In the late 70s, there were intriguing stories built around the closely guarded “secret formula” for Coca Cola. Legend has it that the Janata government of the day demanded the American company reveal its recipe if it wanted to operate in India. Coke refused and was consequently expelled from the country in 1977. Those days, manufacturing was king and it was assumed that the success of Coke lay in the product itself. Today, it’s recognised that the product makes up only a part of the value of the brand. The Coke brand is currently valued at $64 billion and much of this value has been created through marketing, with advertising and promotion playing a major role.
Brand value was once referred to as an intangible, but it is now calculated and usually seen to be higher than the value of the company’s fixed assets. Take the case of the Zydus purchase of three brands from Kraft Heinz in 2018. The Ahmedabad based company paid Rs 4,595 crore for Complan, Glucon-D and Nycil. Zydus was not buying the factories that made the products. What it bought is the goodwill associated with these well-known brand names.
Multi-national companies like Heinz are masters at creating high value brands. But one Indian company that beat the MNCs at the game is Paras Pharma. In 2010, the Ahmedabad based company was acquired by Reckitt Benckiser of the UK for Rs 3,260 crore, a price that was eight times its annual sales of Rs 401 crore.
It was an unprecedented deal in Gujarat’s business history and Paras Pharma promoter Girish Patel has since been hailed as a marketing genius. After selling Paras, he has gone on to start Vini Cosmetics, which owns the Fogg range of deodorants. And like the Paras brands, Fogg has grabbed market shared from the old-timers and emerged the leader in its category.
Paras Pharma was started in 1965 by Girish Patel’s father, a pharmacy graduate. The company was originally located in Orissa and the young Girish did most of his schooling in Bhubaneshwar. After 13 years, the senior Patel finally sold the Orissa operation and moved back to his home state. Paras Pharma was then a single-brand company, with a product called Stopache, a powerful analgesic which sold mainly in rural centres.
Girish Patel finished his college education in Ahmedabad and took over the reins of the company in 1984, at the age of 25. Two years later, he launched Moov, a pain balm that directly competed with Iodex from SmithKline Beecham. He spent the next ten years building a pan-India distribution network for the product, after which he launched Krack, a heel care cream.
In the years that followed, Girishbhai built a portfolio of brands that challenged old incumbents, including Dermi Cool prickly heat powder, D’Cold, Itch Guard, Ring Guard anti-fungal cream, SetWet hair gel, Livon hair serum, all backed by catchy advertising. Not every launch was successful. For example, there was a winter care lotion that was quietly buried in 1989. But the company did manage an 80% hit rate with its brands, in an industry where only 10% make it.
Paras Pharma outsourced most of its production and focused on marketing. The company’s advertising budget was 30% of sales, remarkable in those times. Most Indian companies of that era were wary of heavy ad-spends, since the correlation with sales was difficult to measure. Girishbhai had no such doubts. He understood the process of brand building and knew that advertising was the key. The ads were sharply focused because he also knew the needs his products were catering to. Going beyond commissioned market surveys, he would spend countless evenings in Gujarat’s pharmacy outlets, chatting with customers and trying to gauge their needs. Unique personal products like Ring Guard and Itch Guard were the result of the insights he gained.
The brands Girishbhai created have since gained a life of their own. In 2012, two years after it acquired Paras Pharma, Reckitt Benckiser sold six of the brands to Marico, of Parachute hair oil fame. These included Set Wet, Livon hair serum and Zatak deodorant. Marico has since invested in energising them all over again. In 2016, Marico re-launched Set Wet with actor Ranveer Singh as brand ambassador.
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