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The Rediff Business Special/Nikhil Falleiro

The new corporate mantra: Mini sells many things

When Syndicate Foods Limited, a division of Syndicate Tobacco, manufacturers of Goa Gutka, decided to enter the beverages market for the first time, it wondered what type of product it should launch. The consensus was that ethnic drinks such as lime juice, coconut water and jaljeera seem to have the potential to spawn a big market. There was considerable debate as to how to market these products.

According to V Tetambe, chairman, Syndicate Foods, the company realised that ``ethnic drinks are always served in traditional forms like earthenware jugs or ceramic vessels. If we were to sell these drinks in any other form, then the chance of these drinks failing in the market would be extremely strong. So we decided to launch these products in tetrapacks.''

The company, based at Chiplun in Maharashtra, was to realise that the decision was a wise one: it proved a blessing in disguise. The products in tetrapacks were launched on January 22, 1999. Ever since, it has been flooded with buy orders. The factory can produce 140,000 packets a day and is unable to meet the growing demand.

On the western side of the Sahyadris, at the corporate headquarters of Hindustan Lever Limited in Bombay, test results of a brand in its personal products range are being actively discussed. A miniature version of Close-Up toothpaste is being test marketed for the last three months. But what is unique about this toothpaste is not its new flavour or even its success in the test market but the fact that it is a hybrid between a tube and a sachet.

Various nomenclatures are being coined to describe this product. There is a sense of relief in the company that it has succeeded in making a product that is small in size and consumer-friendly. Dalip Seghal, marketing controller, personal products division, says, ``Consumers are very finicky and cost-conscious about their personal products. They would not buy sachets of toothpaste because the packet had to be left open which often invited uninvited guests. So we devised this new product which had all cost advantages of a sachet and the delivery advantages of a tube.''

Syndicate Foods, a small corporate entity in rural Maharashtra, and HLL, the Bombay-based MNC, are at the either end of the corporate spectrum. The two are part of a growing class of companies that are reducing their products to midget-size levels in a bid to increase sales.

As Jagdeep Kapoor, managing director, Samsika Marketing Consultants, says, ``Companies are reducing their packaging because there is a large mass in the country which cannot afford bulk packets on a weekly basis. They are the low-cash ring, who do not mind spending a few rupees on a supposedly luxury product, say Rs 2.50 on a 7 ml shampoo sachet rather than Rs 52 on a 50 ml bottle.''

Some people may like to dismiss these examples as marketing gimmicks. Consider what Parle Agro is doing. The company is well-known for its Thums-Up, the cola, and a wide variety of beverages, including the popular Frooti. Parle Agro has decided to launch its Bailey mineral water in a new sturdy Pet bottle at a mere 1.5 litre bottle.

Known as the pioneer of the tetra packs in the country -- it launched Frooti in 1980 -- Parle Agro is taking advantage of the consumers' preference for small packs. It is flooding the market with mineral water bottles in various sizes: 1.5 litre, 1 litre and ½ litre. In fact, now there are even 200 ml cups!

Prakash Chauhan, managing director, Parle Agro, says, ``Water is am essential, its need is felt everywhere, be it inside a railway compartment, at a cinema or a shopping plaza. So the smaller the packet the better the value."

Kirana stores (neighbourhood grocers) and swank departmental stores now regularly display miniature bottles of talcum powders along with family size packs on their shelves. Ditto for strips of shampoo sachets camouflaging bulky bottles, sachets of single-serving soups, detergent powders, cans of cola, beer and liquor, miniature toothbrushes, slices of cheese-spreads vying for attention with bigger cans and boxes. Jasmine Irani, a working woman, 'house manager' and a mother of two school-going children, says, ``The (cheese) slices have made life so much easier. The children can make their own sandwiches which sometimes is a relief when I am hard-pressed for time.''

The miniature mantra is not confined to foods and personal products. Medicines now come in blister packs of five. There was a time when they were sold in 'standard' bottles of 100 capsules each.

Pravin Mallik, manager, new products division, Britannia, says, ``Why we decided to introduce slices into the market was because of the ease with which this product can be used. Ease and simplicity are the bywords for any product success today. A child can use a slice as easily as an adult. That is the reason for its success.''

Agrees Professor M J Xavier of the marketing department at the Indian Institute of Management, Bombay. ``In a cost-conscious world, these small products are very useful for any consumer."

HLL's Seghal says the company has captured two-thirds of the shampoo market after it introduced sachets. Likewise, it captured 20 per cent of the talc market with their miniature talc bottles and 40 per cent of the deodorant market after they launched Rexona deodorant in six-gram tube last year. Corn Products Company which began selling its international brand of Knorr soups in single-serving sachets, has realised that the soup sachets now contribute 25 per cent of its total sales.

The drift towards the small has brought in its wake changes in packaging. Consumer-friendly products are those that are perceived to be packaged colourfully, small, easy-to-carry and easy-to-use. The need for innovative packaging has, thus, given a boost to the Rs 100 billion industry which is now growing at a healthy growth of 10 per cent per annum.

The Bangalore-based McDowell and Company was desperate to lift sales of it 100-year-old brand McDowell No 1 Whisky. The logo was changed and the packaging revamp was allocated Rs 60 million. Sure enough, sale soared by an astonishing 35 per cent. Similarly, International Distillers and Vintners decided to take the small route when it discovered that a large portion of its clientele preferred small bottles for single servings. It launched Smirnoff Vodka in 60 ml bottles at Rs 35 and Gilbeys Green Label in 60 ml at Rs 20.

Sunil Lulla, vice-president, marketing, IDV, says, ``Small bottles are popular. People who prefer one serving or two initially opt for miniature bottles. Others who do that are those undertaking a journey and do not have the convenience of storing a large size pack, and those who do not wish to consume at a bar / pub but still would like one or two drinks.'' Their popularity can be seen from the fact that while the industry has grown at 9 per cent, the small bottles segment has grown at 18 per cent.

Concurs Kapoor of Samsika. ``Simply put, it is the globalisation of Indian society. They want the best. If a small bottle of whisky or a can of beer is available abroad, the demand for them grows in India and the products have to be introduced sooner or later.''

The trend will encompass every product in due course, says an analyst at a foreign investment firm. ``When Telco, the automobile giant, decided to launch a small car, the segment exploded. It pays to be small.''

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