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Cocofresh

1. Introduction

The total beverage industry in India is estimated to grow at 17% this year. In Indian
soft drink market, the two names which have marked their heavy presence are Coco Cola and
Pepsi. The market for these carbonated soft drinks in India stands at Rs 7,200 crore in 2007
which has plummeted by about 5% for the second consecutive year in 2007 as Indian
consumers are increasingly opting for healthier beverages such as fruit juices and fruit-based
drinks, and even bottled water. Thus, the carbonated drinks category is facing the heat of the
rising competition from categories falling under the health umbrella. With people turning
more health conscious, the non-carbonated beverage segment has become one of the fastest
growing and most exciting businesses at the moment

2. Rationale behind the project


Coconut water has been known for its natural health benefits that it offers to human
kind. The water of tender coconut, technically the liquid endosperm, is the most nutritious
wholesome beverage that the nature has provided for the people of the tropics to fight the
sultry heat. It has caloric value of 17.4 per 100gm.

"It is unctuous, sweet, increasing semen, promoting digestion and clearing the urinary path,"
says Ayurveda on tender coconut water (TWC).

But, to come up with coconut water drink in packaged form and to cater regions all across
India definitely requires answering some essential questions. Some of them are like what is
the current coconut production in India? What are the regions which are actively into the
production of coconut and have high productivity? What is the availability of coconut water
in other than coconut producing regions? What is the demand for coconut water in India?
Why people would prefer packaged coconut water if it gets available?

Today, India is one of the leading producers of coconut in the world (ranks third) producing
13 million tonnes per annum. Kerala, Tamil Nadu, Karnataka, Andhra Pradesh are the
highest producing states contributing 90% of coconut production in India which can be seen
from the table (for year 2006-07) shown below. Area under cultivation in India is around 1.93
million Hectare where Kerala has the highest cultivation area of 0.898 million Hectare. In
India, productivity for coconut has been increasing since past decade. In 2006 -07,
productivity increased from 7608 to 8165 coconuts per hectare.

Table 1: Statewise production and productivity of coconut

States Productivity(nuts/ hectare) Production (mn nuts/annum)

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Kerala 7046 6326


Tamil Nadu 13133 4867
Karnataka 3139 1210
Andhra Pradesh 8577 892
West Bengal 323.5
Orissa 274.6
Maharashtra 914548 273.4
Assam 204.9
Source: www.indiastat.com

From the table, it can also be seen that Maharashtra has the highest productivity for coconut.
Therefore, in future, it might come up as the largest producer of coconut if more area is
brought under cultivation. Hence, one can say that there is a huge potential in India as far as
production of coconut is concerned which is directly linked to the potential of coconut
market.

Today, health has become a major issue for everyone in this world. And, therefore, people are
more inclined towards those foods or drink products which can keep them fit and healthy.
Therefore, there is huge potential for the demand in India for packaged coconut water as
though, coconut water provides large health benefits with cooling and refreshing effect but it
is not easily available in all parts of the country in hygienic form. Some of the medicinal
properties of tender coconut water reported are like it is naturally low in carbohydrates, 99%
fat free, low in sugar and contains organic compounds possessing healthy growth promoting
properties. It is also a natural an isotonic beverage so it can be considered as the better
alternative for the existing soft drink market.

Coconut water has a prior advantage over many other nutritional products which can be seen
from the following:

a) Coconut Water is more nutritious than whole milk - Less fat and NO cholesterol.

b) Coconut Water is healthier than Orange Juice - Much lower calories.

c) Coconut Water is better than processed baby milk - It contains lauric acid, which is present in
human mother's milk.

Despite the above mentioned benefits of coconut water, people are not able to drink it
because of its unavailability as well as its bulky nature. Therefore, it is clear that coming up
with packaged tender coconut water in the market will definitely grab lot of customers and
consumers. These consumers and customers are those who need refreshing effect with
additional health benefits which other existing health drinks do not provide. There are some
local manufacturers of packaged tender coconut water but their existence is limited to small

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pockets. Therefore, from the preceding discussion, we as promoters have a first mover
advantage in the market as we are targeting people across all regions in India.

3. DEFINING INDUSTRY

Since we are coming up with a new product “packaged coconut water” at the national
level, therefore, it is important to identify the industry. Customers’ and consumers’
behaviours help to correctly define one’s industry. Therefore, we conducted survey to
identify the industry where our product will have an existence. The sample size was around
100 people out of which 96% people drink coconut water. Convenience sampling was used
because of the time constraint.

From the figure 1, it can be seen around half of the people in the sample perceive coconut
water as health drink and around 45% people perceive it as refreshing drink. From the survey,
it has also been seen that people mainly prefer coconut water when they are thirsty, tired or
when they want some health drink.

Figure 1: Perception of consumers about coconut water

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Thus, from the survey results, it can be clearly seen that the product “Cocofresh” should have
an existence in Health and refreshing industry which we, here, are considering it to be fruit
juice industry as fruit juices are also perceived in the same way. Here, one might argue why
not (Carbonated) soft drink industry? The reason why we are not placing our product in the
same is that people do not consider carbonated drinks as health drinks, but thirst quenchers.
Since we are positioning our product as health and refreshing drink so fruit juice industry
suits the best which is also backed up by the survey so conducted.

4. PESTLE ANALYSIS:

The Pestle Analysis identifies the political, economical, social, technological, legal
and ecological influences on an organization.

4.1 Political factors

Various political factors affect the fruit juice industry. With the change of government the
policies regulating the industry might change. As the taxation policy keeps changing, it has a
significant effect on fruit juice industry. The government plans of encouraging foreign direct
investments would affect our industry highly as organised fruit juice industry has only 3 %

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share as of now in the market but with FDIs it could increase significantly by coming of
bigger players.

4.2 Economic factors

Our company would rely on trucks to move our raw materials to the processing plant and
distribute our finished product so, fuel is also an important subject, so the company is subject
to the fuel price fluctuation, and to possible fuel crisis. Since, ours is an agro based industry
so we would be exposed to the risks of high prices due to crop failure, non availability of raw
material because of pest attack etc. Other economic factors affecting fruit juice industry are
often linked to variability in real growth, inflation, interest rates, governmental actions and
other factors. Factors like money supply, energy availability and cost, business cycles, etc.
would also affect our company.

4.3 Socio-cultural factors

We are more than a billion strong nation and the youngest country as well. We are also home
to the great Indian middle class. The major growth drivers in fruit juice market are increase in
health consciousness among consumers, increase in disposable incomes and more
sophisticated cocktail culture. There is more money circulating in the economy. With life
becoming more hectic and tiring, consumer preferences are witnessing a visible shift towards
healthy foods. Even the younger generation has started shifting from fizz to fresh and healthy.
As people are becoming more and more educated, they are taking the healthy route.

4.4 Technological factors

Fruit juices have become big business throughout much of the developed and developing
world with the increasing health conscious proportion of population. In this ever growing
industry technology plays a major role in maintaining the quality and cost efficiency to
generate higher profits. Better technology can increase the shelf life of our product.
Technology refers to both production process as well as machinery.

4.5 Legal factors

Processed fruit juices are regulated under the Food and Drugs Act and Regulations as a food
product and the Consumer Packaging and Labelling Act. The Food and Drugs Act creates
identity standards, provides a basis for labelling requirements and establishes the safety
parameters for soft drinks. As food safety requirements become more advanced across the
beverage industry, tracking and traceability capabilities are a prerequisite.

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4.6 Ecological factors

One environmental issue that food processing companies face is waste remaining from
packaging. However, the problem often lies in feasibility of collection, separation and
purification of the consumers’ disposed bottles or drinks packets. Environmental issues have
gained importance because of regulatory requirements. It is not possible to sell a new
packaging material without covering all the environmental issues. With the increasing use of
plastic bottles for non alcoholic drinks, recycling and return concepts become an absolute
necessity. The reduction of materials in packing cartons can potentially provide both financial
and environmental benefits. Since 1977 even the soft drink industry has reduced the amount
of plastic used in its PET bottles by almost 30%. Packaging materials used by the industry,
including cardboard, plastics, and aluminium, are either recyclable or re-usable. Bottle
deposit laws and other regulations to ensure recycling and re-use of packaging are a
significant regulatory concern to the soft drink industry. We propose to provide our product
in tetrapacks so that lesser damage is done to the environment in comparison to PET bottles.

5. Industry Analysis

We would be operating in the fruit juice industry alongside established players like
Tropicana of Pepsico, Real of Dabur and Maaza of Coca Cola. It basically contains fruit juice
and synthetically constituted producst. The former is based on natural fruit pulp or juice
while the other is synthetic products containing fruit flavours

The pure fruit juices are the preferred drink among the fruit drinks. Production of
fruits in India is of the order of 48.5 million tonnes and as the Table 2 shows that the demand
for packaged fruit juices has been constantly increasing at a steady rate. The demand for fruit
juices in the fiscal year 2008-09 was Rs. 6.85 billion. It is expected to be Rs. 10.9 billion in
the fiscal year 2014-15.

Table 2: Demand for Fruit Juices in India: Past & Future

Year Rs (billions)
1995-96 1.62
2000-01 2.48
2001-02 3.55

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2002-03 3.95
2003-04 4.35
2004-05 4.80
2005-06 5.30
2006-07 5.80
2007-08 6.30
2008-09 6.85
2009-10 7.40
2014-15 10.90
(Source: Intecos-CIER)

As shown in Table 3, the cumulative annual growth rate (CAGR) for fruit juices segment is
expected to be 8% in the period 2009-10 to 2014-15.

Table 3: Market Growth Rate of Fruit Juices in India

Period CAGR
1990-91 to 96-97 40.30%
1996-97 to 2001-02 16.10%
2001-02 to 2006-07 10.30%
2006-07 to 2009-10 9.00%
2009-10 to 2014-15 8.00%
(Source: Intecos-CIER)

Our product is a differentiated one. No other company has launched a coconut water
based drink on a national level. Though there are around 5 companies producing packaged
coconut water in south India but its products are exported. So, we hope to get the first mover
advantage with our product in the country. We are currently offering just one product, i.e.
packaged coconut water.

6. MARKET SHARES OF DIFFERENT CATEGORIES

There are mainly three categories of fruit juices products-Ready to Serve Fruit
Beverages, Fruit Nectar and Fruit Juices. These categories are defined based on the fruit pulp
content in them. The fruit pulp content in ready to serve fruit beverages is less than 20%
while in the fruit nectar; fruit pulp content is 20-85%. In fruit juices the pulp content is
greater than 85%. The prices of fruit juices are the highest while those of the fruit beverages
are the lowest. As shown in Table 4, the market share of fruit beverages is highest (66%)
while that of nectar is lowest (7%).

Table 4: Category Wise Market Share of Fruit Juices Products


in India

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Category Market Share


Fruit Beverages 66%
Fruit Nectar 7%
Fruit Juices 27%
(Source: Intecos-CIER)

7. MARKET SHARE OF DIFFERENT PLAYERS

The major players involved in fruit juices business are Dabur, Pepsi, Mother Dairy,
Parle, Godrej and others. Figure 2 shows that Dabur with its brand “Real” holds the largest
market share of 57%. It is followed by Pepsi with its brand “Tropicana” which holds a market
share of 30%. Mother Dairy with its brand “Safal” holds a market share of 4% while others
hold a market share of 9%. The others category includes Onjus, Freshgold, Leh Berry etc.

Figure 2: Market Share of Different Brands of Fruit Juices


Products in India

(Source: Intecos-CIER)

8. INDUSTRY CONCENTRATION RATIO

In the selected industry for our product many players are in action. But this industry is
subdivided into fruit juice and fruit based drinks industries as is seen earlier. So when market
shares of these players are seen they are sometimes depicted in the context of the fruit juice
industry as a whole and somewhere as in the sub divisions. Moreover, the sales figures of all
the competitors are not available through internet. Therefore, it is difficult to calculate
industry concentration ratio and Herfindahl- Hishchman Index for our defined industry.

9. PORTER’S FIVE FORCES

9.1 Bargaining power of Suppliers

For this we need to procure green tender nuts in huge quantities. The peninsular part of our
country is blessed with a long coastline. This is a fertile ground for coconut cultivation.
Kerala is the largest producer of coconut in the country and we hope to leverage on this
account. Coconut Board has been looking to enhance the consumption of coconut in the

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country. We would be liasioning with it to ensure an assured supply of the desired quality of
coconuts. It would act as an intermediary for procurement either from co-operatives or
dealers or individual farmers. We would not want to depend on a single source of supply of
nuts because that would reduce our bargaining power and also increase our risk. Besides,
there are other small local players also who are into the same business as us. Hence, it
becomes all the more important for us to have a steady supply of nuts at the right cost.

9.2 The threat of substitute products

Substitute products are those competitors that are not in the industry under study. According
to Michael Porter, the existence of close substitute products increases the propensity of
customers to switch to alternatives in response to price increases (high elasticity of demand).
This includes-

• Buyer’s propensity to substitute


• relative price performance of substitutes
• buyers’ switching costs
• perceived level of product differentiation

For our health and refreshing drink industry such products include soft drinks, lassi/
buttermilk, coffee and tea. These substitutes are increasingly popular with the trend to be a
more health conscious consumer or price sensitive consumers. There are progressively more
flavours in the buttermilk that appeal to different consumers’ tastes. Buttermilk and flavoured
milk are not as popular as aerated drinks and fruit juices but to a group of consumers which
can be our target consumers, they appear healthier than soft drinks. In addition, coffee and tea
are competitive substitutes because they provide refreshing feeling. The consumers who
purchase coconut drink as a refreshing drink may substitute coffee if they want to have the
same feeling in a cheaper cost. The tea and coffee industry is growing at 11.8%. Especially
blend coffees are also becoming more popular with the increasing number of coffee houses
that offer many different flavours to appeal to an elite class of consumers.

9.3 Bargaining power of Buyers

The buyers of our coconut drink would be mainly large grocers, retail chains, discount stores,
restaurants and Gymnasiums. From here the product would be resold to consumer. The
bargaining power of the buyers is very evident and strong. Large grocers and discount stores
buy large volumes of the health drinks, allowing them to buy at lower prices. Restaurants

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have less bargaining power because they do not order a large volume. However, with the
number of people who drink soft drinks is declining, therefore, the bargaining power of
buyers might decrease due to increasing demand for health drinks.

9.4 Rivalry among existing competitors

Currently, very few players are operating in coconut water based health drink manufacturing
business in India. Most of these are regional brands and are not having much market share.
The coconut packaged drink concept is most popular in Brazil, Australia, etc but in India its
market is still untapped. Its main competition is from the non-carbonated beverages which are
composed of fruit drinks, nectar and juices. While the fruit drink segment is estimated at Rs
250-300 crore (branded and packaged), the juice market is valued at Rs 150 crore and the
nectar is a small category of about Rs 35-50 crore. The popular brands vying for a share in
the sector are Parle's Frooti, Godrej's Jumpin, Coca Cola's Maaza, Pepsi's Tropicana, and
Dabur's Real.

Frooti from Parle Agro is the largest distributed fruit drink with 85 % market share in India. It
reaches more than 10 lakh retail outlets in up to class C towns through more than 1,500
distributors and wholesalers directly and indirectly. It is India's first real fruit drink in Tetra
pack and is available in three delicious varieties - mango, orange and pineapple.

Dabur's flagship brand Real fruit juice is a market leader in the packaged fruit juice category.
Real was launched in 1996 and the brand has carved out a niche for itself by claiming to be
the only fruit juice in packaged form that is 100 % preservative free. Real with a market share
of 55 % offers to its consumers the largest range of 9 juices that comprise orange, mango,
pineapple, mixed fruit, grape, guava, tomato, litchi and cranberry. Dabur also launched many
variant of Real juice like, Real junior, Real Activ etc.

Pepsi also have its major brand Tropicana in fruit juice category, which has registered double
digit growth and has outpaced the growth of the packaged fruit juices market in India. India is
a very important market for Tropicana and is among the top 10 biggest markets for the brand.
It is available in a wide range of orange, apple, grape and cranberry flavours and a cocktail in
Ruby-red. It also came up with a new variant named twister in different combination of
flavours.

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Maaza another well known and highly consumed fruit beverage brand in India was launched
in 1976. In 1993, Maaza was acquired by Coca Cola India. Maaza currently, dominates the
fruit drinks industry. It faces a direct competition with the Slice brand of Pepsi.

Currently the market share of coconut drink is negligiable in the Industry. It had to face a
heavy competition in the industry if want to have a significant market share as there are a lot
of established and heavily consumed brands of fruit juices, fruit drinks and health drinks in
India. These brands presents a whole range of good quality juices keeping in mind the health
concerns of the consumers.

9.5 Threat of New Entrants:


In the soft drink industry the entry of new competitors depends on the barriers to entry that
are present, and also the reaction from existing competitors that the entrant can expect. The
soft drink Industry is highly competitive because of the presence of some major players like
Coco Cola, Pepsi, Dabur etc. There exists a high entry barrier to new entrants as the existing
brands have strong brand loyalty from customers and therefore entrants are forced to spend a
lot to overcome existing customer loyalties. The access to distribution channels is another
high barrier to entry because the most successful soft drink companies are aggressively
spending on their distribution channels and buying full ownership of bottling plants. Like,
Both Coke and PepsiCo have franchisee agreements with their existing bottlers and these
agreements prohibit bottlers from taking on new competing brands for similar products which
make it very difficult for a firm entering to find bottler’s willing to distribute their
product. Switching costs is also a barrier to entry this business. The switching cost of
customers is very low in this industry which poses another entry barrier to new entrants.

The soft drink industry is fully saturated and the growth is small which further make it
difficult for new entrants to start competing against the existing firms and establish their
presence in the Industry. Another barrier to entry is the high capital investment which a new
entrant had to put for production, distribution and advertising etc. for competing against the
established brands/ industry leaders. New entrants cannot compete in price without
economies of scale. These high capital requirements and market saturation make it extremely
difficult for companies to enter the soft drink industry and therefore new entrants are not
considered as a strong competitive force to the industry. The exit barrier is also high as the
huge investment done on the facility by the new entrant make it difficult to exit from the
industry.

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10. POSITIONING DIAGRAM AND STRATEGIC GROUP


IDENTIFICATION
Figure 3

High availability

SG 1
Cocofresh
1

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Low Price High Price


SG 3
Cocofresh

Low availability

Cocofresh
Tropicana
Real
Slice
Maaza
Frooti

As is evident from the diagram, our product is placed in the same strategic group as
other packaged fruit juices like Tropicana and Real. From our consumer survey, we have
identified two ( x & y) variables, namely availability and price of the product. Availability
would largely depend on the strength of distribution network and price as in price that the
consumer will have to pay for the product. Strategic Group I is dominated by large players
like Tropicana, Real, Maaza and Frooty which owing to their strong distribution network
have a remarkable presence in the country. They are characterized by pan India coverage and
all are in the similar price range which is also incidentally higher when compared to the
prices of other players in the industry. Strategic Group III is characterized by small, local
players in the industry with very limited coverage in terms of area. Also, their prices are
lower when compared to similar branded products. They are unorganized players like juice
vendors. In the local arena, total availability of such products may be quite high but when we
talk about an individual player in a local space, availability becomes extremely limited. Area

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of operation is mostly restricted to a small part of a city or town. Also, since they sell
unbranded and loose stuff, they keep their prices low so that they can gain in volume. Hence,
it ranks low on both accounts, namely availability and price. Coming to Strategic Group II,
we have small players operating in a slightly larger area like a state. In terms of availability
and price, they rank higher than the players in Strategic Group III and lower than Strategic
Group I. Coco Jal, Tender Coco and Tender Fresh, which caters to the employees of IT firms
in Bangalore fall in this group.

We propose to have a pan India coverage and hence we would be drawing up an extensive
distribution network to ensure availability of our product. Also, we are pricing our product
competitively, i.e. 200 ml pack priced at Rs. 15 and 1 lt pack at Rs. 85. Our product would
thus be placed in Strategic Group I. We are positioning it as a healthy and refreshing drink.

11. MOBILITY BARRIERS AMONG STRATEGIC GROUPS:


The strategic groups identified by us in our industry are highly differentiated from each
other on account of the two main variables price and availability of the respective products. It
will be very difficult for one strategic group to enter into the domain of another strategic
group as there are many mobility barriers present in the industry. The main mobility barriers
that restrict any strategic group to move from its positions are:

11.1 Brand name: It is the major strength of any player on account of which it can be place
well in the industry. All the well known big brands fall under one strategic group which are
so much differentiated from other strategic groups that it becomes almost impossible for
players from any other strategic group to move to that particular well known brand strategic
group. Like, in our case it would be very difficult for the strategic group II & III which
comprises some local juice manufactures and the street vendors to enter into the strategic
group I which comprises all the branded juices like Tropicana, Real, Frooti etc. because
strategic group I has a strong brand influence in the industry.

11.2 Distribution network: Another major barrier which restricts any player from entering
one strategic group to another is the strength of their distribution network. As we have
considered availability of the product as a defining variable for identifying the position of the
strategic groups therefore the distribution strength of any player plays a major role in
distinguishing it from rest of the players and identifying its positioning in the strategic group.
In our case, it would be very difficult for local vendors to expand their distribution network

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and thus they would never be able to enter the strategic group I & II because of their
distribution constraints.

11.3 Scale of operation: It is also a major factor which helps in identifying position of any
player in the industry. As the scale of operations expands the firm would be able to invest
more on strengthening its product development, operation, distribution, marketing and
advertisements. A small player would have its own niche and it won’t be possible for them to
enter into the strategic group of the large players. Thus the scale of operations also puts a
major barrier to any small scale player to enter into the domain of the large players in the
industry.

12. PRODUCT POSITIONING DIAGRAM FROM CUSTOMER


PERSPECTIVE VIS- A- VIS TWO MAJOR COMPETITORS
From our consumer survey, it is evident that consumers perceive nutrient value and
availability as the major factors affecting fruit juice consumption. So we have taken these as
our x and y variables in the following product positioning diagram.

For our Cocofresh two major competitors would be Pepsico’s Tropicana and Parle Agro’s
Frooti. Taking these alongside Cocofresh, the product positioning diagram has been drawn as
in figure 4. Currently, coconut water is very high in nutrient value but low in availability.
This has been shown with dotted lines. After coming of Cocofresh, the availability constraint
would be removed and our product is placed at high nutrient value and high availability
position.

Figure 4

After FreshCo
Coconut Water FreshCo

Tropicana
Nutrient Value
Frooti

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13. VALUE CHAIN OF TROPICANA (A COMPETITOR)

Value chain of our competitor Tropicana envisages the following:

• Superior technological knowhow: having been in business for over a century now,
Pepsico has gathered enough gumption that has given Tropicana easy access to latest
superior technology

• High sourcing capacity: they have a well planned procurement system that assures
regular and consistent supply of good quality raw material to the company at the
required time and in right quantity.

• Linkages upstream in the supply chain

• Extensive distribution network: Tropicana has leveraged the existing distribution


network of Pepsico which has had a strong foothold in the country for many years.

• Business process transformation

• Internationally tested and proven flavours: this ensures best quality of product being
available to consumers.

• Above the line and below the line promotion

• Promoting as a health drink

• Practise: reduce, reuse, recycle

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Tropicana used i2 tool extensively, over a very short time period, to discover areas where it
could reduce costs and increase efficiencies within several significant units of the company.
i2 Supply Chain Strategist is a scenario-based strategic planning tool designed to enable an
organization to analyze strategic alternatives and make more profitable strategic decisions
regarding physical plant locations, processes and transportation lanes. Adoption of this
technology has helped pepsico to determine the optimal combination, location and
association of facilities and processes, allowing its managers to understand the total cost,
profit and service trade-offs that exist between alternative network scenarios.

14. COMPETITIVE ADVANTAGE

The product “packaged coconut water” is going to be launched at National level for the first
time. Although, the major competitors in the fruit juice industry have very strong distribution
channel across the nation but they do not have any marketable uniqueness in their products.
All the major competitors are just trying to gain sales volume over one another from the same
products in the fruit juice industry.

Therefore, we have a first mover advantage to come up with a new product in an old market
which would definitely lead to success. The success can be seen as there is huge demand for
coconut water. This is also clear from the survey which we conducted, although coconut
water is considered to be health and refreshing drink, still many people are not able to have
the same because of its non-availability. From all the existing products in the fruit juice
industry, coconut water is the best when it comes to health aspects and freshness. Therefore,
our differentiated product is a competitive advantage over our competitors. Hence,
differentiation will be our strategy for earning above – average returns in the industry. This
industry structure would affect our conduct. The strategies that our firm would adopt would
have a direct bearing on our performance in the market. We need to strategise keeping our
resources in mind and changing needs of consumers. Constant innovation to keep our
resources valuable, rare, inimitable and non-substitutable would be the key to our success.

15. VALUE CHAIN OF COCOFRESH

15.1 PROCUREMENT OF RAW MATERIALS AND LOCATION-

For procurement we had two options, either from Southern states or from Orissa. Our group
decided to procure the raw material for Cocofresh from Orissa because in South a few competitors are
already operational and have tie ups and farming contacts with farmers. So establishing ourselves in
this region would be a risky proposition. Also there would be higher cost cutting in outbound logistics

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(transportation cost of finished product) if we locate our plant in Orissa. Our plant would be situated
in Sakhigopal, a small place in Orissa.

Figure 5: Map of Orissa and location of Sakhigopal

The various factors taken into consideration while selecting this place are as follows:

15.1.1 Proximity to raw material suppliers


Orissa enjoys 450 km of coastal belt most suitable for Coconut plantation. This traditional
area is predominant of tall varieties of coconut, which thrive for more than 100 years and
start fruiting from 4th to 8th year depending on its maintenance. At present the coverage
under coconut is 46690 ha with average annual production of 33 nuts per palm and total
production of 2742 lakh nuts. Coconut is considered as the cash crop of more than 10 lakh
people residing in the coastal belt. The areas in and around Sakhigopal are abundant in
coconuts and potential procurement areas are Cuttack, Jajpur, Jagatsinghpur, Kendrapara,
Puri, Khurda, Bhubaneswar and Pitapally. The maximum distance to any of these centres is
less than 100 km only.
15.1.2 Proximity to domestic customers and export site
Northern and Western parts of India are seen as a potential customer base as coconut
availability is low in these regions. These places would be closer to Orissa in comparison to
other proposed locations in Tamil Nadu or Kerala. The location is also near to the port so that
future plan of the export is also facilitated.

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15.1.3 Costs
The location provides the advantage in terms of low inbound costs owing to its proximity to
the major procurement centres. Owing to its rural location, labour costs are cheap. Outbound
cost in terms of product distribution and marketing is expected to be low owing to the
proximity to the domestic markets. Land cost will be low as Sakhigopal comes under Zone B
and Government grants could be availed if proper location is chosen in this area. Water
availability is not a problem and it comes cheap.

15.1.4 Infrastructure
Sakhigopal is connected to the state highway. The nearest airport is at Bhubaneswar (60 km)
and the nearest seaport is at Paradip (100 Km.). Puri (20km) is the nearest railway station.
Availability of power supply, telephone, mobile and internet connectivity are some of the
infrastructural resources of the area.

15.1.5 Quality of Labour


Sakhigopal is a rural area and semi skilled labour required for manual operations is available
cheaply. For the technical operations, technicians can be recruited from the ITI School at
Puri.

15.1.6 Other facilities


Nearness to institutions like Orissa University of Agriculture and Technology at
Bhubaneswar, demonstration cum seed production farms at Pitapally and Coconut
Development Board State office at Bhubaneswar gives the location an edge. Proximity to
these institutions would help in soliciting any technical advice as when required during the
implementation of the project. The Pitapally farm personnel can be helpful if contract
farming is undertaken for procurement. Proximity to potential promoters like the Agriculture
Promotion & Investment Corporation of Orissa Limited and Industrial Promotion &
Investment Corporation of Orissa Limited, both of which are situated in Bhubaneswar.

15.2 TECHNOLOGY

There are various technologies available for the processing and packaging of tender
coconut water like flash pasteurization and the technology developed by the Coconut Board
of India. The latter is an efficient technology highly promoted by the Board. For production
of Cocofresh, we would buy this technology which is available at a cost of Rs. 3 lakh.

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The raw materials like tender coconut and some other ingredients would be processed
in a hygienic and aseptic environment by the employees and changed to the final output. In
this, coconut water of 6-7 month stage would be first filtered through pressure filters and then
mixed with the desired proportion of additives plus sugar and concentrated to the appropriate
level. The autoclaved water is then cooled with a stream of water and packed in tetra packs.

15.3 MARKETING STRATEGIES

15.3.1 FIVE C’S ANALYSIS:

Company: our company is a new one and a new entrant in the market. We are launching a
new product in an old market.

Consumers: our consumers are health conscious people and people who want an alternative
to fizz to refresh them. We see a high potential market for our product.

Context: in the context of increasing health awareness, greater emphasis on consumption of


natural products and a gradual shift from artificial and aerated drinks, growing disposable
income and consumable surplus, our product would provide consumers a welcome relief
from the conventional drinks available in the market. It would provide them a new taste, an
altogether new experience of freshness and well being.

Collaborators: our suppliers of coconut and our distributors and retailers who would mainly
be responsible for making our product available to consumers. They are an integral part of
our supply chain as well as value chain.

Competitors: our competitors are mainly other fruit juice companies which are also vying
for the consumers’ money and patronage. Mainly Tropicana of Pepsico and Real of Dabur are
our competitors since they are seen as health drinks as well as refreshing drinks by
consumers. Even other fruit based drinks like Frooty of Parle Agro, Maaza of Coca cola and
Slice of Pepsico are our competitors since they also are perceived as refreshing drinks by
consumers. A very positive point we have as of now is that there is no national player in the
market who manufactures packaged drinking water. So, taking a narrow competition in this
small sector, we really have no competitors.

15.3.2 STP ANALYSIS:

Segmentation: we would be operating in a broad market segment of SEC A and B

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Targeting: as explained earlier, our target group of consumers would comprise people from
SEC A and B, health conscious people, the youth who consider going natural as fashionable
and also institutional buyers like airlines, railways, upmarket restaurants and hotels. We
would also target doctors who would recommend our product to their clients. This would
provide an immense opportunity to us to create a stronghold in the market and generate
higher revenues and superior economic profitability.

Positioning: we are positioning our product as a health drink that is extremely nutritive and
also highly refreshing.

15.3.3 MARKETING MIX:

Product: our product is unique. It is different from what we get from roadside coconut
vendors since the shelf life of such products is very low. Our product has a shelf life of 9
months and hence making it available to a wide range of markets becomes easier since
customers would rest assured of the quality of this product. We would also apply for
accreditation by authorized food agencies like FPO and other quality control certifying
agencies like HACCP,

Price: we would price our product competitively. We would initially launch the product in
tetra packs of 200 ml and 1 lt capacity priced at Rs. 15 and Rs. 85 respectively. This is almost
in line with our competitors’ pricing strategy. This would ensure greater returns to us and also
project a high end quality image of the product in the eyes of consumers.

Place: our processing unit would be located in Orissa since the procurement would be done
from nearby places. So, we would be saving on inbound transportation costs. We are
launching the product throughout the country in one go, mainly targeting the northern,
western and eastern market.

Promotion: we would take up heavy promotional campaign to build awareness about our
product and to push it in the market. We would keep track of activities that our competitors
would be doing so that we can strategise further.

We would incentivise our channel partners and create a push strategy to gain more shelf
space. Heavy advertising and brand promotion activities would be taken up to increase
visibility of our product. Since we are new players and unknown to consumers, we need to
spend heavily on the above mentioned activities so that we can sustain competition from
giants in the industry and eventually overtake them. We would also consider sponsoring T.V.
shows, sports events and cultural nights so that our target consumers can be made more aware

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of our brand. We understand that building good relationship with our suppliers, channel
partners and customers would be the formula for our success in the market.

We would be placing our product mainly in modern format retail stores, hypermarkets where
new ideas are more readily accepted by consumers. Here we would have a greater chance of
showcasing ourselves and increasing our visibility. Besides, these are places which are
frequented by our target group of customers. We would like to ensure that the quality of our
product is intact when it is in the market and hence we would like to sell it through stores that
take good care of inventory, have good and adequate storage facilities. Also, we would be
able to track not only our sales and turnover but also that of our competitors. This data would
be available through the store manager because unlike traditional retailers, he would be
engaged in systematic data management and record keeping.

16. SWOT ANALYSIS

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