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Macro Moves

The ‘Desh Ka Namak’!

Created on 10 Jul 2020

Wraps up in 3 Min

Read by 6.9k people

Updated on 08 Sep 2020

Salt as a commodity is not considered to be that important. But, you would have heard many times about taking everything 'with a pinch of salt.' This means that whenever someone tells you something, do not believe them completely or exaggerate. Salt is usually unique with its properties. You would have surely read in recipes add 'Salt to taste.' If the salt is less in a dish, it tastes bland while, on the other hand, if it's more, it
becomes difficult to eat it. So, the perfect quantity of salt remains subjective.

While salt is important to satiate your taste buds, it has economic aspects attached to it. When we talk about salt in India, the one name that immediately strikes is 'Tata Namak.' It is 'Desh Ka Namak.' Have you ever thought about the reason this brand in salt has been on top of our minds for years now? While all other companies and brands are trying to increase their market share, how is Tata Salt able to maintain its leadership constantly? In this newsletter, we're going to answer all this.

How is Tata Salt doing it?

As a brand, Tata has captured our minds for decades, and Tatas are thoroughly respected for their business ethics. You may be surprised to know that this is not the reason this salt is the market leader. We're not questioning the Tatas' brand value; we're merely saying that this is not the
reason for Tata Salt's great success. A simple explanation for this would be that if this were the case, then other brands and businesses owned by Tatas, such as Tata Sampann spices, Tata Tea, etc. would also be market leaders, which is not the case.

By now, you would think that if it's not the brand value, then what is it? To get the answer, you'll have to delve deep into the business model that is involved in this. To shop groceries (and salt in this case), you would agree that grocery shops near you are still the most preferred choices. These brick and mortar stores have a common problem, and that is lack of space. These small-sized grocery stores are forced to use every inch of their space efficiently. Packs of Salt, which weigh a KG each and cost around Rs. 18 (for Tata Salt), take up space and do not provide much
profit margin to the shopkeepers. But, they can't stop keeping salt because it's a staple ingredient of our kitchens.

This is where Tata Salt gets a sort of first-mover advantage. Shopkeepers keep it, and we buy it because salt doesn't affect our budget. When other brands (like Nirma, Pillsbury, etc.) approach the shopkeepers, and if their product is priced less, the shopkeepers refrain from keeping them. Because that would take the same amount of space but give them lesser earnings, on the other hands, if a brand like Puro (which costs Rs. 99 for a KG) approaches them, even then they won't prefer keeping it as the customer demand might not be high for it. So, in both cases, Tata Salt gets the advantage, and it continues to lead the market. Isn't this interesting?

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