ITC, the paper to hotels conglomerate, which saw its non-FMCG cigarette business revenues rise by 24 per cent in the quarter ended December 2010, has managed to turn around its foods business. The Bingo! range of potato chips saw sales growing by 48 per cent during the December 2010 quarter.
In August 2001, ITC made a modest entry into the food business with its Kitchens of India ready-to-eat preparations.The launch of Bingo in March 2007 market ITC entered into fast growing branded snack foods segment. After it entered the category with its wafer snack brand, Bingo, ITC's foray into the Rs 1,800-crore branded snack market has fetched the company a 16 per cent market share across the country and raced to No 2 spot in snack food segment across the Country (Source: AC Nielsen). The company was also quick to realise that the foods business in India requires sound knowledge of local tastes and preference. ITC wanted to provide Indian Consumer some novelty and excitement excited snacks. Hence they differentiated itself in market through its Hindustani Taste. Master Chef of ITC hotels came up to 16 flavours with twist like Spicy Masala Remix, Chatkila Nimbu Achar, Tandoori Paneer Tikka flavoured potato chips. This was totally adverse from Lays which was coming up with flavour like Spanish Tomato, American Style Cream and Onion. The new variant from Lays which are Indian flavors like Lay's Chaat Street, Mint Mischief and Wafer Style is a result of the tough competition from Bingo. ITC also came up with idea of using very famous Gujrati Khakra and created hugely successful Mad Angles.
ITC’s competitive advantage from day one has been procurement of commodities. The agri-business division of ITC connects with 5 million farmers in 170 districts of 16 states. The company leverages this to good advantage for all the commodities it requires for the food business: Wheat, sugar, edible oil, potatoes etc. Such commodities account for almost 60 per cent of the costs of the business. The other advantage has been ITC’s retail network for cigarettes i.e Pan Shops. About a third of the company’s food products apart from flour (snacks, biscuits and candies) are retailed through these Pan shops. If you ask me which is the most critical success factor of Bingo, I would put the distribution strength as the numero uno. Go to any supermarket or Kirana Shop, Bingo is highly visible. The Company distributed more than 400,000 large racks, to display the brand at all points of sale. The racks created so much impact that even competitors like market leader Lay's introduced its own version of wafer racks. This incredible leveraging of distribution system is credited by many as major cause of Bingo's success .In India there is no company that can match the distribution strength of ITC and this has helped this new launch very much in terms of Shelf Space and retailer support.
The Company decided that youngsters in the age group of 16-30 are the most experimental and hence they would be the primary target audience. That’s why Bingo touched a chord with targeted consumers through humour and irreverent advertising. On television, the company booked 10 to 15 spots per channel per day on youth channels such as MTV and Star World, mass Hindi channels like Zee and Star TV, and news channels. It also had around 20 spots on a variety of radio channels and advertised in most leading national dailies. In the top-30 cities, over 1,000 outdoor hoardings advertised the product. It also created a website www.bingeonbingo.com with offers, online games, downloads and even mobile games. According to industry estimates, ITC spent close to Rs 100 crore on marketing.
The importance of Bingo is evident from the fact that potato-based snacks are the largest product segment (85 per cent share) in the Indian snacks market.
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