The Hindu Business Line : Preethi's progress

CONSIDER this factoid: The all-India market for juicer-mixers is around three million pieces a year, of which only one million is the organised sector, which operates in a price band above Rs 1,500 a piece. Of this, the South forms the biggest chunk of this market with a 35 per cent share and the Tamil Nadu market itself contributes around 38 per cent to sales from the Southern States. And, a fairly hefty 21 per cent of the TN market has been cornered by one brand: Preethi.

The juicer-mixer market - or mixies in common parlance - and the brands that make up this market would, perhaps, not be exactly top-of-mind, given the presence of high-profile categories and brands in the consumer electronics category. But, in a mixie market dominated by better known brands such as Sumeet, Maharaja and Philips, the Preethi brand, owned by the Rs 35-crore Chennai-based Maya Appliances Pvt Ltd, has been slowly chipping away shares from its competitors in the regions it has a presence in.

What's more, with a new spark of ambition, Maya, like a whole host of companies that are headed for the hills, has set up a manufacturing unit at Nalagarh, an industrial estate in Himachal Pradesh, a base which will be used to tap upcountry markets. T.T. Varadarajan, founder of the company and a grandson of former Finance Minister T.T. Krishnamachari, says that it has taken 25 years for the company to venture out of the Tamil Nadu market for a manufacturing base. But, he believes that Preethi, launched in 1978, is a brand whose time has come so the urge to venture out with gumption. While Maya is looking to take the brand to the Sri Lankan markets as well as to West Asian markets, it is also looking to expand its product range eventually to coffee makers, gas stoves, kitchen chimneys and wet grinders. "We want to be a market leader in kitchen appliances," is how a senior executive of the company puts it.

The Himachal unit, due to go on stream soon, will have a capacity of 1,000 mixies a day with scope to expand it by 30 per cent if need be. This will bolster its existing capacity of 2,000 mixies a day at its factory at Perungudi on the outskirts of Chennai. The Rs 1-crore project, which will benefit from a 10-year tax holiday, will be funded through internal accruals. The project will have an equal stake by the Mumbai-based Unimoto, which supplies motors and circuit breakers to Preethi. The company intends to start "seeding" the market in the North through its Himachal project.

Maya has charted out an aggressive growth strategy for the year and expects to corner a 24 per cent share of the juicer-mixer market in the South by March 2005. While it will consolidate in its home State of TN, it expects to make strong gains in the other three Southern States. While the overall market for this category is growing at 5 per cent, Preethi claims the company, saw a growth of 50 per cent a year in 2003-04. While the company sold 80,000 mixies in 2000-01 in the South, it sold 1.76 lakh in 2003-04 in the same region. Several dealers Catalyst spoke to in Chennai vouched for the quality standards the company maintained in its product as well as its after sales response. The more powerful 750-watt motor, which its new Super Grind series introduced in August 2003, dealers say, found acceptance with consumers who wanted a mixer which would grind more and faster.

However, Preethi's growth story began only over the last few years. For the past couple of decades, Preethi was just another player among the plethora of brands in the Tamil Nadu market. The '90s was a time of immense competition and the mixie business was by then a mature product category. In 2000 the company found itself in a spot of trouble with volumes stagnant at 65,000 mixies a year and its traditional TN market under increasing attack from a variety of brands. At this juncture, Maya Appliances roped in the Mumbai-based Suhita Ethnic Marketing Services Pvt Ltd as its sales and marketing consulting partner with a clear objective to push Preethi on a sustainable and profitable growth path. Recalls Swaminathan: "The passion that the Preethi team brought to product development and their belief in building a strong after sales service gave us the confidence that if suitable changes are made in the marketing mix we were confident that Preethi would go far."

Preethi along with Suhita undertook an extensive distribution channel survey where the top management along with the Suhita team went across the four Southern states and met dealers, distributors, wholesales and service centre managers. The extensive tour the team did over a period of three months resulted in the team meeting more than 250 channel partners, all of whom had some feedback to give on improving the range, the advertising, the below-the-line content and so on. Swaminathan says that what came out very positively for the brand was its product quality; consumers said it was a hardy product and Preethi was a fair company to deal with.

The feedback received from the market was then used to identify gaps in the organisation's understanding of buyer behaviour and brand preference for mixer grinders. Although Preethi had been in the market for several years, its management had a healthy distrust of market research. However, on Suhita's insistence, it carried out focus group discussions involving housewives across TN, AP and Kerala. It also picked up the Francis Kanoi market research for durables and retail. Says Francis Xavier of MR firm Francis Kanoi: "The company has a sharp focus on quality and processes."

Armed with this feedback, the top management of Maya took several steps which has resulted in its fast track growth. As recommended by Suhita, Maya put in place professional distributors in the market. The key requirement was the ability and willingness of the distributor to operate on a cash basis since the company refused to bill any of its channel partners on credit. "Even in markets like Kerala where the internal feeling was that a brand cannot survive without credit, Preethi changed its distributors and ensured that no credit was extended in the marketplace," says Swaminathan. This to a large extent improved the cash flow dramatically for the organisation and resulted in market outstanding crashing from 60 days to virtually nil.

The distribution challenge in each area was different. In TN, the requirement was rationalisation since the brand was dealing with a large number of marginal accounts. The dealers had to be consolidated under distributors. The challenge in AP and Karnataka was different. The brand in these two markets had to be built from scratch.

The company also launched mixies at different price points: the EcoPlus at the entry-level and the Super Grind series at the upper end with a more powerful motor and a unique juicer-extractor that could easily separate the pulp and the juice once finished.

Sustaining its momentum is the biggest challenge for the brand today as it finds acceptability in newer markets, says Swaminathan. The company has been growing exponentially the past couple of years and expects to finish FY 2005 at Rs 50 crore. By then, it hopes that it would be the mixie that its customers would `love'.

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