DS Group's Entry into Food and Beverages Sector
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Case Details:
Case Code : BSTR024
Case Length : 10 Pages
Period : 1998 - 2002
Organization : DS Foods
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Foods, Beverage and Tobacco
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"We want to be a dominant player in the foods sector and increase our growth rates in the tobacco business. We hope to grow by Rs.5 billion in the next three years."
- Rajiv Kumar, Managing Director, DS Group (Businessworld, November 8, 1999).
"Flavoured water and iced tea are examples of niches in the market but the fact remains there is no market in these niches."
- Jagdeep Kapoor, Managing Director, Samsika Marketing Consultants, Mumbai.
Introduction
In 1998, the DS Group1 set up a subsidiary, DS Foods, to enter the food and beverages market and transferred its flagship brand 'Catch'2 (See Exhibit I on DS Foods product list) to DS Foods. In October 1999, DS Foods launched bottled natural spring water under the 'Catch' brand.
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The group announced that it would invest Rs 1 billion3 in the next three years, in its foods venture. In 1999, DS Foods launched the Pass Pass (Closeness) mouth freshener.
This was the first branded 'Indian' mouth freshener. By mid 2001, Pass Pass was a Rs 350 million brand. Pass Pass aimed at becoming a Rs 500 million brand by the end of 2001. Similar products like Aas Paas, and Saath Saath4 soon appeared in the market. DS Foods also planned to enter other 'untapped' markets like Club soda, flavored water, and iced tea. While some analysts felt that DS Foods might not be able to leverage the brand equity of Catch in the new categories, DS Foods thought otherwise.
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Background Note
Dharampalji Sugandhi (Dharampalji) set up the Dharmapal Satyapal Group (DS Group) in 1929, as a manufacturer of fragrances. In 1935, it diversified into flavored chewing tobacco.
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By 1950, Dharampalji's sons had introduced many varieties of chewing tobacco. In 1965, they launched the first branded chewing tobacco in India. This was the first saffron flavored chewing tobacco in the world. In 1979, the DS Group launched Tulsi Zafrani Zarda (tobacco powder) and Rajnigandha gutka (tobacco powder mixed with beetle-nut powder). By the mid, the DS Group became a leader in tobacco-based products with brands like Baba, Tulsi and Rajnigandha. In 1983, the DS Group entered the food and beverages market when it acquired the Noida-based Hi Tech Foods Ltd., (Hi Tech). In 1987, Hi Tech created a niche market for tabletop salt with its 'Catch Salt Shaker.' Satyapal, the then proprietor of the DS Group, felt that branded free-flowing table salt was exactly what many Indian homes were looking for. |
DS Group's Entry into Food and Beverages Sector
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