Go­ing Glo­caL

The home- grown brands have lever­aged their strengths to emerge with a pan- In­dia taste and a global ap­petite.

Business Today - - SECTOR REPORT FOOD - By E. Ku­mar Sharma

THEY ALL HAD IDEN­TI­CAL BE­GIN­NINGS — the vi­sion of one man, fo­cus on one prod­uct, one small mar­ket and in­volve­ment of the founder in every­thing from man­u­fac­tur­ing to mar­ket­ing. The pro­moter fam­ily-led food brands of­fer­ing rich re­gional flavours have been an in­escapable in­gre­di­ent of In­dia’s pro­cessed, ready-to-eat food growth story. Travel across In­dia and you can­not miss Mrs Bec­tor’s bread in Pun­jab or Vibbs bread and Bedekar masala and pick­les in Ma­ha­rashra. Or in parts of coastal Andhra find Ar­tos soft drink jostling for shelf space with the likes of Pepsi and Coke. Talk about break­fast and snacks and names such as MTR, Haldiram’s, Balaji Wafers and count­less oth­ers come to mind.

Though some like Ar­tos still con­tinue to be lo­cal, oth­ers have out­grown that def­i­ni­tion with a wider geo­graph­i­cal foot­print, blur­ring the iden­tity they were first brack­eted

“We en­cour­age a cul­ture of flaw­less ex­e­cu­tion rather than that of set­ting goals and tar­gets” Chan­dub­hai Vi­rani Founder & MD, Balaji Wafers

“It is im­por­tant to in­tro­duce at least one new of­fer­ing each year – ei­ther a prod­uct or a new con­cept” P. Sadananda Maiya, Founder, MTR Foods

into – re­gional brands. The process has been helped by dig­i­tal plat­forms, en­abling many of them to be avail­able on­line, much like fast mov­ing con­sumer goods ma­jors such as Hin­dus­tan Unilever (HUL) and ITC. Ar­tos, which har­bours hopes of build­ing a larger foot­print, has a turnover of around ` 25 crore. In the foods busi­ness, an­a­lysts categorise play­ers with ` 500 crore turnover as mid-sized and those with ` 1,000 crore or more as large. Much de­pends on the prod­uct, the cat­e­gory and the geo­graph­i­cal foot­print.

Most of the pro­moter fam­ily-led com­pa­nies, at least the big­ger ones, have a long legacy — be it Haldiram’s, whose story be­gan in the first half of the 20th cen­tury led by Ganga Bhis­han Agar­wal in Bikaner in Ra­jasthan or V.P. Bedekar set­ting up a small gro­cery store in Gir­gaum, Mum­bai, in 1910. Apart from the pro­moter’s drive and vi­sion, their growth was also aided by pol­icy in­ter­ven­tions by the gov­ern­ment around food pro­cess­ing, food parks and cold chains. Bet­ter back-end sup­ply chain, qual­ity, tech­nol­ogy and ca­pa­bil­i­ties, es­pe­cially over the last decade, also helped.

Scope for Growth

“There is space for all to grow and no one food com­pany has all the an­swers or so­lu­tions. Out of a to­tal of $700 bil­lion that In­di­ans spend on re­tail mer­chan­dise ev­ery year, 67 per cent is be­ing spent on food,” says Ankur Bisen, Se­nior Vice Pres­i­dent, Technopak, a man­age­ment con­sult­ing firm.

The over­all pack­aged foods seg­ment, he says, is grow­ing at 14 per cent a year. The to­tal size is ` 2 lakh crore, and it in­cludes 11 cat­e­gories. This pie is grow­ing at 8 per cent. If one ex­cludes dairy, oil and sta­ples, the mar­ket size of bev­er­ages, snacks and condi­ments comes to ` 30,000- 40,000 crore and this is grow­ing at 14 per cent, he adds.

To un­der­stand how a lo­cal player can think and be­come big, let’s look at two dis­tinct cases: MTR and Balaji Wafers. MTR be­gan small but is to­day run by a Nor­we­gian ma­jor and is seen as an MNC brand. Balaji Wafers hopes to have a pan-In­dia foot­print in five to seven years; it has al­ready crossed

` 1,800 crore turnover. The jour­ney of Balaji Wafers had started in 1974 when Chan­dub­hai Vi­rani, with his brothers, opened a small re­tail store at a cinema theatre in Ra­jkot, Gu­jarat, to of­fer potato wafers. It took 15 years for the Vi­rani brothers to get to the first crore. This year, says Vi­rani, Balaji will be a ` 2,000 crore com­pany.

Di­rectly en­gag­ing with con­sumers helped de­fine MTR, says P. Sadananda Maiya, who started out in 1976 with one prod­uct, rava idli mix, out of one out­let in Ban­ga­lore. By 2007, he had grown it into a ` 170 crore com­pany with about 130 prod­ucts and a strong foothold in the na­tional in­stant mixes mar­ket; he then sold the busi­ness to a Nor­we­gian ma­jor. Af­ter the end of the non-com­pete pe­riod, Maiya ven­tured out on his own with ‘Maiyas’ again but then a dis­pute with in­vestors reached court. Maiya prefers not to talk about it as the mat­ter is sub ju­dice. Look­ing back at the ini­tial growth recipe of MTR, he says, “We had been sell­ing our only prod­uct – the rava- idli mix – for the first six years since its launch, and that too from only one out­let in Ban­ga­lore.” A di­rect en­gage­ment with cus­tomers at food ex­hi­bi­tions helped him fine-tune fu­ture plans. In the food busi­ness, he says, it is im­por­tant to in­tro­duce at least one new of­fer­ing – ei­ther a prod­uct or a new con­cept — ev­ery year.

Scal­ing Up

But how do you cre­ate a mega brand? Bri­tan­nia MD Varun Berry has this to say: “Ear­lier, there was a be­lief that who­ever can come up with prod­ucts that ap­peal to re­gional con­sumers will rule the roost. Now, if some­one can ap­peal to a larger pop­u­la­tion in In­dia, de­spite the taste buds chang­ing ev­ery 100 kms, that’s the mega brand. There may be smaller vari­ants that you could do on a re­gional ba­sis but the wider ap­peal is be­com­ing im­por­tant. In the North, a lot of peo­ple con­sume South In­dian food, and in the South, peo­ple con­sume North In­dian chaat. Hence, ap­peal­ing to a larger au­di­ence with a brand than hav­ing brands ap­peal to re­gional con­sumers is im­por­tant.” Maiya says dur­ing his days at MTR, he tapped north-east In­dia, not for in­stant break­fast mixes but for his other prod­ucts be­cause, “In hilly ar­eas, prod­ucts like badam milk and milk shakes are more in de­mand.”

Chan­dub­hai Vi­rani, the 62-yearold pa­tri­arch, feels the Balaji busi­ness grew due to fo­cus on en­cour­ag­ing flaw­less ex­e­cu­tion rather than set­ting tar­gets. “If you miss tar­gets, it af­fects your health and I have never till to­day con­sumed any tablet.” But a medicine free life and busi­ness growth have also been pos­si­ble only due to his di­rect in­volve­ment. “For the first eight years, we stud­ied con­sumers. Then, we di­rectly got in­volved in pro­cess­ing and mar­ket­ing of the prod­uct. Only later did we set up a sys­tem of dis­tri­bu­tion through a dealer and then built a mar­ket­ing team.” Balaji Wafers now has around 5,000 peo­ple at three fac­to­ries – Ra­jkot, Val­sad and In­dore. It ven­tured out of Gu­jarat only in 2005, first to Ma­ha­rash­tra and then Ra­jasthan. Soon, it be­came a ` 100 crore com­pany. It touched ` 1,800 last year. In the process, the prod­uct port­fo­lio ex­panded but the food seg­ment re­mained the same. “Ear­lier, we used to make chips only but later ven­tured into nam­keens and snacks.” Vi­rani says at the cur­rent rate of 15-20 per cent per an­num, the com­pany could well be­come an all-In­dia player in five to seven years. Now, it has foot­print in about nine states.

Go­ing Pub­lic

The chal­lenge for most play­ers as they scale up is re­tain­ing the founder’s dif­fer­en­ti­a­tion in the flavour-of­fer­ing while in­sti­tu­tion­al­is­ing and deal­ing with the com­pet­ing de­mands of re­tain­ing con­trol and need for cash. Prataap Snacks, a savoury snacks player, set up by Arvind Me­hta and Amit Ku­mat in 2003, went pub­lic in Oc­to­ber 2017. Man­pasand Bev­er­ages, which is into fruit juice and drinks mar­ket with its flag­ship brand Mango Sip, is an­other player that chose to go pub­lic.

“Peo­ple are used to re­port­ing di­rectly to the pro­moter and so build­ing a new layer of di­rect re­ports can be a chal­lenge,” says Amit Ku­mat, MD and CEO of Prataap Snacks. To beat com­pe­ti­tion, he says, one must choose the tar­get mar­ket and the price point well. Fi­nally, funds are cru­cial for growth and pro­mot­ers should be will­ing to give up con­trol. At Prataap, which went pub­lic last year, pro­mot­ers hold only 25 per cent. It hopes to be a pan-In­dia player in the next 18 months; it crossed ` 1,000 crore rev­enue in FY17-18.

Mean­while, MNCs are also learn­ing the unique com­pet­ing fac­tor in ev­ery cat­e­gory. HUL’s ‘Win­ning in Many In­dia’s’ strat­egy is a case in point. It has di­vided the coun­try into 14 con­sumer clus­ters. It is still early days to say how all this will pan out but the in­gre­di­ents are be­ing put to­gether for a deeper bat­tle be­tween In­dia’s home-grown pro­moter fam­ily-led com­pa­nies and the MNCs.

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