Wednesday, April 17, 2013


Is it not a tragedy that in this century most consumers are swayed by highly aggressive advertisements and commercial promotional strategies of some of the industry giants and buy food products considered least healthy for them? For example while marketing fruit based beverages many manufacturers get away selling fruit pulp based beverages containing hardly 10% of the pulp, rest being sugar and the designs used in presenting the product to the consumer conveys the impression that they are fruit juices! Is it not unethical to market such products though the law may permit? The food laws are not specific regarding the way the label must be designed leaving sufficient leeway to the industry to present such products to give the appearance of a genuine juice though synthetic drinks have to carry the declaration that they do not contain fruit solids. The result is highly attractive fruit beverage packs crowding the retail shelves attracting the consumers in droves who buy them thinking that they are fruit juices. Recent introduction of a 100 ml tetra pack based fruit beverage is an excellent example as to how industry sings about consumer welfare and at the same time targets the consumers that too in poor vulnerable village sector to swell their sugary beverage business. Here is a take on this new strategy of tapping the rural wealth for a wrong cause.   

"This is going to be the lowest price for a Coke product in the non-returnable ready-to-drink category, where the pricing ranges from Rs 8 to Rs 12 and goes on to as high as Rs 60 for a two-litre plastic non-returnable pack. In package size, too, this is the smallest in the beverage product category - the smallest so far were the 200 ml returnable bottles. Explaining the strategy, Coca-Cola India President & CEO Atul Singh told Business Standard in an exclusive interview: "There are two million retail outlets in rural India where we sell our products. There are consumers who want packaged beverage at an affordable price. We have been working with our suppliers to get affordable packaging and have got Maaza at the right price point." He said the challenge would be making carbonated drinks affordable for the rural market. At present, these are sold at Rs 8-12 - not affordable for a large swathe of the market. "We need a sustainable model and there are cost constraints. But, we do recognise there are consumers who are not ready to buy at high prices. That's a challenge; we have to innovate in packaging, distribution, transportation and cooling equipment." At present, neither of the two beverage majors - Coke and PepsiCo - has ready-to-drink mainline branded products at Rs 6. Coke had introduced Fanta Fun Taste powder for Rs 5 but that had to be mixed with water. It had also introduced micronutrient powder sachets at Rs 2.50-3. PepsiCo, on the other hand, sells fruit juice powders for Rs 10, besides Tata Glucose (under a JV with Tatas) for Rs 6".

A part of the blame will have to be born by the food safety authorities in the country for making the law so flexible allowing these merchants of ill health to exploit the unwary citizens in the country. Products based on 100% sugar but with flavors latched on to them to imitate real fruits are popular in India because of the hot and sultry climatic conditions prevailing in most regions of the country during major part of the year. But these products at least carry the declaration that they are made without fruit solids. It is the fruit beverages which are dangerous because they do not warn the consumers that the fruit juice content is minuscule in them and to make up for low fruit solids artificial flavors are permitted! It is time that the category of fruit beverage is withdrawn from the statute books altogether. Alternately industry should not be allowed to add external flavors and this will make these products whither away gradually due to less attraction to the consumers. Another interesting aspect of this strategy is to shrink the pack size to bring down the price and enlarge the consumer base thereby increasing the business volume. Here is an example of a beverage pack of 100 ml priced at Rs 6 per 100 ml which really costs to the consumer Rs 60 per liter where as the same product is available in two liter packs at Rs 30 per liter! The poor is really trapped in this price matrix having no choice but to pay a higher unit price because of their lower purchasing capacity. Thus the pack shrinking strategy hits the poor economically as well nutritionally!      

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