News As We Read- 12th July'13

Thought of the Day:

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Following made the Headlines:

India:

• Colgate Bid to Edge Out P&G’s Oral B: Last week, when Procter & Gamble launched Oral B, its first toothpaste in India, perhaps no one else was watching it more closely than Prabha Parameswaran, the MD of rival Colgate, also the market leader in the 5,000-crore oral care market. Parameswaran’s swift and no holds-barred retort to the P&G threat has by all accounts left the latter overwhelmed in the market. A heap of 250-odd Colgate toothpaste packs greets customers at a leading supermarket in the suburbs of Mumbai. Almost each of the neatly stacked packs forming a mini-pyramid has either BOGO (buy one get one) printed on it or carries reduced price tags. Here and across 4.5 million retail outlets, Colgate is being a shameless bully, elbowing P&G out of any shelf space. It is throwing toothbrushes, pastes, and brand events and promotions with trade partners, and discounts, all to deny or delay giving P&G even a toehold. Such promotional intensity wasn’t there even two weeks ago. “Several large retailers haven’t even stocked P&G’s new toothpaste as the margins offered were lower than Colgate and GSK,” said two officials at leading supermarkets. This is already turning out to be a costly battle — Colgate has hiked its advertising and promotion spends by 31% during the first half of this calendar year.

• Liberty Media in Talks for Stake in Bharti DTH Arm: Bharti Airtel is in talks with American media and communications giant Liberty Media to sell a stake in its unlisted direct-to-home business, as compulsory digitisation and higher foreign ownership limit drive firms to seek capital and market reach. Two people familiar with the development said Bharti informed three private equity firms knocking on its doors that it was keen on selling a larger stake at a higher valuation. A strategic player with deep pockets will be better bet than private equity funds, the funds have been told. These PE funds were in independent discussions with the company to buy a minority stake in the DTH business, which commands an 18% market share in subscribers. The likes of Temasek, Carlyle, ICICI Venture and American media company Comcast had shown interest in the company so far. The Bharti-Liberty talks are now focused on the American company buying 25% in the DTH unit.

• Slowdown Doesn’t Bite Appetite for Luxury Foods: Japan’s luxury chocolate maker Royce will make its India entry by opening a flagship store at Mumbai’s high-street Palladium Mall this weekend at a time when consumers are slashing spends on discretionary products. Bad timing? Perhaps no. Officials at Royce — which sells a 120-gram box of chocolate for 995 on an average — say initial market tests have shown a ready market for super-premium gourmet products. Luxury food retailers such as Godrej Nature’s Basket, Le Marche and Future Group’s FoodHall say there is no sign of slowdown in their business despite a falling rupee pushing prices up. At a time when Indian consumers are shunning discretionary spends and almost all mid-segment consumer goods brands are stepping up promotions or discounts to push sales, luxury food marketers seem to be heading in the opposite direction. American burger chain The Counter has started selling burgers priced upwards of 400 in the country. Nature’s Basket, Le Marche and FoodHall say they are not witnessing downtrading in demand for luxury foods such as cheeses, almonds and cookies. “Consumers are buying tomatoes imported from Holland and avocados that sell for 1,500 a kilo,” says Avni Biyani, Future Group head Kishore Biyani’s daughter and concept head at FoodHall. “If the rupee devaluation continues, there will be a 10% spike in prices, but despite that we do not expect any decline in demand,” she adds. A store manager at FoodHall says Thai fruits are a big hit among consumers, adding that fruits like ice guava, kiwi, berries, mango and dry pineapple are selling like hot cakes despite being 50-100% more expensive than local fruits. Experts say the trend reflects well-off Indian consumers’ increasing exposure to international cuisine. “It’s also about the consumers these companies address. As they go up the pricing and evolution chain, they don’t need to address a larger set of consumers, unlike the quickservice sector that targets mass consumers,” Saloni Nangia, president at consultancy firm Technopak Advisors, says.

• Nestle’s Alpino to Take on Toblerone, Ferrero Rocher: Nestle will soon launch its premium chocolate brand Alpino in India to take on Italian brand Ferrero Rocher and Cadbury’s Toblerone in the country, two officials working at its launch said. “Nestle’s new brand has a striking resemblance with Ferrero in terms of packaging and shape,” one of them said. It will also be priced similar to Ferrero at 30 for a pack with two chocolate balls. Nestle India did not respond to an email query sent to them. The global food giant’s move comes at a time when the growth in chocolate market has halved to around 17% from more than 35% growth a year ago. In fact, the country’s largest chocolate maker Cadbury saw its slowest growth in profit and sales in over six years in 2012 at 20%. Yet it was better than Nestle’s chocolate division that added 69 crore in its kitty and grew by 7% with sales of 1,169 crore in the year ended December. In comparison, Ferrero India — which sells Nutella spread, Ferrero Rocher chocolate and Tic Tac breath mint in the country — grew 30% by adding . 80 crore year-on-year to its revenues of nearly 341 crore in the year ended August 2012. Experts feel that premium chocolates are replacing traditional Indian mithais and thus they are no longer a category just for kids. “Consumers are rewarding innovative launches and the category is premiumising at a faster rate, especially after Ferrero Rocher cracked open the gifting segment at the premium end,” Devendra Chawla, president – Food Bazaar at Future Group, said. “Round shape chocolate is like the new age laddoo in a market where chocolate is the new mithai.” Cadbury has over two-thirds share in the 5,562-crore chocolates market in India, followed by Nestle with 21% market share and Ferrero with 6%, industry insiders said quoting data from market research agency Nielsen.

• Piaggio may Roll Out New Vespa in Fourth Quarter: Italian automaker Piaggio on Thursday said the latest model of its iconic scooter brand Vespa is under evaluation for roadworthiness and may be made available in India from the last quarter of current fiscal. Vespa 946, which made its debut in the European markets in early June, is currently under the evaluation of Automotive Research Association of India (ARAI). Ravi Chopra, chairman and managing director (CMD), Piaggio Vehicles India, said the company may launch another product in the two-wheeler segment by the end of this year. “In India, we will have to go through the process of homologation. Currently, it (Vespa 946) is under homologation under ARAI and the process will take three to four months. Hopefully, it will be available from the fourth quarter of 2014. Vespa 946 is the ambassador of Vespa,” Chopra said. Homologation is the process of certifying whether a particular vehicle is roadworthy and matches certain specified criteria laid down by the government for all vehicles made or imported into that country.

• India is 'ready to use' Blackberry message intercept system: Blackberry is ready to provide the Indian authorities with a way to intercept consumers' messages sent and received on its platform. The news was revealed by the Times of India, which published part of a leaked government document. It said officials appeared to have dropped demands that the firm also made it possible to access business emails sent over Blackberry Enterprise Server. This would bring an end to a long-running dispute between the two sides. In 2010 the country had threatened to impose a ban on Blackberry devices, saying its secret services needed to be able to access suspects' messages and have the keys to decrypt them in order to prevent terrorist attacks. Blackberry has always said it does not have a "master key" or "backdoor" that would make encrypted corporate information sent through its service accessible either to itself or law enforcers. The Times of India said the government now appeared to be "content" just being told which firms were using the Canadian company's Enterprise services.

International:

• Nokia's Lumia 1020 features 41 megapixel camera: Nokia has unveiled a new handset with a 41 megapixel sensor which it claims can record "details never thought possible from a smartphone". It says consumers will be able to zoom in and reframe their photos without worrying about the image quality suffering. Analysts who have tested the device said that it was "without doubt" the best smartphone camera on the market. But they added that was not a guarantee that it would be a bestseller. Market research firm IDC recently carried out a survey of smartphone owners in 25 countries to identify what factors were most likely to drive future purchases. The results placed camera resolution 15th on a list of 23 features. Audio quality for voice, battery life, device security and browsing came top of the poll. "Most people just look at their photos on their smartphone or via a social network on a computer - and for this the other vendors already provide very good quality," Francisco Jeronimo, a mobile phone analyst at the firm, told the BBC. "Nokia needs to convince consumers that this new handset outperforms others in low-light conditions, otherwise they would only really notice the difference if they zoomed in on the images on a large screen or printed out a poster.

• Shopzilla Acquires Zappli: Shopzilla Inc., which connects buyers and sellers online, has acquired Zappli Inc., a provider of mobile-central commerce solutions. The purchase price wasn’t disclosed. Founded in San Francisco in 2010 by a team of e-commerce experts, Zappli has developed innovative solutions such as InstaBuy, an instant online checkout solution, and myShopanion, a mobile social shopping application. “Shopzilla has always been committed to being at the forefront of online shopping, connecting millions of consumers with thousands of its e-commerce partners for great shopping experiences,” said Bill Glass, chief executive officer of Shopzilla, Inc. “The retail industry is experiencing some of the most dramatic changes in consumer behavior in its history. By acquiring Zappli, an innovative player in mobile-centric commerce, Shopzilla will accelerate its ability to offer a highly satisfying and seamless shopping experience across all digital devices.” Over the next few months, Shopzilla plans to integrate Zappli’s technology and expertise to enhance its portfolio of shopping sites. The entire Zappli team has joined Shopzilla. Philippe Suchet, co-founder and ceo of Zappli, has become chief strategy officer of Shopzilla, Inc. Shopzilla, based in Los Angeles, reaches a global audience of over 40 million shoppers each month through its destination Web sites and affiliate network. Its portfolio of online shopping brands in the U.S. and Europe consist of Bizrate, Beso, Shopzilla, Retrevo, RobotOatmeal, PrixMoinsCher and SparDeinGeld, as well as a several B2B businesses.

• Kering's Jean-François Palus Moving to London: Kering said on Thursday its managing director Jean-François Palus was moving to London for professional reasons. A spokesman confirmed press reports that Palus, who is also chairman of the administrative board of Puma SE, was moving to London from Paris. Kering will relocate its corporate headquarters from the Avenue Hoche in Paris to a sprawling development on the Rue de Sèvres next year. Known as Laennec and previously home to a hospital, the Left Bank site features a series of historic stone buildings in cross formations, plus a church. The French group is the parent of a fleet of international brands specializing in fashion and accessories across the luxury and sport-lifestyle segments, the divisions built around Gucci and Puma, respectively.

• Target Goes Big for Back-to-School: Target is going co-ed in a big way, this back-to-school season. The Minneapolis-based mass retailer will join the campus crowd with a freestanding glass-enclosed live dorm room on five college campuses in August and September. Furnished with Target products, students will receive coupons at the structures. Another b-t-s initiative, BullseyeUniversity.com, will be like an online “Big Brother” set in dorm rooms furnished with shoppable Target merchandise. From July 15-18, popular YouTube personalities will co-exist, the tableaux vivants broadcast on YouTube. The roommates, who were chosen based on their online reach and appeal to college-aged students, include Chester See, a producer, actor, musician and entrepreneur; Meekakitty (Tessa Violet), a vlogger, guitar-player and music video maker; Magic of Rahat, YouTube’s premier magician and prankster; Brooke “Dodger” Leigh, a gamer and DIY “nerd-craft”-obsessive, and Clothes Encounters (Jenn Im), whose passion for fashion and self-expression led to a vlog of style musings, tutorials and lifestyleadvice. Shoppers can interact with the roommates, who will be gathered in the communal longe when not hanging out in their own rooms. Target’s C9 athletic wear brand will be hosting yoga classes in the lounge and Ben & Jerry’s built a milkshake dunk tank. Target will also sponsor after-hours shopping events for incoming freshmen at select colleges and universities across the country. During August and September, about 90,000 students will be conveyed by bus from their campus to Target stores for entertainment, offers and shopping.

• Topshop, iTunes Team Up: Topshop’s online customers will soon be able to shop to mood music on the Website, thanks to a deal between the British retailer and iTunes. Over the next couple of weeks, Topshop will begin embedding music tracks in tune with the latest clothing drops on the site — or ones that reflect the local weather in a given market. Visitors will be able to sample the music as they shop, and download their favorite tracks and playlists. For those itching to download new content now, Topshop is also offering its online customers access to the printed word. Topshop's more bookish customers can go online now, and download four free chapters of London journalist Hadley Freeman’s new book, “Be Awesome: Modern Life for Modern Ladies.” “It’s all about bringing new content into our customers’ environment, and programming the Topshop brand around it,” said Justin Cooke, the company’s chief marketing officer, on the sidelines of the first WWD’s first Digital Forum in London on Thursday. “We want to surprise and delight our customers — and it’s also a way for us to understand their behavior,” Cooke said, adding that content offered on the site would be both free and paid-for.