Regional brands and Retail Stores opt for more sales and less margins!

Well the quest of going big has always made companies to come out with various kinds of marketing strategies. This time it's a move initiated by midsize companies to increase sales of their brand and product in the national market among the cluster of high scale brands. In accordance with a tie up with modern retailers such as Reliance Fresh outlet or an Aditya Birla Retail's More, these companies have decided to sell products at about a 15 per cent cheaper rate then branded products and wrestle greater shelf space across retail chains.

Such a deal is bound to effect sales of private labels in a positive way but would also block the entry of some competitors in the market. This initiative has seen a range of companies such as Bourbon biscuits, Cremica biscuits, Pogo chips, Dynamix ghee etc has grab the opportunity and the take the plunge.

According to Muni Garg, marketing head, Bonn Foods Industries said their tie up with Aditya Birla Retail to make cookies under the Feasters has only helped them increase the biscuits volumes. Similarly, Vishal Malik, marketing head, Cremica biscuits said their deal with More was to help Bector Foods Specialties to make inroads in the southern market, as per media reports.

So far it seems like a win-win situation wherein retailers to match up with national brands in quality and packaging are seeking contract manufacturers with product line expertise. MNVV Prasad, DGM (sales and marketing), Indo Nissin Foods said, "If price-conscious consumers enjoy the private label and realise that it is also manufactured by Indo Nissin, they are likely to pick up Top Ramen at another store," as reported by media.

"There are very few non-branded food FMCG manufacturers in India due to the shortage of incentives in this sector. Therefore, with retailers vouching for quality products they find the need to tie up with existing brands," said Saloni Nangia, VP, consumer goods and retail, Technopak.

But all this and more doesn't seem to have affected the national brands a great deal. As of now they are maintaining that there has not been any dent in their sales figures because of the presence of such regional FMCG labels. But on the other hand, private labels such as Nissin, Dynamix, Bector's Gee Pee Foods, Bonn Foods, Lee Bee Foods, Shanta Foodchem and VLS Foods seem to very keen on such an arrangement and have quickly the opportunity.