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Friday, June 6, 2014 | 07:07 PM IST



It had been giving tough competition to Kraft Foods'Tang in the powdered drink segment with
its Rs 1 and Rs 2 sachets. And now, Rasna is set to play a similar pricing game
withPepsico's Tropicana in the fruit juice category.

Having launched its first ready-to-drink (RTD) fruit beverage under the brand name 'Ju-C'
recently, the soft drink concentrate maker has now set its eyes on the fast growing ready-to-
drink beverages market Rasna has priced the product at Rs 65 for one litre PET bottle as
against the industry's current pricing of Rs 75-90 for one-litre Tetrapack.

Take, for instance, the average price increase of its current products. Rasna's average price
increase annually has been a meagre four per cent. In comparison, Piruz Khambatta, chairman
and managing director of Rasna, claims, Kraft Food's Tang's average price increase has been
around 22 per cent annually.

Rasna enjoys an over 80 per cent market share in the soft drink concentrate and powdered
drink market in the country. "At Rasna, we believe we will have to cater to everybody. Rasna
has to cater to the bottom of the pyramid with Rs 1, Rs 2 and Rs 5 sachets as well as large
party pack products. We have products from bottom to the top. We are the only soft drink
maker who can reach everywhere," Khambatta says.

So, how exactly does the company manage to hold on to its attractive pricing? To keep the
prices down, Rasna has also done some backward integration where even the fruits are picked
up directly by Rasna officials from the farm to reduce procurement costs.

The non-alcoholic ready-to-drink (RTD) beverage segment has been growing at a compound
annual growth rate (CAGR) of 13 per cent since 2009, and is one of the segments that have
defied the slowing economic growth, according to the Indian Beverage Association (IBA), which
expects the country's beverage industry to continue to grow in double digits in 2013. It indeed
is a lucrative space to be in.

According to brand experts, Rasna has till date confined itself to indoor home space
consumption, where consumers would have to make a Rasna drink to have it, but with the new
Ju-C, the company has entered the outdoor space as well.

"Powder has a limitation. It takes time in making and is suited for indoor consumption. Launch
of a fruit beverage now shields Rasna from the seasonality of sales. The focus will now have to
be on managing competition. Plus, Rasna's core is juice and since affordability is a big plus in
India, the fruit beverage should work well. Rasna is good at distribution but will still have to
work on its supply chain to be present everywhere," says Pinakiranjan Mishra, partner and head
- retail and consumer products at Ernst & Young India (E&Y).

On its part, Rasna is taking cue from it and is working on a hub-and-spoke model of supplying
its products to villages through depots in a nearby town, something that has brought success
for the Gujarat Co-operative Milk Marketing Federation (GCMMF)-owned Amul brand for its milk
and milk products.

While the overall RTD market including carbonated drinks is around Rs 15,000 crore, the fruit
beverages market is estimated to be around Rs 5,000 crore, Khambatta informs. "Our research
shows that there is a gradual shift from carbonated drinks to nectar or fruit juice." Rasna's
strategy in beverages would be to target the 'middle category'or as its CMD puts it, "We are not
competing with brands like Frooti and Maaza, nor even the more premiumly placed brands. We
want to grow in the middle segment."

While a 360-degree campaign is indeed planned around the new launch, over the years,
Khambatta says, he doesn't wish to focus on TVCs solely. After having given the country one of
its longest running product slogans, 'I Love you Rasna', Khambatta feels television commercials
are losing TRPs.

However, Rasna has only recently launched a fresh TVC for its Fruit Fun product with a new
mascot - Gillu, the squirrel. The new campaign aims to draw on the 'origin' concept (like
Nagpuri Orange, American Pineapple, and Alphonso Mango) to sell the Fruit Fun range.

Experts feel that Rasna might choose to spend more on Ju-C ads now rather than its earlier
range of products. But will the strategy hurt the quintessential soft drink concentrate brand?
"Rasna has immense brand equity, and a few lesser TVCs would not hurt much," feels Ruchita
Maheshwari, an analyst with Nirmal Bang.

In fact, according to experts, it should look to exploit as many categories as possible in drinks.
"The fruit beverage launch is indeed the right move. Rasna shouldn't see itself just as a Tang
equivalent. The kind of opportunity for Rasna is beyond the categies it is in. Rasna has a latent
power of being in other categories and should look to exploit it. In fact, Rasna should look to
become the beverage solution of India," says Santosh Desai, independent advertising &
branding analyst and author.

Khambatta is quick to admit that he would take a conservative approach towards positioning
the Rasna beverages segment. "It will take time to build the brand, nothing happens overnight.
And we will take a conservative approach," he says.

"A purely old brand will not work until you keep with the times. Rasna is in a unique position in
terms of a brand because in India people like something which is old as well as modern. Rasna
is modern with Indian ethos. We have a unique attachment with the people which foreign
brands don't have," he adds.

And perhaps, the strategy has worked for the company. "For the last five months, we are
working on 100 per cent capacity, but still we are unable to meet demand," says an elated
Khambatta, citing the company's turnover excluding exports at Rs 400 crore. Rasna has seven
plants including one each in Uttaranchal, Kalol (Gujarat) and Daman and four plants in
Ahmedabad. Apart from this, it has contract manufacturing for Squash in Kerala and
Coimbatore.
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CNBC-TV18
KRITIKA SAXENA Reporter

Rasna, which controls over 92% of the Rs 500 crore powdered drinks market wants more. It's looking at the
premium ready-to-drink market to whip up its next perfect cocktail, reports CNBC-TV18's Farah Bookwala and
Kritika Saxena. Rasna's recipe for success has always been simple, only a rupee for a refreshing glass of taste
and health for two! This will help Rasna fight off Kraft Food's Tang and Coca-Cola's Sunfill and maintain a 90%
market share in the instant drink market. But now, Rasna is looking to replicate this success in the high-end,
ready-to-drink market through its subsidiary, Rasna Beverages. Piruz Khambatta, chief managing director of
Rasna says,"As India is expanding, there are people who want different drinks. There are people who want a
Rs 5 drink, a Rs 10 drink and we can provide that. But there are people who want a fancy drink. They want a
Cranberry juice, they want an energy drink, a non-alcoholic beer. We believe India is right for that also." The
plan is to manufacture energy drinks, fortified water and premium fruit drinks under this Rs 100 crore venture.
For this, Rasna is eyeing technical collaborations with two foreign companies. It is setting up three greenfield
plants. Its working to increase its sales force from the current 700 to 1,000 by next year and setting up a new
distribution network. "We are also looking at separate distribution network for this project because around 40-
50% of the outlets that sell ready-to-drink products are different than powdered drink outlets. Right now we
cover around 1.3 million outlets in our current distribution system and our plan is to at least increase this by
15% every year. So we will be definitely going to 1.5 million outlets this year", says Khambatta. These drinks
will hit the shelves next summer but will see Rasna charging over Rs15 a glass. But analysts say that while
Rasna will face stiff competition from Tata Global Beverages, Red Bull and Dabur. Harminder Sahni, founder
and managing director of Wazir Advisors says, "They are the same consumers who used to drink Rasna many
years ago. They have grown in life, they have more money, they have a different lifestyle and they have
different needs now and whoever is fulfilling those needs, will be asking for a certain price and Rasna is doing
the same. So if customers are doing it for others, why not for Rasna, which is a trusted brand." Rasna is clear
that it does not want to shed its health-drink image by entering into Rs 5900 crore carbonated drinks market. It
is working on a range of beverages that offer nutraceutical benefits which should hit the shelves in 2013. So
plenty of reasons to say I Love You, Rasna!