Piruz Khambatta believes in blind taste tests. He begins meetings by offering tastes of over a dozen drinks, brands withheld, and waits for feedback. “We listen to everything our customers say,” says the 42-year-old CMD of Rasna Ltd, before reluctantly setting the drinks aside to talk about his plans for the soft drink concentrate brand.
Launched in the mid-1970s, Rasna soon became a staple at birthday parties. Three decades later, the soft drink concentrate market is still dominated by Rasna — the ₹600 crore company has a 97% market share (see: Full to the brim). And in the era of multi-litre PET bottles of colas and cartons of juice, Khambatta insists the segment is still growing at over 20% each year. “We are the market and it will take a lot to beat us,” he confidently says.
Full to the brim
With little room for further growth in soft drink concentrates,
Rasna’s expansion to new categories is natural
But then, the 20% growth is driven by rising rural consumers rather than from its traditional clientele, urban households. Rural market now contribute a third to sales and are growing in excess of 30% while urban sales are growing only by 10-12% per annum. One option to propel growth could be to scale up its presence in smaller towns aggressively, but Khambatta isn’t taking that route. “We will increase our presence in rural areas slowly, however we, don’t want to expand too rapidly because distribution costs can spiral out of control very quickly,” he says.
Right now, Khambatta is focusing on taking Rasna outside its comfort zone and making a mark in new categories like squashes and energy powder drinks. He’s also planning on positioning Rasna’s offerings in the already overcrowded nutrition and health platform. What does this mean for Brand Rasna and can it succeed in this very challenging space?
Rasna’s success in the 1980s hinged on a simple strategy: transfer the cost of sugar — which accounted for 60% of the cost of flavoured drinks — to consumers. Households could thus decide how sweet they wanted their drink, making the product affordable. Advertising that reiterated the value-for-money (VFM) proposition — 32 glasses from every pack — helped consolidate Rasna’s position.
It helped that competition was non-existent. Some me-too products — Sunfill, Trinka and Tang (in its first avatar) — tried their luck, but Rasna was too well-entrenched by the mid-1980s.
The market today is completely different. Income and aspirations are growing and store shelves are creaking under the weight of affordable options. Carbonated drinks, fruit juices and squashes have flooded the market with economical packs and private label alternatives are even cheaper. Rasna now faces intense competition and is in danger of losing relevance. Which is why Khambatta is moving into the larger beverage market. “I just need to be careful to not dilute the equity of the Rasna brand,” he says.
A battle with milk
Like every company in the beverages market, Rasna too wants to get on the health bandwagon and become the “health beverage of choice”. But that’s not going to be easy. “In the minds of most people, health means milk. We don’t have an answer to that,” Khambatta admits. In India, milk-based drinks are still considered the healthiest, followed by 100% fruit juices — and right now, at least, Rasna has no plans to enter either segment.
The ₹2,200-crore malted drinks category, for instance, is dominated by brands like Horlicks and Boost (GlaxoSmithKline) and Complan (Heinz). “There is a dire need for tailor-made nutritional solutions. Affordability will play a role in consumer decisions, but they would generally prefer products that are well-researched and taste good,” says RR Pal, general manager, R&D, Heinz India.
Rasna is banking on just that. A new subsidiary, Rasna Beverages, will spearhead the foray into the ready-to-drink (RTD) segment, which will launch fortified water, energy drinks and premium fruit drinks over the next couple of years. A ₹60 crore greenfield manufacturing facility is planned for this (the parent company already has seven manufacturing facilities across India). The opportunity is big: the overall market for non-alcoholic beverages is worth ₹20,000 crore (see: The mocktail party) and is growing at over 20% a year.
The idea now, whether with RTD products or with additives, is to “make Rasna a ritual”, thus ensuring customer stickiness and repeat purchases. All new launches, therefore, focus on promoting regular consumption. Last summer, the company introduced Rasna Glucose D in Kolkata. No formal advertising campaign has started, but in informal communication and below the line activities, it’s promoting the flavoured glucose drink as an after-sport necessity for children.
Another product, Rasna Squash, was launched in Kerala last year where it is being positioned as a breakfast drink. “The idea is to make it a quasi-energy consumption,” says Jagdish Acharya, founder and creative head of Cut the Crap, the advertising agency handling the Rasna Squash account. The ad shows a boy scoring a goal in a game of football and claiming it’s because he had 21 fruits for breakfast. “The way we see it, any beverage at home that can be consumed is competition,” adds Acharya.
It remains to be seen how effective a different positioning will be in an over-crowded market. The organised squash market in India is just about ₹300 crore, with Kissan dominating smaller, regional players like Mapro, Ganesh and Haldiram. For his part, Mayur Vora, MD of Mapro Foods, thinks Rasna’s strategy makes sense.
“Rasna has a strong presence in powdered beverages, which is at the lower end of the market. Over the past few years, consumers have become willing to spend on options that cost a little more,” he says. The worry, however, is that the squash market is growing at less than 10% a year, again because of the growing popularity of the RTD segment.
The price proposition
What works against Rasna is it’s no longer the only VFM brand. Indeed, in many cases, the company can no longer lay claim to that differentiator any more. For instance, Rasna Fruit Plus, a powdered energy fruit drink, is ₹5 costlier than Tang for a 500 gm pack (₹90 versus ₹85). Rasna’s agency, however, explains why the VFM tag is no longer relevant.
The mocktail party
Rasna’s opportunity lies in fruit and energy drinks
“Juice powder consumption is an indulgence in India,” says Priti Nair, director, Curry Nation, which handles the mother brand and Rasna Fruit Plus accounts. “It’s also the first time Rasna is speaking of real fruit,” she adds. Soft launched in 2008, Fruit Plus has now started aggressively advertising on the health platform, with Virender Sehwag as brand ambassador. According to Nair, while the focus is on energy and health, the first hurdle is convincing the mother about the product. “Rasna has been innovative by launching flavours like guava and watermelon, which should help mothers buy into the format. The price crosses their minds much later,” she says.
An everyday affair?
Can Rasna become the ritual that Khambatta wants? Veteran adman Prathap Suthan, MD, Bang in the Middle, believes the task will be extremely difficult. “There is a very strong perception that Rasna is artificial/ synthetic. People may not be willing to start their day with it. It is easier to make the consumption of juice a ritual compared to anything artificial.”
Even Rasna’s own creative team agrees that it’s an uphill task. The challenge is to remove the perception of Rasna as a thirst-quencher and increase consumption to all year rather than remain a summer drink. “That will require sustained communication,” concedes Acharya. Rasna spends about ₹40 crore a year on advertising and, although it’s still remembered for the “I love you, Rasna” ads, the brand has had celebrity endorsers like Karisma Kapur, Hrithik Roshan, Anupam Kher and now, Genelia D’souza.
The “I love you Rasna” has been replaced with a more slick “Love you Rasna” in a bid to appeal to today’s youth. Has it worked? Suthan says it’s a good idea to latch on to the energy and nutrition platforms but wonders how unique a differentiator it will prove. “It should have done this a long time ago,” he says. The key challenge will be to get past its “artificial/ synthetic” tag and communication should focus on emphasising its natural ingredients wherever possible. If consumers buy that argument, perhaps the love affair will continue. Otherwise, Rasna runs the risk of estrangement from its customers.