ready to switch to fruit juices. .

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3.2.3

Income Elasticity of Demand.

Survey for soft drinks: Initial demand per week 3.97 3.64 3.66 New demand per week 6.38 3.78 3.66 Income elasticity 6.0705 0.3846 0

Income in Rs. <20000 20000-50000 >50000

Increase in income 10% 10% 10%

Demand is found to increase significantly when income is increased by 10% for the least income category in our survey. However for the medium income group, increase in demand is very low and in the case of the highest income group, there is no change in demand. This is mainly because a very negligible portion of income is spent on soft drinks. At higher income levels, a change in income does not change soft drink consumption pattern since soft drinks were not unaffordable in the first place at all. Hence income elasticity of demand is observed to be decreasing as income increases.
In case of fruit juices, the following results are observed: Initial demand per week 3.3 4.57 7.16 New demand per week 5.47 7.57 7.5 Income elasticity 6.5758 6.5646 0.4749

Income in Rs. <20000 20000-50000 >50000

Increase in income 10% 10% 10%

Again, it is observed that the demand increases significantly for the lower income group but not so significantly for medium and higher income groups. This is because only a small portion of income is spent on fruit juices. Income elasticity of demand is observed to be decreasing as income increases.

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3.3

Indifference Curve Analysis

The indifference curve shows combination of fruit juice and soft drinks that will give the consumers the same units of satisfaction. The slope of a tangent at any point gives the marginal rate of substitution at that point. From the graph we can see that as the unit of soft drinks increases the consumer is willing to give up fewer amounts of soft drinks for fruit juice and the slope of the curve flattens.
Market Indifference Curve 0 2 5 21 11 8

Soft Drink Fruit juice

8 4

Indifference Curve
25 20 Fruit Juice 15 10 5 0 0 2 4 6 Soft Drinks 8 10

Fig: Indifference curve

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3.4 Marginal Utility Analysis

From the graph we can see that the marginal utility for both soft drinks and fruit juice decreases as the consumption increases. The decrease in marginal utility is pretty steep for change in consumption by 50 and 200ml whereas it is not that steep when consumption changes by 500ml.
Soft Drink Consumption Price Change Cons. Change 250 300 4 50 500 7 200 1000 14 500 Fruit Juice 250 300 5 50 500 7 200 1000 11 500

Price 13 17 24 38 13 18 26 37

Marginal Utility 0.08 0.04 0.03

0.10 0.04 0.02

Marginal Utility (Soft Drink)

0.12 0.10 0.08 0.06 0.04 0.02 0.00 0 1 2 3 4

Marginal

Fig: Marginal utility (soft drinks)

Marginal Utility (Fruit Juice)

0.15 0.10 Marginal 0.05 0.00 0 1 2 3 4

Fig: Marginal utility (fruit juices) 24 | P a g e

4 INTERPRETATION OF RESULTS
Demand for soft drinks is relatively price elastic ( = 1.315) whereas demand for fruit juices is relatively price inelastic ( = 0.834). Soft drinks are a weak substitute for fruit juices (Cross elasticity = 0.3) whereas fruit juices are a relatively strong substitute for soft drinks (Cross elasticity = 0.63). Income elasticity of demand decreases with increase in income for both soft drinks and fruit juices.

4.1

Summary of findings

The soft drinks industry which is well established is facing increased competition from fruit juice industry.

The myth that ladies prefer fruit drinks while men prefer soft drinks is no longer true. The demand is based purely on taste and perceived health benefits.

Fruit juice consumption is more in higher salary segment. This could be due to awareness of health benefits in comparison.

People in age group 35 to 55 consume more fruit juices. Income elasticity is high only in lower income group. So, as economy grows, there is scope for lot of potential new customers in this target segment.

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5 Minute Maid
5.1 Introduction

Hindustan Coca-Cola launched its orange juice drink and brand Minute Maid in India, as part of its strategy to extend its leadership in the juice drink segment on 20th Jan 2007 as they wanted to tap the juice market which is dominated by Real juice, Tropicana and various other local players. It was a major decision that was taken by Coke India to step into the market for health drinks after the allegations against them with relation to the pesticide case that took place and gave setback to all the cola makers in the country. Minute Maid Pulpy Orange, which has been advertised with the Slogan refreshingly Orange, Surprisingly Pulpy was made available in two PET bottle sizes, 400ml and one liter. During the launch Coca- Cola said it will initially target young adults in key cities and then move into the rest of India. The product was launched in a phased manner, starting first with the southern states of Andhra Pradesh, Tamil Nadu, and Karnataka and then eventually moved into other states such as Uttar Pradesh, Maharashtra, Haryana, Punjab and Himachal Pradesh within the first 6 months. Coca- Cola in India currently enjoys market leadership in the juice drink segment with the Maaza brand. With the launch of Minute Maid Pulpy Orange, Coca-Cola expects to further extend its leadership in this fast growing segment. The introduction of the brand Minute Maid was in line with consumer preferences which are increasingly getting skewed towards health and wellness products, Coca Cola and Pepsi Co have been pushing their Non-Carbonated portfolios aggressively. In contrast to carbonated beverages
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which have been growing at 4-6 %, healthy beverages such as fruit-based drinks and sports drinks have been registering a healthy 30 - 40% growth. The fruit based drink market is estimated at about Rs 535 Crore. Leading brands in this category include Maaza from the cokes table which leads the pack with a market share of 37%, followed by Frooti from Parle and Pepsi Cos Slice. So it is evident that the market is becoming more consumers based as the products are intended to benefit but the health of the consumer.

6 Marketing Mix
6.1 Product
Product Pros and Cons

6.1.1.1

Pros Orange Juice Thirst Quencher Real Pulp Sweet Compared to other readymade Juices Non Carbonated Ready to drink Healthy to drink

Cons Not sweet as natural orange juice Coca Cola Controversy of pesticide It taste like Tang/Rasna Fresh Fruit Juice More preferable High Price

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6.1.1.2 Target Market

The drink is targeted at young adults (20-34 years age group) and is getting good response from other segments as well-children and housewives. 6.1.1.3 Product Life cycle Ever since the launch Minute maid Orange or Pullpy as masses generally call it has become a phenomenal success as it was the first of its kind to enter the Indian market. The product captured the hearts and taste buds of everyone and the sales performance of the product went off the charts. In fact in just 4 months it had notched up 2 million units and people wanted more. Juice was really healthy and people realized that because of the ad campaign and the advertising in the market.

In its span of 3 Years Minute maid has managed to capture 3% of the market and it is still in its growth stage. The Packaged juice market is growing at a healthy rate. It will be interesting to see how Minute Maid responds to this growth as the challenge would be to grow in parallel with the industry growth.

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6.1.1.4

Production

Orange Pulp is imported from Florida Orange Juice concentrate is imported from Brazil Bottling Plant at Chittor Andhra Pradesh

Bareilly Uttar Pradesh Dasana Wada Uttar Pradesh Maharshtra

6.2 Price
At a time when competition has products in 200 ml Tetra Pak, Hindustan Coca-Cola decided to be different by launching the drink in 400 ml, 1 litre PET bottle priced at Rs25, Rs60 respectively.

Packaging 400 ml 1 Litre

Ind (Rs) Rs25 Rs 60

Converted -US $ $0.53 $1.28

Consumer research identified that the 400 ml pet bottle as an optimal value proposition both from a serve and price point of view. The offering also reflects innovation in price point of Rs25 the lowest entry point for an orange based juice drink in India,"

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However there is a possibility of 200 ml Tetra Pak in the near future. The pricing will be interesting to note as at the market place the minimum price of such 200ml is Rs10.

While the entry price may be lower in this category when compared to 100 per cent fruit juice products available in the Rs70-90 pricing band, the price of Minute Maid that has a 12 per cent fruit juice and pulp content is quite steep.

6.3 Promotional Strategy

"The 360-degree marketing communication plan involved organising road shows including extensive experiential sampling sessions in markets, offices, malls, and colleges, all backed by a range of exciting contests. Complimenting the on ground initiatives, TV commercials bringing out the "Refreshingly Orange, Surprisingly Pulpy" proposition of the Minute Maid brand.

When one looks at the brand's global tag lines `Pulpy Orange' are not visible to the brand Minute Maid. Whereas in India, the drink having 12 per cent fruit juice and pulp content has tag words `pulpy orange' tagged to the main brand name.

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6.4 Distribution Strategy

6.4.1.1 Distribution System Distribution system used by the company for Minute maid in rural and urban areas Centralized distribution system used by the company in the urban areas is not suitable for rural areas. In the centralized distribution system, the product was transported directly from the bottling plants to retailers. In Hub and spoke distribution system the stock was transported from the bottling plants to hubs and then from hubs, the stock was transported to spokes which were situated in small towns. These spokes fed the retailers catering to the demand in rural areas. Used large trucks for transporting stock from bottling plants to hubs. Medium commercial vehicles transported the stock from the hubs to spokes. From spokes to village retailers the company utilized auto rickshaws and cycles.

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6.4.1.2 Distribution Channels

There are two main channel categories used by Hindustan Cola PVT Ltd

a) Packaged product channels

b) Fountain channels.

The packaged product channels include Supermarkets Mass merchandisers Drug stores Vending machines.

Fountain channels include Fast-food restaurants Sports arenas, Convenience stores Gas stations.

Hindustan Cola has stepped up their efforts to capture a larger share of the fountain business by offering Minute maid at the fountain channels, by aggressively competing for service contracts with high-profile customers. They have noted that fountain customers are becoming increasingly brand conscious

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Competitor Analysis

7.1 Competitor Grid

TIGER COMPETITOR

STOCHASTIC COMPETITOR

STRATEGIC COMPETITOR

LAID BACK COMPETITOR

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7.2 Competitors Strengths and weakness

NAME Cavin Care Pvt Ltd Products Maa Fruits Pvt Ltd Strengths Aquire Maa Fruits Pvt Ltd. Distribution Network. Weakness Entering into a new segment

Parle Agro Pvt Ltd

Frooti / Appy/ N-joi

Market Share

Less Product Line

Pepsi Co

Tropicana,Slice

Global Brand in beverage

Less Product Line

Dabur

Real

Market leader in heath Less Cost effective drink segment Innovation New entry

Godrej Beverages

Xs brand / Sofit

Ladakh Foods

Leh Berry

Nutrients

Taste

Mother Dairy

Safal

Cost effective

New Entry

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7.3 STP - (Segmenting, Targeting and Positioning)

The overall Indian juice market is estimated to be approximately Rs 1200 crore. "In volume terms, this is roughly equivalent to a 500 million unit cases that includes juices, nectars and fruit drinks etc. The packaged juice industry is however, just about 50 million cases." This confirms the enormous potential for growth in this segment.

The market is highly confusing for a customer as Frooti, Tropicana, Maaza, Real etc are all fruit based beverages.

Brands such as Frooti, Maaza etc belong to the Fruit Drinks category as they contain less than 20% fruit pulp. Fruit drinks is the dominant category which is worth around Rs 250-300 crores.

Brands like Godrej Xs and Real Nectar belong to the Fruit Nectar category as they contain around 25 -85% fruit pulp. This is a small category worth around Rs 35 crore.

Brands like Tropicana and Real belongs to the fruit juice category as they contain more that 85% fruit pulp. This category is worth Rs 150 crore.

Most consumers in India are not aware of this micro segmentation. Those who drink Frooti or Maaza do not know or is not bothered about the fruit pulp content. The reason is that, they drink these beverages for the taste and quenching thirst.

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Unlike the fruit drinks, customers of fruit juices are health conscious. One of the reasons for them taking this product category is that they want a healthy drink. The product is more of a health supplement than a beverage. The fact that these products are less tasty compared to fruit drink is a proof that only the health conscious ones will take it.

The category of fruit juices are dominated by Dabur's Real and Pepsi's Tropicana. Real is the market leader with around 55 - 60% share and Tropicana takes the rest.

Minute Maid - Orange has 12% fruit pulp content therefore it comes under the fruit drink segment. However since most consumers are more taste conscious and not bothered about the fruit pulp content ,it would be inappropriate just to segment the product purely on pulp content.

The Indian Packaged fruit juice market which is approximately Rs 535 crores, can also be segmented flavour wise.

The result of this segmentation shows that 85% of this market is Mango based and the remaining 15% accounts for the other flavours such as orange, lime etc. Minute Maid therefore falls into the Orange based Fruit Drink Segment, However because the drink is surprisingly pulpy in nature it can be marketed as an Orange Based fruit juice as well, creating a unique selling proposition. The Product is currently targeted at young adults (20-34 years age group) and at the same time getting a good response from other segments such as children and housewives as well.

This However is a clear indication that the consumers in India prefer Mango Based drinks to any other drink in the Overall Juice market.

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Maaza which is a brand which was brought over by Hindustan Coca cola from Parle Agro in 1993 is the market leader in the Overall Packaged Juice sector with a market share of 37% followed by Parle Agro - Frooti and Pepsi Slice. Minute Maid orange has 3% of the Market share.

The overall Market share of the packaged fruit Juice Market is as follows.

Distribution of Packaged Juice Market

Coca Cola Dabur Pepsi Parle Others

4% 12%

40% 20%

Maket size - 535 Crores (50 Million Cases)

24%

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7.3.1 Brand Positioning

In 2007 however the brand Minute Maid caught the Indian consumer's attention through its launch campaign "Where is the Pulp. The launch campaign was so interesting that it encouraged the consumers to try this international brand from Coca Cola. The brand had the positioning based on its Pulpy Orangy characteristic. You can really feel the orange pulp when drinking this . This makes the brand unique. The uniqueness makes this brand a niche because there will be many consumers who like that pulpy nature of the drink which is Minute Maid's Unique selling proposition(USP)

The brand is trying to further reinforce the position based on its pulpy-factor. But there is a big difference in the current marketing strategy. In the launch campaign, the strategy was to drive home the USP of the brand. The ad was highly successful in communicating this basic differentiating point. The task of the commercial was to tell the consumer that Minute Maid has more Orange Pulp in it and the ad communicated it perfectly.

The new commercial is now translating this USP into customer benefit. The current positioning is based on the benefit that this Orange Pulp gives to the consumer. The brand promise is that Minute Maid gives you the UPLIFTING Feeling. You feel energized and Uplifted when you drink Minute Maid. So the brand is trying out the equation Pulpy Orange = Uplifting Feeling. The ad is simple and directly conveys the brand's promise. When you drink Minute Maid, oranges comes and lifts you up. The ad backed by good music keeps you glued to the screen and of course there is the temptation to pick up a bottle of the product.
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7.3.2

Survey on Consumer Preference

Consumer Preference
Liked Average Mixed Reaction Disliked

12% 8% 11% 69%

Age Preference
90 80 70 60 50 40 30 20 10 0 (05-15) (15-25) (25 -35) (35-45) (45-55) (55-65) (65-75) Liked Average Disliked

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The product is currently targeted at young adults (20-34 years) age group however it is quite clear through this survey that the age group (5-15 Years) and (15-25 Years) have a stronger liking towards minute maid.

In fact as the age group shifts from one to another the liking for minute made declines. However even though there is a decline in each age group the overall liking for Minute made in each group still is greater than those who dislike the product.

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8 Recommendations
A smaller 200 ml Pet Bottle should be introduced into the market as from a consumers point of view they might find the 400ml too much to consume and too less to share. The Indian market is used to the 200 & 300 ml Pet Bottles and Tetra Packs so I do see a need to have a smaller packaging size available in the market.

I also recommend that a 200 & 250 ml Tetra pack should be introduced aimed at driving the convenience of consuming Minute Maid on the go. Tropicana, Real and Frooti have already introduced their products in Tetra pack and one feels that there is a segment that would buy such products to consume on the go. Hindustan Cola needs to asses and address this potential market as it could turn out to be a lucrative customer segment.

The school and college growing crowd show greater liking for the product that the present target market than the group that consumes fruit juice the most (35-55 years). Hindustan Cola should bring in a range that would be more suitable to this age category of (35-55 years), as they are more health conscious and there are healthier drinks on offer than the present Minute Maid offered by Hindustan cola. Minute Maid- Original (100% Orange juice) and Minute Maid Heart Wise (The only orange juice that is proven to help lower cholesterol) are just two products from the minute family that can be used to target this segment of customers which as mentioned earlier are the key group of consumers for fruit juices.

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Films and Film Stars have a serious impact on consumer buying behaviour as a result I believe that the product needs the backing of a celebrity. Strategic Placements on the Small & Big screen and movie stars endorsing the product both on and off screen can go along way when it comes to the consumers purchasing habits for E.g. Cadbury's India brand team started working with the director of Koi Mil Gaya - Rakesh Roshan for its Chocolate milk brand Bournvita right at the story stage and if you have happened to watch this movie you'll see that the product placement is a contextual fit. Bournvita brand subtly entered the subconscious mind of the consumers and as a result its sales picked up drastically

India is certainly on the brink of a beverage revolution and Hindustan Cola needs to be vigilant. Minute Maid has performed reasonably well in the last 3 years; however as recommended better packaging and products that satisfy the main customer segments need to be introduced. Associating the product with a Film Star and strategically placing the product in films could also help minute position itself in the minds of the consumer thus influencing his buying behavior. The Future for Minute Maid orange in India is looking extremely promising and since the product will bring in better contribution that the carbonated drinks segment, Hindustan Cola can be expected to turn in substantial profits in the coming years thus endorsing India as a key market in the Groups performance.

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9 Bibliography
Malika Rani, Manik Grover .(2009) Welcome to the world of Soft drinks: Enjoy the trip to soft drink industry. Retrieved from http://www.slideshare.net/guestbb69f0/soft-drink-industry-ppt. Nishant Subba, Praveen Patel, Manoj Tivari. Fresh Punch New Product Strategy. Retrieved from http://www.slideshare.net/guest595aed/fresh-punch-new-product-strategy. Venkatachari Jagannathan . (2007). Minute Maid crosses 2 million sales mark. Retrieved from http://www.domain-b.com/companies/companies_c/coca-cola_india/20070510_million.htm. FPI Part 2: Sector Analysis. Retrieved from http://www.indiabiznews.com/biznews/categoryNewsDesc.jsp?catId=18306. Saint juice, 100% juice nothing else.(2009) Retrieved from http://marketingpractice.blogspot.com/2009/01/saint-juice-100-juice-nothing-else.html KAKOLY CHATTERJEE.(2007) Soft drink giants taste fruit juice thunder The Telegraph. Retrieved from http://www.telegraphindia.com/1070409/asp/business/story_7623644.asp. Consumer-behavior-analysis-for-the-Indian-beverage-industry---a-microeconomic-study Retrieved from http://www.docstoc.com/docs/30195663/Consumer-behavior-analysis-for-theIndian-beverage-industry---a-microeconomic-study.

Dhanraj Koli, Jay Lodaya ,Nahush Mhaskar, Rohit Mundhara ,Sneha Sharma.(2008) Pulpy Orange. Retrieved from http://www.slideshare.net/paddy53/pulpy-orange. Coca cola to launch minute maid.(2007) The financial express. Retrieved from http://www.financialexpress.com/news/cocacola-to-launch-minute-maid/191187/ Anurag Huria, Navdeep Khurana ,Ashish Bhambari, Tabish .(2008) . Marketing Strategy for relaunching minute maid in india. Retrieved from http://www.scribd.com/doc/7801493/Marketing-Strategy-for-Relaunching-Minute-Maid Brand update- Minute maid (2009). Retrieved from http://marketingpractice.blogspot.com/2009/04/brand-update-minute-maid.html. Minute maid. Retrieved from http://www.minutemaid.com/productsMain.jsp

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