~by MADHUMITA MOOKERJI
“What’s in a name? That which we call a rose by any other name would smell as sweet,” – wrote William Shakespeare in Romeo & Juliet, Placing a strong case for the commodification of the world’s most celebrated flower! But, what if commodification is turned on its head and a product as heterogenous and unbranded as ferrous scrap metal heads for the make-up room, and emerges branded and backed by the assurance of “quality with trust”, like any other FMCG product?
In what is for the first time in the world, Tata Steel’s Steel Recycling Business (SRB) recently unveiled a concept. The fledgling business announced two brand names for the ferrous scrap it is offering, Tata Ferroshred® and Tata Ferrobaled®.
Branding is a key marketing strategy to make products look more attractive to consumers. However, “commodities” are products where one can easily be substituted by another. These are items for which demand exists, but there is no qualitative difference across a marketplace, like iron ore, or even vegetables, for instance. These exist through various grades, but, there is no packaging or labelling initiated or involved as a differentiating factor.
In contrast, brands create differentiated products which are highly desired by their customer base. Of course, within a commodity like steel, finished items like TMT bars, pipes and other construction materials have been branded and at times even endorsed by celebrities.
But, branding scrap is somewhat akin to branding of water, as says a marketing source. “But, more importantly, we should not get caught by the word ‘first’… As long as it is a new, progressive thought, and as long as it raises the bar of the scrap industry, I think, it should be a welcome move,” says the source, adding: “A brand is a promise , so there is pressure on the supplier to offer a good product… Just like when water was first branded …”
When approached, Tata Steel officials declined to comment, saying they would do so only after issuing an official press release. Kiran Khalap, Co-founder and Managing Director, chlorophyll brand consultancy, speaking exclusively to Steel360, stresses: “With a little bit of hard work, it is possible to create a brand out of any commodity. Once that is done, the brand guarantees the buyer the benefits of consistent quality, delivery, stability in pricing, bundled services; while it guarantees the brand owner future sales and low marketing investments when the brand enters unrelated categories (Ansoff Matrix).”
“In the 1990s, Rhone Poulenc branded sand and got a 75% price premium. The Australian Wheat Board brands wheat to get a price premium from buyers in Japan to whom the quality is most relevant. Acme brands bricks and gets a 10% premium,” Khalap further informs.
“Closer home, Parachute branded coconut oil and extended the brand into men’s grooming! So creating a brand out of ferrous scrap is not as difficult as it seems, especially when backed by the most trusted brand in India, Tata. It will involve finding the buyers to whom the difference in the product is most relevant, and then creating service guarantees, including TATs. Branding should not be mistaken for exciting advertising; branding here means standing for a promise and delivering on that promise,” Khalap emphasises.
Zain Nathani, VP, MRAI and MD of Nathani Industrial Services, while commending the move, tells Steel360: “This is an interesting strategy used by Tata. To my knowledge, this is the first time globally that anyone is trying to do branding for a commodity such as scrap. Globally, almost all scrap is sold basis various standards and specifications. The most common specification used is ISRI (Institute of Scrap Recycling Industries) – most buying and selling is done under that umbrella. So a buyer, once the scrap is defined under a specific grade, knows exactly what he is buying/selling. How this translates or corresponds to a brand that a company is trying to sell it under – whether Tata Ferroshred® or Tata Ferrobaled® – and how that impacts the consumer, would be interesting to see.”
Nathani adds: “My personal view is that as long as it means a certain standard or specific grade then that will be the most important thing and not necessarily a brand per se. But this is an evolving and new space and it would be interesting to see the Indian consumer reacting to a branding such as this, which has not been done globally so far.”
That apart, interestingly, as with FMCG products, Tata Steel has gone for varianting too with King Bales and Queen Bales.
Social Media Usage
Tata Steel’s SRB, on its part, is also attempting another never-before. A rather innovative use of social media. Statements like, “You have fed your furnace with scrap. Now treat it with brands! Yesss. For your furnace to produce the best – it needs to be fed with the best!”
Or, “Tata FerroBaled® & Tata FerroShred® – Quality Ferrous Scrap from Tata Steel”.
There is more. “Scrap is a global resource! It is a future raw material! Recycling scrap is a sustainable imperative! It’s time it got a name! Announcing our brand names: Tata FerroShred™ and Tata FerroBaled™.”
And, take this: “Behind every successful King, there is a Queen! Our ferrous scrap bales come in two variants, King Bales & Queen Bales! Pure, impeccable & unblemished! Try your pick!”
Commenting on the social media usage, Nathani says, “Not many companies are trying to use social media to promote their scrap. We have seen recycling as a whole, as an industry, being promoted a lot on social media. But, we have not really seen any company trying to promote its scrap using social media.”
He observes: “Where reaching the right audience is concerned, India is a very large country, most of the scrap buyers are based pan-India and a lot of selling all these years has been through personal relations, personal visits or across the phone. So using social media platforms to promote scrap… I am not sure whether we would be reaching the right audience today but it is an evolving space and tomorrow it could be something worth considering.”
Indian Scrap Market
It may be mentioned that Tata Steel has set up a state-of-the-art 0.5 million tonne (MnT) shredding plant at Rohtak, Haryana, for shredding of obsolete scrap, which has been partly commissioned, with the selling of some products as well.
The Indian scrap market so far has been highly unorganised and fragmented, characterised by manual operations, along with environmental concerns. The long and complex supply chains employ more than 1 million workers who are not in the social security ambit. The scrap changes multiple hands with little or no value addition. The resulting scrap is of low quality and low value-add. Thus, imports are an option but they entail long lead times, higher costs and loss of crucial foreign exchange.
Despite being a ~USD 10 billion industry (and it is expected to grow @ 7% y-o-y), the sector does not have an “industry status” and lacked a robust governance framework till the vehicle scrappage policy came along.
At such a juncture, the entry of organised players will help streamline the currently unorganised scrap supply chain by making available quality processed scrap, enhance transparency and lower the dependency on imports. It would also enhance the traceability and statutory compliances.
In an earlier interview to Steel360, Yogesh Bedi, Chief, Steel Recycling Business, Tata Steel, India, had said, “Organised players will bring about mechanisation in scrap processing through state-of-the-art plants and equipment like balers, shredders, shears, material handlers etc which will reduce manual operations and ensure a safe work environment. The resulting high quality scrap will help satiate long-standing demand for quality scrap by electric arc furnaces, induction furnaces and foundries.”
He added: “organised steel processing would help pave the way for de-integrated and modular steel production, closer to markets, which, in turn, can lead to consistency in scrap supply to furnaces, reduce logistics costs and dependence on imports.”
In such a scenario, branding can fetch extra bandwidth.