The Rise and Fall of Indian FMCG Companies — Nirma , Torino , Limca, Thums up and Gold Spot
In 1969, Dr Karsanbhai Patel, a chemist and lab technician in Gujarat, began making a homemade detergent product that he distributed to people on his way to work. It was not harsh on clothes and was much less costly than Surf, the dominant detergent in the market.
As people began liking it, Patel began manufacturing it on a much larger scale. He started the packaging in a 10×10 feet room in his house, and named the detergent powder Nirma, after his daughter Nirupama. The girl in the white dress on the packaging was inspired by his daughter.
Their marketing was top notch in the early 90s when they made ads with catchy tunes which even kids used rhyme at schools,
It’s simplicity is what made the jingle memorable — through various iterations of the advertisement, the phrase ‘washing powder Nirma’, repeated twice, has given it a high recall value.
Nirma was founded when a chemist from Gujarat, Karsanbhai Patel manufactured a phosphate-free detergent in his backyard and started selling it locally. That time, Surf (a product of HUL), the Pioneer of Detergents, had priced its product at Rs.15 per Kg. The door-to-door campaigns for Nirma in 1969 were very well-timed. By coordinating and streamlining activities such as production, distribution, and marketing, Patel was able to sell Nirma at Rs. 3.5 per kg.
The Fall :
Inspite of such a good start it fell off the cliff, several reasons
- Nirma spent a meager 3–4% of its revenue on Marketing communications (Ad-campaigns) while other competing brands spent 6–8% on advertising.
- The rival brands have products across all price ranges to mitigate the input cost effect, but Nirma is available in only one category — value for money. This has proved disadvantageous for the brand
- Consumers began to perceive Nirma as an inferior brand due to its low price
While their marketing was top notch in the early 90s when they made ads with catchy tunes which even kids used rhyme at schools, they somehow missed the bus at the later stages
There are many such Indian companies which did so well in the 80s/90s and competed with established FMCG companies from the west. Here Nirma took on the Hindustan Lever Limited. By 1998 Nirma had around 60% market share by then, selling more than 1.72 lakh tonnes taking off the major shares off from Surf (HUL)
Where does Nirma stand now ??
In November 2007, Nirma purchased American raw materials company Searles Valley Minerals Inc., making it among the top seven soda ash manufacturers in the world.
Nirma Group started cement manufacturing in 2014 from a single plant in Nimbol. In 2016, Nirma acquired Lafarge India’s cement assets for $1.4 billion. In February 2020, Nirma acquired Emami Cement for ₹5,500 crore (US$730 million)
Story of Soft drinks
Thums Up was created in 1977, after the American company Coca-Cola withdrew from India, due to regulations requiring it to disclose its formula and sell 60% of its equity to an Indian company under a government plan for foreign-owned companies to share stakes with domestic partners.
The Chauhan brothers owned part of the Parle company and already had two other brands of soda, Limca and Gold Spot, which were popular in India at the time. Thums Up quickly became the most popular and achieved a near monopoly among cola products in India during the 1980s, such as Campa Cola, Double Seven, Dukes and United Breweries Group’s McDowell’s Crush.
Ramesh Chauhan had developed the formula from scratch, experimenting with ingredients such as cinnamon, cardamom, and nutmeg. The company also wanted the drink to be fizzy, even when it was not ice-cold, so it could be sold by vendors. After much testing and experimentation, the Chauhan brothers and their research team created a cola that was fizzier and spicier than Coca-Cola. They originally planned to name the drink “Thumbs Up,” but removed the “b” to make the name unique.
In 1991, when the Indian government opened the market to multinationals, Pepsi was the first to come in. Thums Up and Pepsi subsequently engaged in heavy competition for endorsements. Pepsi advertisements included major Indian movie stars like Juhi Chawla, while Thums Up increased its spending on cricket sponsorship.
In 1993, Coca-Cola re-entered the market, and the three companies competed intensely. Later in the year, Coca-Cola bought the Parle-owned drinks Gold Spot, Limca and Thums Up for $60 million. When these were sold to Coca-Cola, Thums Up had a market share of 85 percent in India
One is selling it for just $60 million but another thing is giving up on your hardwork of establishing a 85% market share. This is another example of how most Indian companies concentrated mainly on local market, there was not much done to make it export oriented even a regional player lets say in Asia like in Sri Lanka , Bangladesh , Nepal etc
Where does Parle stand now in 2019, it had a 7% share of the global biscuit market, growing to 50% by 2020. As of 2020, as per Nielsen, it is the largest selling biscuit brand in the world
Torino
I think many in the South would remember this cool drink brand , also called as Color in Tamil Nadu
In 1977, as Coca-Cola was beating a retreat from India under the provisions of the Foreign Exchange Regulation Act, Torino, an orange soda with a prodigious use of sugar, entered the market in south India.
“In no time, we had captured 90 per cent of Karnataka’s orange soda market,” says Pankaj Lakhani, the second-generation owner and MD of Bangalore Soft Drinks. Torino has since been re-launched in PET bottles across Karnataka, where it has over 60 distributors, and Tamil Nadu, where doctors still recommend it as a high-calorie fluid in summer.
Do you know any other Indian company that fell off a cliff ????
Sources:
- [The Indian Express] Indian Ad-age: How a jingle made Nirma sabki pasand!
- [Marketing Weekly] The Rise and Fall of Nirma
- [The Print] ‘Washing powder Nirma, washing powder Nirma’: A simple jingle that became earworm for millions
- [Wikipedia] Thums Up
- [The Indian Epxress] India’s homegrown sodas that survived despite cola wars
