In April, Indus Pencil Industries, better known for their Deer stationery, launched Teddy Choco – bite-sized chocolate flavoured biscuits. The launch marks Deer’s diversification through its snack food division into the local biscuit market.
According to Naeem Akhter, Director, Indus Pencil Industries, the rationale behind Deer’s decision was: “We have seen tremendous growth in the food industry and expanding our manufacturing vision from stationery to products, such as healthy snacks, allows our company to move in a new direction.”
According to Akhter’s estimates the local biscuit market is worth Rs 100 billion and involves fierce competition from established biscuit manufacturers such as EBM (Peek Freans), Continental Biscuits (Lu), Ismail Industries (Bisconni) and Mayfair, which account for over 60% of the total market share. Deer, however, is entering the market by specialising in bite-sized biscuits as it seeks to differentiate itself from other brands.
“Bite-sized biscuits are widely available in international markets,” says Akhter. “We wanted to create a niche for ourselves as this trend has yet to develop in Pakistan.”
Deer manufactures over a dozen bite-sized biscuit varieties in three different SKUs (24, 50, and 110 grams), with prices ranging from Rs 10 to Rs 30, in line with market practices. Its portfolio includes regular sized biscuits (Peanut and Zeera, for example) but these come in small packs priced at five rupees.
In terms of distribution, Deer is approaching smaller stores in Karachi, Lahore and Rawalpindi as well as smaller cities such as Dadu, Kohat, Mardan, Nowshera and Sukkur.
“There are a lot of small stores in the market where customers go to in order to buy biscuits,” says Akhter “and we will also eventually move to larger chain stores.”
Using the Deer brand has given the snack food division considerable brand equity in the market, and has been an important factor in building relationships with distributors and retailers.
“Deer is associated with quality products and our credibility among traders convinces them to stock our products, which, in turn, brings synergies to our business,” says Akhter.
These synergies are linked to three aspects of Indus Pencils. The first is experience in manufacturing technologies, as the company has been manufacturing stationery for 60 years. Next is experience in organising sales and distribution networks, allowing the company to aggregate sales data from different locations and to gain information about how its products move to consumers, and finally economies of scale conferred by the expansion of their existing factory by a further five floors.
As Akhter puts it: “We did not have to incur additional costs related to opening new administration, finance or technical departments. Moreover, it was easy to replicate our existing set up for the new division.”
The additional space combined with manufacturing and selling experience has consequently allowed the company to develop and market their biscuits from one location.
So far, most of the marketing efforts have been focused on Teddy Choco because, according to Akhter, “it has been well received in the market.”
Humaira Saleem, Executive Creative Director, The Zebra Issue (Deer’s advertising agency), adds that “Teddy Choco is positioned as a fun and wholesome snack for schoolgoing children. The idea of fun and learning experiences combined with health concerns has always been part of Deer’s philosophy.”
Saleem reiterates that such brand perceptions also help to convince parents (who are the purchase decision makers) to buy Deer products for their children.
Teddy Choco is being promoted by an animated TVC (on Cartoon Network) and outdoor advertising (billboards and POS) as well as on Deer stationery’s Facebook page, via which the company is encouraging trials and collecting customer feedback.
Deer plans to introduce more varieties of biscuits (including more cream biscuits) in the future, and is open to the option of expanding its snack food business to other items.
“We would eventually like to bring a wide range of products under the Deer umbrella,” concludes Akhter.