New Delhi: When Bharti Walmart Pvt. Ltd opened its wholesale store near Chandigarh earlier this year, it found in a customer survey that demand existed for a ghee (clarified butter) brand that had been non-existent in most markets for several years.
The retailer then approached GlaxoSmithKline Consumer Healthcare Ltd (GSKCH), the maker of Gopikaghee, and made a pitch for reviving the brand.
“We told them the opportunity is win-win for both of us,” said Arvind Mediratta, business head for cash-and-carry at Bharti Walmart, a 50:50 joint venture between Wal-Mart Stores Inc., the world’s largest retailer, and New Delhi-based Bharti Enterprises Ltd. “They didn’t have the distribution focus on that brand and we thought we could distribute it in our trade areas. So we entered into an exclusive distribution tie-up.”
Today, Gopika outsells market leader Verkaghee in that cash-and-carry store in Zirakpur, Punjab, and GSKCH is happy to see a big increase in its sales, said Mediratta.
Retailers in India are not only busy building their private label portfolios, they are also looking at opportunities to revive old brands that still enjoy some recall among consumers or are looking at relaunching brands that have lost their sheen over the years.
Bharti Walmart is also handling the distribution of another GSKCH brand—the chocolate-flavoured health drink Maltova. Since acquiring Maltova from Jagatjit Industries in 2000, GSKCH has re-launched the brand twice—in 2002 and in 2004.
The brand had, however, “lost momentum”, according to Mediratta.
He said Maltova is now selling very well in Bharti Walmart’s three stores in Punjab, the target market of the beverage.
GSKCH, through its public relations agency Genesis Burson-Marsteller, declined to comment for this story. Emails sent to Shubhajit Sen, the company’s executive vice-president for marketing, on 30 November went unanswered.
There have been other successful brand revivals. In 2006, the Future Group acquired a mothballed jeans brand, Buffalo, from a family-owned company because the retailer found the brand still retained some “residual memory” among consumers. The company relaunched the jeans brand and spent crores of rupees in marketing it.
“We are extremely happy with it, and today it’s one of the fastest growing among our brands,” said Santosh Desai, managing director of Future Brands Ltd, the unit that is developing private brands for the country’s largest retail group.
Kishore Biyani, chief executive officer of Future Group, said his organization is currently in talks to acquire “many” such defunct brands in the home and personal consumer goods segments, declining to name any.
“Instead of building a new brand, why can’t we take a defunct brand and build it up so the primary work is always done,” he said. “It brings brand salience.”
Brand salience is the degree to which a brand is recalled by a consumer who is about to make a purchase.
Biyani said the company is also on the lookout for small-time brands that can be scaled up.
Jealous, a small jeans brand acquired five years ago, was a small Rs.1 crore business. “Now it’s nearly a Rs.40 crore brand for us,” he said.
According to Abhishek Malhotra, a partner at consulting firm Booz and Co., reviving existing brands comes with its own sets of advantages such as a ready infrastructure and brand equity.
“For modern trade, there are two choices. Either they can create their own brands or there is benefit of going with an existing brand that has all the infrastructure and try to reinvigorate that,” he said.
An organized retailer can help a great deal in reviving a brand, Malhotra said, and added, “A Wal-Mart or an Aditya Birla (retail) can offer significant upside and bring it back into the brand curving.”
Encouraged by its experience, such as with Gopika, Bharti Walmart said it will continue to identify regional brands that have appeal in certain parts of India as it expands to newer states.
Currently, Bharti Walmart operates five Best Price Modern Wholesale hypermarkets— three in Punjab, and one each in Rajasthan and Madhya Pradesh. It plans to expand to other parts of the country.
“We will certainly look at such brands, which may not be national brands, but would have some brand equity in certain pockets of the country,” Mediratta said.