Practical ways of reviving an ailing Company.
SweetBite is the largest player in Food & Beverages Industry in India. The Indian Food & Beverage Industry is marked by number of small players and a few large players controlling a market share of approximately 52%. This large chunk of Market share is controlled by three major players, SweetBite (15%), Ronald Beverages Ltd. (25%) and Khana Khazana Pvt. Ltd. (12%). The Green revolution and booming economy changed the fortunes of even the Regional Players who saw an unprecedented upsurge in revenues leading to Business expansion. This booming economy also led to changing Life Styles, especially in Metros and Tier II cities. Lured by this expanding Indian Food & Beverages Industry, a lot of MNCs started making their foray into Indian market. Even the Regional Players started focusing on Processed Food and Branded Beverages in these Metros and Tier II cities.
SweetBite has been a trusted name in Industry for almost four decades. Most of the brands owned by SweetBite were household names and commanded a leadership position in their category. However, this leadership was taken over by Ronald Beverages Ltd. In the last five years. In the recent years, all the top five companies made their foray into emerging category like Energy Drinks (in the last five years). The category is poised for a 30% annual growth given the fact that Energy Drink is a new concept in India. A comparative Analysis of Revenue figures is given in the table below (Figures in Rs. Crores):
Company Brand Name 2011-12 2012-13 2013-14 2014-15 2015-16
SweetBite Thirst 69 77 83 88 91
Beverages Ltd. TipsyTop 65 72 84 105 153
Pvt. Ltd. High Up 15 16 18 20 27
Though SweetBite started the first with a bang and was the biggest player in this category, over the last three years Ronald Beverages Ltd. Took over the Leadership position. This leadership position in the first two years was on account of SweetBite’s takeover of the sole and significant Brand in the market in 2010 called Thirst, owned by an Indian Company named Indian Breweries Ltd.
However, the recent growth in Energy Drinks market was married with some controversies as well. Thirst was often targeted by other companies (though indirectly in their ad campaigns) as a Drink meant for uneducated followers because of high Caffeine content and its ill effects.
Ronald Beverages, on the other hand engaged in educating consumers about the alertness and energy associated with Energy Drinks. Simultaneously Ronald Beverages understood the Indian Market well and started to get associated with various sporting events ranging from Cricket to Hockey to Tennis etc. This added to TipsyTop’s popularity and revenue.
This shrinking margin (for Thirst) also led the Management to put a lid on Marketing efforts followed by a slash on R&D. This in turn resulted in attrition of key people in these departments. Employees at SweetBite (Thirst Division) started feeling ‘Chocked’ by restricted span of control.
Meanwhile, the take over of Thirst (owned by Indian Breweries) by SweetBite brought people from inside the organization together, yet the cultural issues prevailed. Since, the take over, the Management has been struggling with issues on Technological as well as Cultural front. Indian Breweries used improved technology and fostered a culture of achievement and performance. On the other hand, SweetBite was characterized by monopolistic and laid back attitude in every category that it was involved. It has been able to command wide market share only on account of First mover advantage. The decline of SweetBite got reflected in the last three years as evident from the figures. A recent internal and a market survey indicated the following:
Findings from Internal survey:
a. Clash of interest among Boss and Reportee; most of the Top Management designations held by SweetBite employees followed by employees in Middle and Junior Management from Indian Breweries.
b. Lack of appropriate skills needed for business expansion across levels – SweetBite Managers were living the Legacy of ‘Pioneer’ in the Industy. It was the ‘Pull’ Strategy, that worked in their favour in initial years, rather than aggressive ‘Market Driven’ strategy.
c. Low motivation among employees and a sense of insecurity post takeover.
Findings from Market Survey (including the consumer and supply chain):
a. Poor commission being given to Retailers. 58% of Retailers that were surveyed indicated lower commission being offered as compared to other companies. This was true in relative percentage terms as well, when compared with other categories like; soft drinks, Flavoured Milk, Butter Milk etc.
b. Irregular supply of the stock- A significant number of Retailers (56% of the sample population surveyed) were not happy with the stock availability at their stores. Most commonly found reason was – ‘SweetBite Area Managers have to be called and reminded for the stock’. Stock Out was a common phenomenon among Retailers.
c. Low Brand Visibility – Only 28% of the respondents could recollect having seen ‘Thirst’ in ads (both in Print and Broadcast Media) or at POP (Point of Purchase), as compared to 68% for TipsyTop. Ronald Beverage focused all its campaigns on Gen Y and was promoting TipsyTop on Music Channels (TVs and FM), Coffee Joints and Pubs.
d. Unavailability at the store – next-door- Most of the Respondents (62% of the sample population surveyed) expressed disappointment on account of rare availability of Thirst. Most of the times consumer would switch over instantly on the available Brand.
e. Lack of variety – 59% of the sample population surveyed expressed bad ‘After Taste Experience’ and rated TipsyTop higher in terms of taste and variety of flavours available.
You have to assume you are Rohit Kumar. The big question before you is to ensure regaining deteriorating market share of SweetBite in Energy Drinks category, considering the issues faced.
What will you do if you were Rohit Kumar?