Corporate: Philip Morris' Tangy Come-Back

MARKETING
PHILIP MORRIS' Tang(y) come-back

The company's entry into the foods market is part of its strategy to establish a beachhead in the country ahead of launching its final blitz.

By E. Kumar Sharma

So, the Malboro Man is finally coming to India. And he's drinking Tang. It's been four years since Philip Morris got the Foreign Investment Promotion Board's (FIPB) permission to set up a 100 per cent subsidiary to venture into agro-based food processing. Now, the global tobacco and food-processing major is getting ready to re-launch its granulated quick-mix powdered drink. If all goes according to plan, Philip Morris India will place Tang in the Indian supermarkets by early 2001. ''We see a huge potential for the powdered drink market in India. Its current share is less than 0.2 per cent of the total beverage market,'' says General Manager Ajit Sahgal, 54.

Philip Morris has known that for some time. In 1983, it launched Tang via a joint venture, Kothari General Foods. The product bombed. In pre-liberalisation India, price turned out to be an insurmountable barrier. And consumers who could afford the powdered drink were unhappy with its quality. Distribution was a problem too. Philip Morris' doubts about the Indian market have persisted since that fiasco.

That's because its proposal to set up a Rs 320-crore agronomy and bulk processing of tobacco project has been hanging fire with the FIPB since December, 1998. Of late, the company has been engaging the Industry Ministry, which has decided to close the case, in a bitter war of words. Philip Morris is not getting a no-objection certificate from its Indian partner, Godfrey Philips. Moreover, a powerful domestic lobby continues to oppose the tobacco company's entry into the country.

That's why Philip Morris wants to establish a food beachhead in the country while continuing to push its application for the tobacco project. An investment of Rs 50 crore is fuelling Tang and the company will manufacture the product near Hyderabad. ''The product will be of global standards,'' avers Sahgal.

Much has changed since Tang's first Indian avatar. The domestic market has matured, distribution networks are in place, import tariffs have come down, and securing quality raw materials is so much more easier. Says Sahgal: ''The company plans to market Tang as a premium quality product targeted at the urban consumer. Tang would be priced keeping in mind this brand image.''

Once ready, Philip Morris will have to compete with local players and transnationals. The market has changed. A visit to the supermarket reveals a slew of brands, domestic and global, in the powdered drink category. For instance, there's Delight, launched by Bestfoods' Brown & Polson (Bestfoods has now been taken over by Unilever). Then there's domestic player Pioma Industries, which has been retailing Rasna International since 1995. Warns Pioma's President (Operations), Raj Pinjani, 46: ''Any new player will have to start from scratch and there are costs attached.''

Agreed. But provided it is handled well, Tang's second coming should wash down infinitely better with Indian consumers. Of course, Philip Morris continues to insist that it is not banking on Tang alone, and hopes to launch other products. At one level, that would depend on whether it can meet an internal target of 6,000 tonnes of powdered food per annum. And, at another, there's that pending tobacco project.

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