Ds group share name

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PULSE CANDY: SUSTAINING THE BRAND DIFFERENTIATION1

Ritu Mehta and Mayank More wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

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Copyright © 2018, Ivey Business School Foundation Version: 2018-06-01

By April 2017, within two years of its launch, Pulse, a raw-mango-flavoured, hard-boiled candy, had reached ₹3.26 billion2 in sales and become the leader in the hard-boiled candy segment, beating leading brands like Parle Products Pvt. Ltd. (Parle)’s Kaccha Mango Bite and Perfetti Van Melle Group B.V.’s Alpenliebe.3 Pulse sales were even higher than those of multinational brands Oreo and Mars, which had been in the Indian market since 2011.4 Pulse achieved this astounding success with hardly any promotion or advertising for the brand.

The journey for Pulse began in April 2015 when the Dharampal Satyapal (DS) Group, a diversified conglomerate operating out of Noida, India, launched Pulse in three states in India as test markets.5 In the very first year of its launch, sales of Pulse exceeded ₹1 billion.6 With its stupendous success, the brand was launched in other states, and by January 2016, the company had a pan-India presence.7 Within two years, Pulse had surpassed ₹3 billion in sales and the company was able to meet only 60–70 per cent of the demand.8

Eventually, competitors launched similar products, and cheap imitations started to be sold at roadside kiosks. In view of these developments, the DS Group needed to consider how it could keep up with Pulse’s sales momentum. Should it extend the Pulse brand to other formats and flavours? Should it focus on meeting the domestic demand or should it explore overseas markets? These were some of the options the company could explore to sustain Pulse’s competitive advantage.

COMPANY BACKGROUND

The DS Group was founded by Lala Dharampal (the “D” in DS) in 1929. He started with a small perfume store in Chandni Chowk, Delhi, and eventually launched chewing tobacco in 1948. He was later joined by his son, Satyapal (the “S” in DS), who earned the title of sugandhi (perfumer) as a result of his profound knowledge of perfumes. He used this knowledge to innovatively blend tobacco with various fragrances. Under Satyapal’s guidance, the company launched its flagship brand, BABA, the first branded chewing tobacco. The brand took the country by storm and since then, the company had engaged in launching a host of innovative products, including the famous chewing tobacco brand Tulsi9 and Rajnigandha pan masala, a betel nut product.

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The DS Group slowly diversified into non-tobacco businesses. It entered the food and beverage industry (F&B) in 1987 by introducing Catch, a branded salt packaged in tabletop rotary dispensers—the first of its kind in India.10 The DS Group eventually launched a portfolio of spices and beverages under the brand name Catch. In 1999, the DS Group also entered the confectionery segment with the pioneering launch of a herbal mouth freshener called Pass. The DS Group further diversified its offerings, making its presence felt in the hospitality, dairy, agro forestry, and printing and packaging industries.

With the government tightening regulations on the sale of smokeless tobacco products, the company’s focus in the consumer goods segment, especially F&B, increased over the years. The DS Group launched Chingles, mini chewing gums, in 2012, and in 2013 it expanded into dairy products under the Ksheer brand. Pulse was the latest brand in the confectionery segment, launched in 2015 under the umbrella brand of Pass Pass.

The company’s revenues and profits in fiscal year (FY) 2012/13 were ₹33.6 billion and ₹2.9 billion, respectively.11 The F&B segment contributed approximately 22 per cent to the firm’s turnover, which was reported to be around ₹77 billion in FY 2015/16.12

THE CONFECTIONERY MARKET IN INDIA

The per capita consumption of confectionery in India was among the lowest globally, providing a great opportunity for growth.13 With the country’s economic boom and increase in customer spending, several domestic and multi-national companies expanded their operations in the Indian confectionery market, and the per capita consumption of confectionery items increased.

The confectionery market was broadly divided into three categories: chocolate, gum, and sugar confectionery. Within the non-gum, non-chocolate, sugar confectionery market, hard-boiled candies formed the largest segment and showed promising growth.14 The hot climate in India led to a preference for hard-boiled candies over chocolates, which would quickly melt in the high temperatures, especially in summers. Gum was seen by the Indian middle class as a luxury item and was mostly consumed in urban markets.