The Hindu Business Line : Lotte, DS Group venture to launch gum next year

THE joint venture between Lotte Company Ltd of Japan and the Delhi-based DS Group is expected to begin with the launch of gum in the Indian market under the Lotte brand by December 2005.

The joint venture, in which Lotte will retain 70 per cent stake, has identified a site in Solan, Himachal Pradesh, to start manufacturing. The venture plans to break even within the first two years.

Lotte is already present in the country through its acquisition of the erstwhile Parry's Confectionery Ltd based in Chennai.

When contacted, the DS Group President, Mr Ashok Aggarwal, told Business Line: "Lotte is a global confectionery giant with 14 per cent of the world's gum market. Their brand will sell through the joint venture and the first product is expected to roll out by December 2005. We are yet to finalise the product portfolio but most likely the venture will begin with several varieties of gum."

The Lotte India Managing Director, Mr N.C. Venugopal, had earlier told Business Line that his company would look to diversify into several product categories including chocolates, biscuits, snack foods and ice creams.

The company is currently studying the market and will look to roll out its brands in two or three years.

Mr Venugopal had said that early next year Lotte planned to manufacture and market a range of chewing gum with brands such as Spout and Lotte Xylitol, a sugar-free variety, which is a $100-million (around Rs 436 crore) brand worldwide.

Meanwhile, Mr Aggarwal said the new company is expected to be named Lotte DS India Ltd and is likely to be incorporated within the next few weeks. Asked about a possible overlap between products from Chennai and Himachal, he said Lotte will "synchronise product strategy. Parrys' strength is products such as hard-boiled confectionery while our joint venture will concentrate on products like gum initially." Sources said that the parent company will have to take a call on which sub-brands will be made by whom so that there is no overlap of products.

On whether the two ventures would have a common distribution network, Mr Aggarwal said no such decision has been taken as yet. He did state, however, that the Rs 750-crore DS Group decided to enter the highly competitive confectionery business to leverage its existing "distribution strength."

At present, the group has access to 10 lakh retailers in what is known as the paan-beedi channel and to another 15,000 dedicated wholesalers for its tobacco brands that include `Baba' chewing tobacco and `Rajnigandha' paan masala.

More Stories on : Strategy | Alliances & Joint Ventures | Food & Dairy Products | Brands

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