Big Bazaar: Private label push

Byravee Iyer / Mumbai December 1, 2009, 20:00 IST

http://www.business-standard.com/india/news/big-bazaar-private-label-push/378124/

Big Bazaar, the hypermarket of Pantaloon Retail, has come out with a breakfast cereal range under its
private label, Tasty Treat. Big Bazaar already sells noodles, pasta, vermicelli, soups, namkeens, chips,
toast, khari, papads, jams, pickles, carbonated drinks, ketchup and fruit beverages under the brand. It has
now added breakfast cereals to the range.

The breakfast cereals will be available in three variants — plain cornflakes, chocolate-flavoured Choco
Gols and honey-flavoured Honey Circles. There are two reasons for launching the product, says Pantaloon
Retail’s head of private brands, Devendra Chawla. “One is that private brands give us far higher margins,
and the second is that cornflakes as a category is under-penetrated and has a lot of scope to grow.” The
market for breakfast cereals is still small. While the packaged food market is valued at Rs 33,234 crore, the
organised breakfast cereal market is just Rs 250 crore — less than one per cent. But the market is growing
fast, given the growing health consciousness in the country, especially the urban middle class. Kelloggs
monopolises the market for breakfast cereals with its range of flakes. Some other multinational players
have also shown keen interest in this market. PepsiCo has already entered with its bestseller brand,
Quaker Oates. Heinz India, which has a hugely strong bond with households because of its Complan
health drinks, too has joined the bandwagon.

In spite of the presence of a large number of players in the branded packaged food segment, Tasty Treat is
growing at about 70 per cent. This perhaps has given Big Bazaar the confidence to try its luck in breakfast
cereals as well.

In a recent development, Pantaloon Retail, promoted by Kishore Biyani, has boycotted Kelloggs at all its
retail formats for turning down its demand for higher margins. Not surprisingly, Big Bazaar is pushing its
own brand of cornflakes now. This is not the first time Big Bazaar is doing this. A while back Cadburys and
PepsiCo owned snack food brand Frito Lay had to bear the brunt.

As an introductory offer, the cornflakes brand will be priced at Rs 99 along with a free bowl worth Rs 60.

According to Chawla, the brand will provide 10 to 15 per cent value when compared to rivals. “We have the
option of pricing it lower as we don’t have to pay intermediaries and can pass on that advantage to
consumers,” says Chawla.