\u201cPerishable Value Opportunities\u201d<\/a><\/em>).<\/p>\nAt the end of that seminar session, an agriculturist from the audience put forth a very pointed question: \u201cWhat is the cost of the potatoes in a bag of branded chips that sells for Rs. 10? Or to put it another way, how much of the retail price actually goes back to the potato farmer?\u201d<\/p>\n
The question, of course, was completely loaded with angst on the economic imbalance between farm and factory, supplier and buyer, small and big, rural and urban. But it also underlined missed opportunities to capture economic value, which in turn accentuate the imbalances in growth.<\/p>\n
Economic value can be added to food through improvement, providing protection, changing the basic product and through marketing. Improvement typically focuses on seeds, growing techniques and post-harvest areas for improved quality of harvests, disease resistance, better colours, size and flavour, possibly nutrition. Protection initiatives work across cultivation, harvest and post-harvest, storage, during processing, through packaging, while change is essentially focused on processing techniques (cooking, combining, breaking down and reconstitution).<\/p>\n
There is a lot of work going on in the food supply chain to enhance the value captured closer to the farmgate. And, certainly, the \u201cvalue-added\u201d earlier is vital to maintaining and building value later in the supply chain.<\/p>\n
However, what is striking is the fact that as we move downstream towards final consumption, the economic value captured as a price premium also increases dramatically.<\/p>\n
So, as depressing as the multiplier may be to the farmer, on a kilo-for-kilo comparison, the bag of factory-fresh potato chips is priced many times higher than his farm-fresh potatoes. And, the maximum economic value is created, or at least captured, by the act of branding and marketing.<\/p>\n
The Love is in the Brand<\/strong><\/p>\nA short quiz break: can you recall the \u201cmost valuable company\u201d in the world in August 2011, as measured by valuation on the stock market?<\/p>\n
The answer is Apple. It is a company that physically manufactures nothing, but tightly controls the design, development, sourcing, distribution and, yes, branding of a group of products and services, whose fans seem to grow by the minute.<\/p>\n
Of course, one can argue that Apple \u201cproduces\u201d by the very act of designing completely new, highly desirable, products that are not available from anyone else, and that this is what provides the premium. But similar premium \u2013 which is due to branding and marketing, rather than proprietary products \u2013 is also visible in thousands of companies, across product sectors, including food. That sustained price premium is the sign that the consumer trusts and wants a particular brand\u2019s product more than another one. There is a hook, a strong connect, due to which that consumer is willing to lighten her wallet just that much more.<\/p>\n
In India, surprisingly, \u201cvalue-addition\u201d discussions in the food industry focus almost entirely on cultivation, storage and transformation through processing, virtually ignoring branding and marketing. In fact, branding is usually only discussed in the context of multinationals or some of the largest Indian companies. What\u2019s more, most of the brands discussed are focussed largely in the area of processed food products that originated in the west.<\/p>\n
Run these tests yourself. When you think of food and beverage branded companies who do you think of? And, when you think of food brands, what kind of products come to mind first?<\/p>\n
The answer is that the brand landscape is dominated by products such as biscuits and cookies, jams, fruit and non-fruit beverages, potato chips, 2-minute noodles, confectionary products and food supplements, mostly from the portfolio of some of the largest companies operating in the market.<\/p>\n
Of course, there are some alternative examples.<\/p>\n
Aashirvaad and Kitchens of India present quintessentially Indian products (albeit from the gigantic stables of ITC which also has a multinational parent).<\/p>\n
And, yes, there are cooperatives such as Lijjat, as well as home-grown mid-sized companies such as the Indian snack maker Haldiram\u2019s, spice brands such as MTR and MDH, pickle brands such as \u201cMother\u2019s Recipe\u201d, rice brands such as Kohinoor and Daawat.<\/p>\n
But, given the size of the Indian food market and the width and depth of Indian cuisine, shouldn\u2019t there be more brands that are Indian and focussed on essentially Indian food products?<\/p>\n
This is a tremendous opportunity \u2013 a gap \u2013 not just in the Indian market (among the largest and fastest growing in the world), but also globally.<\/p>\n
The Hurdles to Branding<\/strong><\/p>\nSo, why aren\u2019t there more Indian brands?<\/p>\n
Let\u2019s face it, for most companies, marketing fulfils one need: to communicate their name to potential customers. Most of them generally hope that if they do it enough, they would actually be able to sell more volume.<\/p>\n
Of course, no one has been able to draw a straight line graph that correlates more marketing expense with higher sales.<\/p>\n
Those are two self-destructive notions. Obviously, if marketing is an expense, then it must be minimised! And secondly, if it cannot be proven to be effective, why would you spend money doing it? For most people, branding is even fuzzier in that regard, in terms of what it is and what it achieves.<\/p>\n
However, the picture changes when you look at marketing as an investment rather than an expense. As we evaluate any investment, there should be an expected return that should be quantifiable. Examples of Apple and other brands make it amply clear that branding and marketing, when done well, can certainly create quantifiable financial returns on the investment.<\/p>\n
The second hurdle to branding and marketing is that they require consistency, which is not a strong point for most wannabe brands. They end up with too many messages to the consumer, or the messages keep changing and shifting. The company, the name, end up representing many things, sometimes everything, and eventually nothing.<\/p>\n
The third, enormous, hurdle is the time needed to develop a brand with a decent sized marketing footprint and a deep relationship with the consumer. Most small and mid-sized companies, constrained as they are for resources, focus on areas that seem to offer more immediate returns, such as distribution margins or discounts, or even expansion of production capacity. Especially in the early years of the business, the benefits of branding and marketing seem to be too far in the future to be a priority for investment.<\/p>\n
Due to these one of these reasons or a combination, many companies are unable to see their brands through to success. In fact, sadly, most companies do not last long enough to become owners of successful brands.<\/p>\n
Even those who do achieve success and even market leadership, sometimes choose to cash-out on their success by selling their brands to larger competitors, rather than competing with the financial might of the giants (such as Thums Up being sold to Coca Cola; Kissan, Kwality and Milkfood being sold to Hindustan Unilever).<\/p>\n
In the past, one of the other barriers in India was the hugely fragmented retail and distribution system, which essentially sapped energy, resources and focus for any company that wished to grow a brand across regions. In fact, one of the key lessons from the western markets is that the growth of brands has been closely linked to the expansion of retail chains. So, certainly, we should view the growth of modern retail in India as a platform for the emergence of regional, national and global Indian food brands.<\/p>\n
However, there is a flip side to this retail growth. In the west, most retailers were focussed on running shops, and were content to leave product development and brand development to their suppliers, the national brands. These retailers began looking at private labels only as an additional source of margin well after they had gained scale, and even then they ventured rather carefully into the space. In India, on the other hand, private label is very high on the priority list of our nascent modern retailers, precisely because the effectiveness of that business model has been proven elsewhere and because there are such few national brands that have a strong, irrevocable connect with the consumer.<\/p>\n
Should You Invest in Branding?<\/strong><\/p>\nThe short answer is to that question is: yes.<\/p>\n
It doesn\u2019t matter if you run a small company or start-up, or a more mature company. It doesn\u2019t matter whether you are selling a consumer product directly, which is the most effective and most necessary playing field for building a brand, or an intermediate product or service where you can still achieve a premium within the trade.<\/p>\n
If you are committed to selling only commodities, where your selling prices are determined only by the tug-of-war between supply and demand, government policies and Acts of God, then you wouldn\u2019t be reading this article.<\/p>\n
Since you are reading this, you should brand.<\/p>\n
In the short to medium term, if you do the job well, your customers will pay you a premium. And in the mid to long term, financial investors looking to ride India\u2019s economic growth are more willing to put their money in a company that has a recognisable hook and a trading premium over its generic competition.<\/p>\n
The brand can be built on any platform for which there could be a discernible premium. This can be trust (quality, quantity), simplicity and convenience (prepared snacks and meals, pre-ground spices, flour instead of grain), or even novelty (fizzy coloured sweetened water, reconstituted potato \u201cchips\u201d so uniform in shape and size such that they fit into a cylinder). Organic, vegan, fair-trade \u2013 you take your pick of the platform on which to build the brand.<\/p>\n
Possibly the strongest driver of premium and brand value is a properly maintained heritage. Some brands have a past, some of them even have a history, but very few have a heritage. If your business has a history, there is a heritage waiting to be discovered, and it is worth a lot.<\/p>\n
Of course, this doesn\u2019t mean that a brand should become anchored at a certain historical time point and expect to only milk its age. Heritage is always viewed in a cultural context and culture evolves over time, so the most effective brands maintain a link between the attributes of their past to their ever-evolving present.<\/p>\n
As with most other things, it is good idea to start early. Take on board the lessons of branding early in the company\u2019s life so that the foundation is strong, and the brand can grow organically. As a side benefit, strongly branded companies also have strong and cohesive organisation cultures, a fantastic defence during times of high employee attrition.<\/p>\n
The Global Branding Opportunity for Indian Food Companies<\/strong><\/p>\nOne of the most important ingredients of a good brand is clarity of identity and origin.<\/p>\n
Often we confuse identity with the name, the logo, fonts or colours associated with a brand. Yes, a brand\u2019s identity is certainly indicated by these \u2013 as much as our name and our physical appearance indicate our identity. However, the identity itself is much larger; in fact, it is helpful to think of the brand\u2019s identity as a personality. The personality gets expressed in many different ways, but is tied together in a definable manner and has some strong traits that define its actions.<\/p>\n
There are clear statements that can be associated with effective brands, whether or not they have been expressed by the company or brand in any of its formal communications. For instance, some globally relevant Indian brands include Tata Nano (\u201cfrugal engineering\u201d), the Taj Mahal (\u201ctimeless beauty\u201d), Goa (\u201cparty\u201d), Rajasthan (\u201croyal exotica\u201d), and Kerala (\u201cbliss\u201d).<\/p>\n
(I am deliberately picking \u201cglobal relevance\u201d as a theme to keep in mind that there is, literally, a world of opportunity that we could be looking at.)<\/p>\n
We find a high number of tourism-related brands in this list, because these are destinations that pull the customer in \u2013 as long as they are true to themselves and relevant to the context of the consumer, they will be successful.<\/p>\n
More conventional consumer product brands, on the other hand, must work harder to fit into the consumer own context, especially as they move away from their geographical origin, their home market.<\/p>\n
This is particularly true of food, which is widely divergent across geographies. Some products can be adopted into multiple cuisines, offering more easily accessible opportunities and potentially greater scale. Rice and generic spices fit the bill here. However, for most other food items, the context of the home country cuisine is vital. Therefore, the growth of food brands, not surprisingly, is linked to the expansion of cuisines across borders. It is partly driven by the movement of people, and partly by the movement of culture (television and movies being the most important in current times), mostly both together.<\/p>\n
For Indian companies, there is certainly an opportunity to ride on the back of the Indian diaspora across the world. And now there is an additional opportunity: expatriates who spend a few years living and working in India can also help to carry the cuisine and its associated brands out.<\/p>\n
Finished product brands such as Tasty Bite, Haldiram\u2019s and Amul are good examples of diaspora-led expansion, where the original driver was to bring people of Indian-origin a taste of home. In fact, Amul has recently announced that it wants to set up a manufacturing plant for cheese and other dairy products in the US, to service the Indian-origin population more effectively. Should it be restricted only to that? Certainly not; availability, if supported well by branding, can help it to cross into other segments as well.<\/p>\n
As the consumption of Indian food grows across ethnic lines, it is likely to drive the growth of Indian ingredients as well \u2013 a perfect vehicle for branded ingredient suppliers. What\u2019s more, Indian recipe books could even specify Amul Cheddar Cheese, MDH Chaat Masala or MTR\u2019s Dosa Mix as ingredients \u2013 they wouldn\u2019t achieve a 100% hit rate, but it would certainly be significantly higher than zero!<\/p>\n
There is an opportunity to capture economic value that branding offers, which is very often greater than any other process in the food supply chain. Remember two phrases made famous by Hollywood: \u201cshow me the money\u201d and \u201cshow me some love\u201d. In the business of brands, these are one and the same.<\/p>\n
It\u2019s worth asking: do we have the patience to live through the lifecycle of a brand, and can we commit resources to nurturing it? If the answer is \u201cyes\u201d to both, we are most likely to benefit from branding.<\/p>\n
Here\u2019s to more Indian food brands that grow within India and across the world.<\/p>\n
(If you need support with growing brands, do connect with us<\/a>.)<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"As we move downstream towards final consumption, the economic value captured as a price premium also increases dramatically. An aspect that is often forgotten in discussions about “value-addition”.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[25,27,389,212,215,33,60,222,36,37,131,43,44,46,47,48,1],"tags":[97,99,100,168,283,52,53,390,174,102,103,106,107,110,183,226,250,214,216,292,293,217,58,391,113,59,69,336,548,120,166,195,121,71,65,124,480],"class_list":["post-948","post","type-post","status-publish","format-standard","hentry","category-apparel","category-branding","category-progressive-grocer","category-consumer","category-food-grocery","category-footwear","category-india","category-leadership","category-lifestyle-fashion","category-marketing","category-product-development-and-design","category-retail","category-soft-goods","category-strategy","category-supply-chain","category-textiles","category-uncategorized","tag-advertising","tag-brand","tag-brand-building","tag-brand-evangelist","tag-brand-identity","tag-branding","tag-brands","tag-column-progressive-grocer","tag-consumer","tag-consumer-markets","tag-consumer-products","tag-consumer-segments","tag-consumerism","tag-entrepreneurship","tag-ethical-consumer","tag-fast-food","tag-fmcg","tag-food","tag-food-grocery","tag-food-and-grocery","tag-food-processing","tag-food-service","tag-global","tag-grocery","tag-growing-brands","tag-india","tag-indian-retail-sector","tag-leadership","tag-margin","tag-marketing","tag-modern-retail","tag-modern-retailing","tag-organic-growth","tag-organized-retail","tag-retail","tag-strategy","tag-unorganized-retail"],"yoast_head":"\n
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