Daily News Digest- 3rd Feb'14

Thought of the Day:

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Following made the Headlines:

India:

• Big B’s ‘Poison’ Dart Leaves Pepsi Cringing: Amitabh Bachchan’s contract with PepsiCo India as its brand ambassador for eight years came to a natural end and the superstar did not snap ties with the soft drinks maker prematurely, dismaying company executives who wondered why the mega star equated the brand with “poison” on Thursday. A spokesperson of the company said on Sunday night: “Amitabh Bachchan is a living legend, and it’s only natural that statements such as his can sadden employees of any organisation, as they look up to their brand ambassadors as thought leaders.” PepsiCo paid the Bollywood star 3 crore a year, which amounts to a total of about 24 crore. The association began in 1998 when Bachchan was roped in as brand ambassador for Mirinda Lemon. Between 2002 and end-2005, he endorsed Pepsi cola, starring in campaigns for the soft drink. Rohit Ohri, ex-managing partner at JWT Delhi and now chairman of the Dentsu India Group, recalls how Bachchan cited the ‘ullu’ ad, in which he stumbles into a home thirsting for a Pepsi, as an all-time favourite. Ohri, who was heading the Pepsi-Co account in those days, said: “Bachchan has endorsed Pepsi for many years. He has always evaluated the brands he endorses carefully. I’m surprised he is now having second thoughts.”

• India is Kohinoor in Zuckerberg’s Facebook Crown: She’s the India head of a global firm that celebrates its 10th anniversary this week, and the company’s founder is a tech icon who says India is the next big thing for his business. She appears confident the Indian market can deliver what the boss wants. Kirthiga Reddy (42), Facebook’s India chief, says her challenge is to make Indian firms see Facebook as a mass media, not social media. “That’s the shift that I see, that’s the kind of conversation I have with Indian CEOs and CMOs,” Reddy says. “Zuck (Mark Zuckerberg, Facebook’s founder) sees India as a key market…a large market for our monetisation drive, a lead market for emerging economy models,” says Reddy, who joined the company in July 2010. “What we learn in India, we implement elsewhere,” she adds. FB’s India numbers are impressive: 93 million users, second only to the US user base, and as many as 75 million of these are on mobile (December 2013). Given FB’s globally announced emphasis on exploiting the mobile platform, FB India seems to have the right kind of platform. Facebook, as a company, started operations in India about four years ago and Reddy came on board when the user base was a mere 8 million in the country.

• Marico Forays into Hair Colour Space with Livon: Consumer goods maker Marico has entered the hair colour business with its Livon brand, kicking off a revamp exercise that will focus on the Paras Pharmaceuticals products it had acquired two years ago. Livon hair colour is priced about 30% lower than category leader L'Oreal and will be competing with Procter & Gamble's Wella, Revlon, Godrej Expert and Streax and CavinKare’s Indica. It is currently av ailable in some big markets. “The entry point creme segment is expected to witness the fastest growth in the category. Livon conditioning colour occupies a sweet spot that maximises aspiration with affordability,” said Saugata Gupta, CEO of Marico, the maker of Parachute hair oil and Safola. Marico had bought Paras Pharmaceuticals’ personal care products, including Livon hair serum, Zatak deodorant and Set Wet hair gel, from Reckitt Benckiser in 2012 for about 700 crore. The Mumbai-headquartered company, which operates in about 25 countries in Asia and Africa, has been cross-leveraging brands across its domestic and international businesses, mirroring similar moves by FMCG peers Dabur and Godrej. India’s hair colour market, estimated to be worth over 2,000 crore (excluding henna), includes creams, powders, liquids, dyes and henna. Experts say that the hair colour segment, with a penetration level of just 36%, offers plenty of room for growth. Marico said hair colour offers the dual advantage of a big category with low-to-medium penetration. “Livon has a strong conditioning equity, which enables us to address consumers concerns of effect on hair,” Gupta said. “This allows us the opportunity of extending a conditioning brand to hair colour where consumers are concerned about the effects of hair colour.” Last week, the company declared stronger-than-expected quarterly profits but said volume growth was just 3%, reflecting what some analysts say is the larger trend of consumption slowing down across categories. “The volume growth is largely a reflection of weakness in the industry particularly hair oils,” Kotak Securities analyst Ritwik Rai said in a recent note. Analysts say Marico has been scaling up its distribution at ‘kiraana’ stores, modern trade outlets and cosmetics stores. Salon firms say the shift from black to other hair colours has been quite dramatic over the past two years, with colours such as brown, gold and burgundy doing very well. A study by research firm Mintel indicates that India could be a 'star performer' in the hair colour market in Asia Pacific between 2012 and 2016, growing at over 100%.

• Luxury retail fever grips Kolkata: Minu Budhia, a psychotherapist and founder-director of Addlife Caring Minds is ready to be spoilt for choices when it comes to shopping. Like many of her friends Minu, who loves to indulge into luxury brands, is finding Kolkata waking up to luxury retail. Even a few months back it was difficult to find a Caran d'Ache's Shiva limited edition pen with a price tag of Rs 7 lakh on the shelves of any shopping mall in Kolkata. A watch priced at Rs 1.5 lakh was rarely seen on the shelves of any shopping mall in Kolkata. To top it all brands like Gucci, Canali, Burberry or Emporio Armani are likely to open their stores soon. "You have a host of choices here now when it comes to luxury retail in Kolkata. In fact, I was in Palladium Mall in Mumbai a few days back and I found most of the brands are now present in Kolkata," Budhia said. Even a few years back the concept of a luxury store was not in Kolkata as retailers found the market more price-sensitive. "But then, unless you are there, you will never know," felt Sanjeev Mehra, general manager of Quest. Quest is likely to host luxury brands like Paul Smith, Michael Kors, Rolex, Tag Heuer or Breitling. Some of the brands like FCUK, Tommy Hilfiger, Vero Moda, Nautica, Guess, Forever New and CK, have already opened their shops in the city. For other brands like Timberland or Kenneth Cole, which are not easily found on shelves, there is a lot of enthusiasm on the e-commerce sites. Even a few years back, other than watches hardly there was any luxury brand in Kolkata. There were 'trunk shows' in which a brand like Jimmy Choo would come to a five-star hotel for two-three days, open its suitcases, invite the hoity-toity and sell. The creme de la creme would come, buy and leave. Actor Rituparna Sengupta takes time out for shopping whenever she is shooting abroad. "When in the US, I prefer to go to GAP, Colors of Benetton or Banana Republic ... and of course Marks & Spencer. You will not find good brands in here. Last year, I was in Boston and I got hooked on to Macy's," she said. Fond of brands like Zara, Armani and Gucci, Rituparna never had her 'thirst quenched' when she tried to do a bit of shopping in the city.

• Cheaper smartphones: Lenovo set to challenge Samsung, Micromax, Nokia & Apple in India: The competition in India's smartphone space could hot up further with Lenovo likely to emerge as a real threat to major players Samsung, Micromax, Nokia and Apple post the Chinese major's acquisition of Motorola Mobility, with consumers likely the biggest beneficiaries of cheaper devices with better features. "We have ambitions of being a leading player in the PC+ space and Motorola Mobility will give us patents and technical talent that will be very relevant and helpful in emerging markets including India," Lenovo India's managing director Amar Babu told ET. The Chinese smartphone maker - the world's largest personal computer maker - is one of the strongest brands to come out of China. It would like to replicate its success in India, among the world's fastest-growing smartphone market. With Motorola in the kitty, the company can push the throttle on branding and gain traction in emerging markets like India, say analysts. India's fragmented smartphone market is dominated by global major Samsung and home-bred handset makers Micromax and Karbonn, who together accounted for over 60% of the smartphone market during the July-September period in 2013 when nearly 13 million smartphones were sold. Lenovo and Japanese consumer major Sony, along with some 24 others, made up for around 29% of the smartphone market, research firm IDC said. With Motorola Mobility now in its kitty, Lenovo could offer innovative features on cheaper smartphones, forcing competitors to follow suit, say analysts. Microsoft recently said that its acquisition of Nokia's devices business will give the integrated company scale which could allow it to lower prices of its smartphones in India, a cost-sensitive market. "The strategy is simple, we build scale in China and expand to the rest of the world," Babu said. "Our China business has grown 120% year-on-year last quarter, and they have 40 models. I need to make sure that I am picking and choosing the right models, customise and localise them before bringing to the Indian market." This, he added, will allow Lenovo to bring quality products at competitive prices, while the increasing scale could open up the window of beginning manufacturing in India.

International:

• Actor Philip Hoffman found dead at home: Oscar-winning actor Philip Seymour Hoffman was found dead in his New York apartment on Sunday. An NYPD spokesman said the cause of the 46-year-old actor’s death was under investigation. “He was found dead in his bathroom of an apparent drug overdose,” he added. Hoffman reportedly sought help for heroin addiction, including a stint in rehab, last May. He had spoken in interviews about “falling off the wagon” at that time after remaining clean for 23 years. Hoffman was most recently seen in the ‘Hunger Games’ sequel ‘Catching Fire’. He has been critically lauded over his career, including winning a Best Actor Oscar for his role in 2005’s Capote. He has also appeared in ‘Magnolia’, ‘Mission: Impossible III’, ‘The Boat that Rocked’, ‘The Master’ and ‘Moneyball’. Just a month ago, Hoffman was the victim of a death hoax.

• After Walmart, Amazon lobbies in US for Indian FDI: After supermarket giant Walmart, it is online retail major Amazon which has begun lobbying with the US lawmakers to seek their support for facilitating its "foreign direct investment in India". According to lobby disclosure reports filed with the US Senate, Amazon.com and its group entities including Amazon Corporate LLC have been lobbying on various issues since at least year 2000. However, it was only in the last quarter, ended December 31, 2013, when its lobbying issues included "foreign direct investment in India", shows the latest disclosure report dated January 22, 2014. During this quarter, Amazon spent a total amount of $ 960,000 (over Rs six crore) on numerous lobbying issues, which included "issues related to free trade agreements", "Transaltantic Trade and Investment Partnership", as also matters relating to various Acts and proposals in the US. Among others, Amazon lobbied with the US Trade Representative, the Department of Commerce, the Department of State and the US House of Representatives on these issues. During entire 2013, Amazon spent a total amount of $ 3.45 million on lobbying, while such expenses have been mostly rising since the year 2000 when it began lobbying, shows the disclosure reports filed with the Senate. The total lobbying expenses during these 13 years exceed $ 21.5 million (about Rs 136 crore), but any Indian issue has figured among the "specific lobbying issues" in these reports for the first time ever. Amazon's lobbying in the US comes at a time when Indian government has floated a discussion paper on allowing FDI into e-commerce retail business in the country. A final decision would be taken after taking into account responses to this discussion paper.

• Porsche board members face 1.8bn euros lawsuit: Porsche's chairman Wolfgang Porsche and board member Ferdinand Piech are being sued by seven hedge funds over its failed takeover bid for Volkswagen. They are seeking 1.8bn euros ($2.4bn; £1.5bn) in compensation. Porsche has been accused of misleading markets in the run-up to its takeover bid for VW in 2008. Porsche initially dismissed speculation it was seeking to takeover VW, but later revealed it that owned or had positions on almost 74% of VW shares. Some investors had bet against Volkswagen shares, expecting them to fall in the absence on any firm takeover bid from Porsche. However, Porsche's disclosure of an increased holding triggered an unprecedented stock market squeeze on VW shares as investors rushed to buy them to cover their short positions. Porsche, which has earlier faced similar cases, has denied any wrongdoing. "Porsche SE and its supervisory board members will defend themselves with all available legal means," the carmaker said.

• Etihad and Alitalia airlines in 'final phase' of investment talks: Etihad Airways and Alitalia are close to agreeing an investment by the Abu Dhabi carrier in the troubled Italian airline, the companies said on Sunday. The airlines said they are in the "final phase" of talks, which may take another 30 days to complete. Neither side disclosed the size of the possible investment, but there have been reports that the fast-expanding Gulf airline could take up to 40%. Etihad has taken stakes in Air Berlin, Aer Lingus, and Virgin Australia. A deal would give Etihad a stake in one of Europe's biggest travel markets. Alitalia flies about 25 million passengers a year, but is weighed down by debts of about 800m euros (£656m) and Etihad could provide a welcome injection of money. The Italian airline, which had to be bailed out by the government, employs about 14,000 staff and is regarded as one of the country's more important business assets. Alitalia chief executive Gabriele Del Torchio said on Sunday that a deal would be "an important step in creating a solid and competitive Alitalia". Giorgio Squinzi, head of Italy's main employers' group, Confindustria, also welcomed the news. "A strategic alliance with a strong group that is willing to invest and does not sideline our country is a positive development," he said. Last October, Alitalia approved plans for a 300m-euro capital increase as part of a strategy to fend off bankruptcy.

• Tandy Brands to Cease Operations: Tandy Brands Accessories Inc., the men’s belts and leather goods producer that has spent much of the past year engaged in a series of liquidity battles, intends to discontinue its operations. The company said it would shutter after attempting to sell of some of its assets, including a facility in Mexico that was closed earlier this week, and its remaining inventory of men’s and boys’ belts, which it hopes to sell to Wal-MartStores Inc. After violating the covenants of its earlier credit facility with Wells Fargo Bank following a shortfall in sales of gift merchandise during the 2012 holiday season, Tandy secured $29 million in financing from Salus Capital Partners in July that was secured by essentially all of the company’s assets. However, it defaulted on the new facility after delays in the closing of the Salus deal caused lateness in gift deliveries for holiday 2013 and it was unable to meet other shipment windows because of damage to a Chinese production facility in early October because of Typhoon Fitow. It lost $958,000 in the quarter ended Sept. 30 as sales slid 23 percent to $19.9 million. According to a Securities and Exchange Commission filing, Salus formally notified Tandy that it was in default on Wednesday and said it would “exercise certain rights available to it” under the securitization wording of the facility. The SEC document indicated Tandy had been unable “to enter into a strategic transaction that would have allowed [it] to continue operations.” Calls to Tandy seeking comment weren’t returned. Shares of Tandy Friday closed down 51.7 percent, or 15 cents, at 14 cents. Their 52-week high, reached on Feb. 8, was $1.59.