Hey folks!

Picture this — 7 inches of bread, topped with cheese and a sprinkle of basil and parsley.

And the most important bit: it’s just ₹49. Yup, Reuters reported that this is Domino’s latest offering in India and it’s being labelled as the cheapest pizza in the world! My mother would scoff at this ‘bread and cheese’ concoction, but Indians love it. Pizza has a nearly 30% market share in the Quick Service Restaurant (QSR) space.

And it’s not just some gimmick from Domino’s. The spectre of food inflation is hurting people. They’re not eating out as much. And that hurts businesses too because they can’t pass along the high costs to customers. Jubilant FoodWorks which runs Domino’s in India has seen its profits slide by 10% in FY23.

So Domino’s simply wants to offer a stripped-down, barebones version of a pizza. Get people to still indulge in their cravings without hurting their pockets. And that way, pad up their financials too.

And how is Domino’s India managing this budget offering, you ask?

Well, it’s cutting packaging costs. Like eliminating lids from pizza boxes for dine-in orders. It’s also trying to negotiate indirect costs like store rents by paying them in advance and asking for a discount in return.

And with this ₹49 stunt, Domino's is hoping to redirect some consumer traffic and keep its shareholders happy.

And hey! This story isn’t sponsored by Domino’s. But if you waltz into a Domino’s after reading this, then you could tell people there to read our newsletter and subscribe. 😁

Here’s a soundtrack to put you in the mood 🎵

Mere Yaar by The Local Train

Thanks for this tranquilizing track, Satya Laddha!

Let’s slide in now?

A couple of things caught our eye this week 👀

Delhi has a problem with Pernod Ricard

The French liquor maker behind brands such as Royal Stag, Blenders Pride, Chivas Regal, and Absolut Vodka, has been in a spot of bother for a while now. Apparently, Delhi hasn’t let Pernod renew its license for nearly a year.

And that’s weighing the company’s Indian business down. Because it actually commanded nearly 33% and 40% of Delhi’s prestige and ENA (Extra Neutral Alcohol or spirits with >95% alcohol) market share respectively.

But now that Pernod’s products have disappeared from Delhi’s bars and liquor stores, it’s quickly losing out to competitors like Radico and United Spirits.

So what’s happening, you ask?

Well, in 2021, Pernod incentivized retailers to stock its brand ahead of others and broke a few rules in the process. Authorities also accused the company of feeding them with false information. Delhi’s Liquor Policy required manufacturers to disclose their lowest factory prices across the country so that the local government could set competitive prices and boost revenue. But Pernod allegedly quoted higher prices that gave it $23 million in excess profits.

Just a year later it was slapped with a $250 million tax notice for paying lower import duties for nearly a decade starting from FY10. They allegedly undervalued their liquor concentrates.

And since these cases are still pending, Delhi just doesn’t want to let Pernod operate in the city. Of course, the booze maker didn’t sit mum. It dragged the authorities to court because these are just unproven allegations. But a couple of days ago even the Delhi High Court rejected its license renewal plea.

Pernod is surely having a tough time in India (its largest market by volume and third largest contributor to global sales and profit) just because of Delhi.

And we’ll have to wait and see what the company can do about it.

***

Jeep India’s comeback story?

When Jeep arrived on Indian shores a few years ago, it took the market by storm. Everyone wanted to get their hands on the Compass SUV. It had a solid road presence and was priced attractively too.

But since then, the American brand has lost its way. Even though the  SUV market in India has been on a tear, the company hasn’t been able to capitalise on it. It commands less than 1% share of this segment. Competition from the likes of Hyundai, Kia, Maruti Suzuki and Honda is insane. And the management has been worried for a while too. Just look at the statements their top executive made last year: “We need to grow in India, we need to put all the focus in India. We're not here to lose, we're here to win.”

And that’s because the country was selling just 1,000 SUVs a month in the country. Meanwhile, Brazilian sales were 15,000 units a month. And in a market where everyone was vying for an SUV, it was definitely not a good look. Its sales have fallen by 30% in the first half of this year.

Maybe a part of it was because rivals offered cheaper alternatives. Or maybe it was also because there were a handful of reports about Jeeps breaking down within a couple of months into the purchase. And that broke buyer trust too.

Either way, Jeep is trying to salvage things now. It has a new leadership team in India. It wants to set aside some big bucks for marketing and outreach. It’s launching new financing schemes that will reduce the upfront cost of purchase and make the prices more palatable. It’s discontinuing some low-end variants where it didn’t see much demand.

But on the other hand, it is also discontinuing petrol variants and sticking with diesel. That does seem odd in a market where petrol and hybrid variants have picked up quite a bit of pace.

And that’s making people wonder if Jeep’s India strategy is flawed and if this will be the next big foreign carmaker to exit Indian shores.

We don’t know. But maybe what Jeep needs is to regain some of the lost trust too. In 2019, it took the crown as the most trusted automobile brand in India. Maybe it needs to convince people of that again. What do you think?

Infographic 📊

Money tips 💰

Are extended warranties worth it?

Often we’re shoved with requests to buy extended warranties with new purchases. Most appliances come with up to a year of warranty. But if you want to protect it longer, you’ll have to pay a higher price. And just in case something major goes wrong with your new appliance, you could save up a lot of money on repair which you’d have to shell out of pocket otherwise. That’s the premise.

But are extended warranties really worth it?

Well, it’s all a game of probabilities if you look at it. Retailers offer this simply because they’ve done their math and know that it’s a money-making scheme. Fewer people are likely to actually use this extended warranty. And their profit margins on this are as high as 50%.

Think about it — you get one year’s worth of warranty when you buy the appliance. And maybe another 2-3 years of an extension. But most electronics don’t break down within this period. That means, by the time you run into some trouble, the warranty period has also died out.

Also, these extensions come with clauses too. It may not cover damage to certain parts of the appliance. For instance, refrigerators these days have a whole host of electronic features. A power fluctuation leading to damage to the chip may not be covered in the extended warranty.

So yeah, more often than not, these warranties really don’t serve any purpose.

On the other hand, sometimes an extended warranty does help you sleep peacefully at night. Especially when you buy an expensive car. You want to make sure its crucial parts are as protected as possible for as long as you can.

So yeah, while most people might call these warranties a scam, you have to think for yourself about how you use the appliance, in what conditions, and your propensity to worry too. It’s not as black and white as it appears.

Readers Recommend 🗒️

Business Wars | A podcast by David Brown

Today we have an interesting recommendation from Arnab Ghosh. Business wars tell stories of closed-door battles between the richest companies. Netflix vs Blockbuster. Uber vs Lyft. Tesla vs Detroit and more. It has reimagined conversations, putting you in the shoes of the dealmakers, executives and stakeholders.

So it’s not like your typical interview-style podcast as Arnab puts it. “You'll feel like you're right there, witnessing the clash of corporate titans” he says.

Thanks for writing in Arnab. We hope our readers enjoy your recommendation.

Finshots Weekly Quiz 🧩

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Vishal Anand! Congratulations. Keep an eye on your inbox and we’ll get in touch with you soon to send over your Finshots merch.

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