A STA­PLE DIET

The In­dian con­sumer is be­com­ing aware of which brand of rice or atta to buy and food com­pa­nies and re­tail­ers are leav­ing no stone un­turned to cap­i­talise on the grow­ing trend.

Business Today - - SECTOR REPORT FOOD - By AJITA SHASHIDHAR Pho­tographs by Rachit Goswami

THE HUM­BLE DAL, chawal and roti have never been as fash­ion­able as they are to­day. Right from Bol­ly­wood icons to celebrity chefs to di­eti­cians, every­one, it seems, is talk­ing about the good­ness of tra­di­tional In­dian food. Nowhere is the trend clearer than in a mod­ern re­tail store where you nowa­days see “dis­pro­por­tion­ate” shelf space be­ing ded­i­cated to In­dian sta­ple food such as wheat, pulses and rice. The ` 25,00,000 crore In­dian sta­ples busi­ness is cer­tainly gath­er­ing steam as branded sta­ples make their way into con­sumer homes.

Fu­ture Group, for in­stance, sells as many as 100 va­ri­eties of rice from Ko­lam

and Sona Ma­soori to Govind Bhog and, of course, Bas­mati. Its wheat brand, Desi Atta Com­pany, has close to 57 va­ri­eties of flour. Sim­i­larly, Go­drej Na­ture’s Bas­ket has cre­ated a pre­mium sta­ples brand called Healthy Al­ter­na­tives which has 13-14 rice va­ri­eties rang­ing from brown to black and even red rice. Each pack men­tions the sourc­ing story of that vari­ant and why it is good for you. Even cash & carry re­tailer Metro Cash & Carry, which mostly caters to ki­rana re­tail­ers and in­sti­tu­tions such as ho­tels and restau­rants, has three sta­ples brands — Ar­row, an en­try-level brand, Fine Life, which is pre­mium, and Fine Life Bio, which claims to be or­ganic and pes­ti­cide free. It com­petes with other pre­mium or­ganic brands such as Health Mantra. “We have peo­ple who are ex­perts at buy­ing dif­fer­ent va­ri­eties of rice rel­e­vant to lo­cal tastes. The im­por­tance of good qual­ity, pes­ti­cide­free prod­ucts across the value chain is grow­ing,” says Arvind Medi­ratta, Man­ag­ing Di­rec­tor, Metro Cash & Carry.

The mod­ern In­dian con­sumer is well trav­elled and has had the op­por­tu­nity to try var­i­ous cul­tures and cuisines and get in­flu­enced by dif­fer­ent cook­ing styles. But now, there is a trend of com­ing back to the roots, say food in­dus­try ex­ec­u­tives. They may be in­spired by keto di­ets and food cooked in cold pressed olive oil but very much want the good old dal, roti and sabji as they be­lieve this is where nour­ish­ment comes from. “They want food fresh from the farm which is authen­tic and pure. There is an op­por­tu­nity for peo­ple who gen­uinely de­liver that,” says Richa Arora, COO (Con­sumer Divi­sion), Tata Chem­i­cals.

Ashni Biyani, Man­ag­ing Di­rec­tor, Fu­ture Con­sumer Prod­ucts, won­ders why none of the food ma­jors have fo­cused on sta­ples, also called the cen­tre- of-plate food. “Bar­ring ITC, com­pa­nies have made very lit­tle ef­fort to brand the cen­tre- of-plate food. We may have branded nam­keen, chips and bev­er­ages but lit­tle ef­fort has gone into brand­ing the cen­tre- of-plate food.”

BUILD­ING THE CAT­E­GORY

Biyani says build­ing habits and brand­ing sta­ples isn’t easy. “How­ever, once cracked, the op­por­tu­nity is so much larger. For us, food is all about nour­ish­ment and find­ing every­day pur­pose, which can't hap­pen with­out the cen­tre-of-plate be­ing served and ser­viced.”

“One can't make money by just be­ing pre­mium. The sta­ples busi­ness is a sup­ply chain story” He­mant Ma­lik CEO, ITC Foods

Branded sta­ples is a tough busi­ness as it is about brand­ing com­modi­ties de­pen­dent on agri­cul­tural cy­cles. The mar­gins are wafer thin too, in lower sin­gle dig­its. ITC, for in­stance, took close to 10 years to build its Aashir­vaad brand of atta. “We had to first en­sure that the price-value equa­tion was right as the con­cept of buy­ing branded atta didn’t ex­ist. There­after, we had dif­fer­ent strate­gies for North and South. In north­ern mar­kets, it was about con­vinc­ing the con­sumer to buy a prod­uct that was more hy­gienic and clean than the chakki atta but not ex­pen­sive. In the South, the fo­cus was on build­ing the cat­e­gory, as con­sumers didn't know how to use atta in their diet,” says He­mant Ma­lik, CEO, ITC Foods.

Tata Chem­i­cals’ tryst with branded sta­ples started in the 80s when it part­nered with the gov­ern­ment of In­dia by launch­ing branded iodised salt. The idea was to ad­dress io­dine and other mi­cro nu­tri­ent de­fi­cien­cies. To­day, 80 per cent of salt avail­able in the coun­try is branded. The com­pany has fol­lowed a sim­i­lar route with its Tata Sam­pann brand of pulses and spices which claims to ad­dress the prob­lem of pro­tein de­fi­ciency. “We have iden­ti­fied Tata Sam­pann as a brand un­der which we will build a port­fo­lio of prod­ucts. The core is nu­tri­tion. Pulses are one way of of­fer­ing pro­tein. We have also launched chila mixes, which are pro­tein-rich prod­ucts,” says Arora of Tata Chem­i­cals. The com­pany is also plan­ning to launch other ready-to-eat prod­ucts rich in pro­tein. “There is an op­por­tu­nity to cre­ate gen­uine propo­si­tions around health,” says Arora.

Branded sta­ples is about value ad­di­tion and not so much about just pack­ing and sell­ing rice, dal or atta. Mendi­ratta of Metro says the fastest grow­ing sta­ples brand at his stores is or­ganic Fine Life Bio, which he claims is pes­ti­cide free. How­ever, a large seg­ment of his cus­tomers still prefers buy­ing loose, the only dif­fer­ence be­ing that it is much more qual­ity con­scious than be­fore.

“There is so much more you can do with flours and other sta­ples,” says Biyani of Fu­ture Con­sumer. She sells a brand called 90/10 Atta, which has 90 per cent atta and 10 per cent oats. “In­di­ans don't just buy the reg­u­lar atta. There is nachni, jowhar and ba­jra atta; one can value-add by mak­ing them gluten free, pro­tein en­riched, and so on.”

PROFIT CHAL­LENGE

Still, the fact re­mains that it is a low mar­gin, low profit busi­ness. “The mar­gins are too low to build brands through ad­ver­tis­ing and mar­ket­ing, es­pe­cially at low scale,” says De­bashish Mukher­jee, Part­ner, AT Kear­ney. But the com­pa­nies are get­ting at­tracted by the huge scale of the seg­ment. “The per per­son con­sump­tion of sta­ples is far higher than that of bis­cuits or dairy prod­ucts,” he says. ITC’s Aashir­vaad is al­ready a ` 4,000 crore brand, while Fu­ture Group’s Desi Atta Com­pany has be­come a ` 300 crore brand in a span of three years.

So, how are com­pa­nies man­ag­ing prof­its and mar­gins? Is pre­mi­u­mi­sa­tion the key? “One can't make money by just be­ing pre­mium. The sta­ples

busi­ness is a sup­ply chain story,” says Ma­lik of ITC Foods. “It is all about how com­pet­i­tive I can be and that’s where our e- Chaupal and agri busi­ness come in. We not only get the best price, we are also ef­fi­cient and in­no­va­tive in reach­ing man­u­fac­tur­ing lo­ca­tions,” says Ma­lik. In­stead of the farmer de­liv­er­ing wheat to the man­u­fac­tur­ing lo­ca­tion, ITC col­lects from the farm and trans­fers it to the fac­tory on a trailer. “Ev­ery paisa makes a dif­fer­ence. This gives me scale.”

With raw ma­te­rial ac­count­ing for close to 80 per cent cost, back­ward in­te­gra­tion and sourc­ing be­come cru­cial. “Sourc­ing ef­fi­ciently is one part of the game. More im­por­tant is mar­ket-linked pric­ing. When com­mod­ity rates go up and down, it is im­por­tant to have mar­ket-linked pric­ing, so that you don’t miss out when the mar­ket is high and can be tight when the mar­ket is low. You need ears on the ground, know­ing what farm­ers are sow­ing and be­ing with the farm­ers dur­ing har­vest time,” says Arora of Tata Chem­i­cals. The com­pany has cre­ated a sys­tem where 25-30 per cent vol­umes are com­ing from di­rect dis­tri­bu­tion in­stead of to­tal de­pen­dence on clear­ing & for­ward­ing agents. “This is faster and fresher. You are able to man­age your pre­mium po­si­tion in the mar­ket to the ex­tent you want to. These are the things which, in terms of scale, mat­ter,” she says.

Apart from the na­tional play­ers, com­pa­nies such as Shakti Bhog and Dou­ble Horse are happy with their re­gion-spe­cific play as they un­der­stand their mar­ket well enough. “The busi­ness needs huge in­vest­ments. It will need the money power of a large cor­po­rate to do it,” says Mukher­jee of AT Kear­ney.

The busi­ness of branded sta­ples is surely a longer term play. “One needs to be­lieve in it and keep at it. It needs an In­dian com­pany to un­der­stand these nu­ances,” says Biyani of Fu­ture Con­sumer. The com­pa­nies, it seems, are cer­tainly mak­ing the right moves.

“Peo­ple want food fresh from the farm which is authen­tic and pure. There is an op­por­tu­nity for peo­ple who gen­uinely de­liver that” Richa Arora COO, Con­sumer Divi­sion, Tata Chem­i­cals

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