CEAT , the RPG Group flagship tyre company, has gone off the beaten track to take its products to the unreached. It may sound unthinkable to go buy a tyre from a shop stocking groceries, milk and FMCG products. But you could buy a CEAT tyre from such a shop.
The Mumbai-based company has painstakingly built a grid of sales touch points operated by partners who have never sold tyres before but sell them off-the-shelf like packets of milk. Since these small establishments are closest to the end consumer, they have become a prized catch for the company and have helped grow CEAT’s sales in a big way.
“Kirana store operators, puncture repair shops, mini authorised service stations of OEMs (original equipment manufacturers), spare parts sellers are some of the people who we have engaged with to sell our tyres. People who knew nothing about tyres are today selling CEAT tyres,” said Arnab Banerjee, Chief Operating Officer, CEAT.
New distribution model
With two-wheeler sales of 13.46 million in FY22 (as per the Society of Indian Automobile Manufacturers data), India is the largest two-wheeler market in the world. More than half of this volume came from rural and non-urban markets where two-wheelers are often the best medium of transport.
This FMCG-style distribution model has brought rich dividends for CEAT. About 60-70 percent of the company’s sales of two-wheeler tyres is generated from non-traditional type channels such as kirana stores and others.
From being fourth in the ranking table with a market share of 11 per cent in 2011, the company has grabbed the top spot with a share of 30 per cent in the two-wheeler space, dethroning the former heavyweight MRF. “We have close to 50,000 selling points across the country, up from 20,000 a few years ago. We are penetrating deeper into the market and going closer to the customer,” Banerjee added.
CEAT is also able to command a price premium because of its market reach, since it is now most likely the only available brand in the unlikeliest of the places. “I have the highest priced tyres out there. My selling price to the dealer/sub-dealer is higher than our competition. Consequently, my revenue is the highest,” Banerjee added.