BETTING BIG ON VOLTAS BEKO

Q] What was the reason behind Voltas’ decision to partner with Arcelik to foray into the consumer durables market in India?
Voltas, being a Tata Group company, wanted to be doubly sure as far as choosing a partner is concerned. Having established our presence in the Indian market with the manufacturing and sale of air conditioners, commercial refrigerators, air coolers and water cooling products, we decided to extend our portfolio to other appliances as well. Between reinventing the wheel ourselves or looking at available technologies from other geographies, we decided to partner with Arcelik, who matched our technology requirements, as well as our business ethos, ideology and principles.  Thus began the dialogue with them and today we have a 50:50 joint venture (JV) in this category.

Q] How long has it taken for the JV to shape up and what does each company bring to the table?
The JV process took over 6-7 years, considering the size of both the firms involved. Arcelik is a Koc Holding company based in Turkey with a little over 50% market share, making it amongst the top three players in Europe. Similarly, Voltas is a market leader in the air conditioning category, with a 26.7% market share, according to Nielsen and GfK research. In other appliances categories as well, Voltas is among the leading brands. Thus, we decided to combine our strength in distribution, sales and marketing activities with the strong technological capabilities of Arcelik, in terms of R&D, manufacturing and more. We will complement each other’s strengths to become category leaders in the consumer durables segment in India.

Q] Tell us a bit about the product line-up from Voltas Beko and the one you are most excited about…
Personally, I am very enthusiastic about the washing machine segment as well as the frost-free refrigerators segment. Today, a large chunk of business comes in from the semi-automatic washing machines and the direct cooling refrigerators, but these are for the masses. Looking at the increase in spending power amongst the youth of the country, we see a demand for premium products, including frost-free refrigerators, front load washing machines, fully automatic washing machines, dishwashers and microwaves. These categories are growing at a CAGR of about 10-11%. Thus, we are going to see very exciting times ahead.

Q] Does that mean that Voltas Beko products will be priced at a premium?
We will have an entire range. Prices will be affordable and value for money, catering to every customer requirement.

Q] You are a late entrant in the household appliances market; would this be a disadvantage for you?
While we are late entrants, we have done our research, and found that there are not more than 4-5 major players in the refrigerator category. So there is definitely a vacuum waiting to be filled. Even in the washing machine segment, while semi-automatic washing machines are sold by several players, front load and fullyautomatic variants are not as widely available. Our strength lies in our wide range of front load washing machines and frost-free refrigerators, with unique features and benefits, yet unseen in this market. We are hoping to get the same kind of support from consumers for other categories, which our air conditioning category has enjoyed since 2011-2012.

Q] When are you planning to launch the marketing campaign for Voltas Beko and what is the marketing mix you are looking at?
We will look at a 360 degree campaign. While the TVCs are still being worked on, the Print and Digital campaigns are ready. We will begin with Print, followed by TVCs during the upcoming festive season, when a lot of purchases take place. However, I want to ensure that our channel distribution is in place well before that, so that the products being advertised are available to consumers across the board.

Q] What kind of marketing spends are you looking at?
The air conditioning category is an evolved one for us, so spending 3-3.5% or about Rs 100 crore on ad spends on a yearly basis is sufficient. However, for a new category like Voltas Beko, we will need to spend much more before the brand fully takes off. While the budgets are being worked out, I plan to infuse about Rs 1000 crore in this category over the next five years, including manufacturing, sales and marketing.

Q] What is the USP of Voltas Beko, and alternately what are some of the challenges you anticipate for the brand?
Our USP is firstly value for money, and providing a product which is differentiated. We don’t want to be a me-too product or brand. Therefore we are launching products which are technologically superior and differentiated from the rest. Apart from that, each sub-category has a USP. For example, for the refrigerator category, we want to talk about ‘ever fresh’ because consumers are mainly concerned about the shelf life of food. In the washing machine category, consumers primarily look at efficient cleaning and stain removal. And as a company, we will deliver on our promise.

Q] You mentioned that by 2025 you hope to become amongst the top three players in the consumer durables category. How do you hope to achieve this?
We already have the trust of our large consumer base, backed by the experience of six decades and proven capability in the categories we operate in. It is also a sense of great pride for us that one out of every four customers buying an air conditioner, opts for Voltas. We have a wide base of loyal channel partners. When you enter a new category, both the width and depth of the channel matter. While the width of the channel can be created by anyone, depth of the channel purely depends on customer loyalty. We will also ensure that we don’t restrict ourselves to just this 15,000 strong channel base for the air conditioning category, but we will also expand and double it within the next five years.