Creating International Food Brands from India

Prof. Rishikesha T. Krishnan Indian Institute of Management Bangalore rishi@iimb.ernet.in

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Going Global is Tough

Liability of country of origin No familiarity with quality standards Scarcity of resources Difficult to attract managerial talent abroad Lack of confidence
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Going Global is Tough

Perceived loss of control Existing market structures Response of entrenched competition Political risk No deep understanding of local mkts Cultural issues
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Advantages of Branding
Higher margins Reason for customer to buy - security, reliability, quality, image, etc. Less vulnerable to ups and downs of market resist commoditisation Lower costs due to better negotiating power with suppliers Ability to attract qualified employees
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Case Study #1

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1974: Founded by Merrill J. Fernando Presence in 90 countries Known for the quality of its teas Fernando was disturbed by MNCs use of local Ceylon tea brands to sell low quality teas in the world market 1984: entry into foreign markets as a supplier to large Australian supermarket
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 1988: Launch of Dilmah brand in Australia Vision: Build a completely integrated tea company that produces its own tea and sells it under its own brand Supplies the same 100% pure Ceylon tea grown and nurtured in Sri Lanka to different global markets
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Positioned as true Ceylon tea freshest tea in the world Priced in premium range Brand name has an oriental touch, conveys association with Ceylon Innovative marketing: e.g. North Vietnam dotted with Dilmah cafes 3-year sponsorship of SL cricket team
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Pvt Label supplier

Pkg innov Tea bags

Own Intl Brand

Dilmahs Emergence as a Global Brand

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Lesson #1

Vision and unwavering will are essential to create international brands

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Case Study #2 Jollibee Foods

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Jollibee Foods
Started in 1975 as a 2-branch ice cream parlour in the Philippines Jollibee mascot created in 1980 Listed on stock exchange in 1993 Today, 400 outlets all over the world using the franchise model Rated the top corporation in the Philippines and in the top 10 in Asia Sales $ 472m in 2001
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Jollibee Foods
1981: Used entry of McDonalds to benchmark and improve its standards 1986: After achieving critical mass in home market, entered small markets such as Brunei, Guam and Vietnam (fast food concept new; fragmented market with no large players) Early 1990s: S.E. Asia, Gulf (10 countries) 1998: Entry into US market - California
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Gained dominance in Domestic Market

1st mover in small, untapped markets

Take on big players in established mkts

Jollibees International Expansion Strategy

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Jollibee: Success factors

Standardized retail identity for outlets worldwide designed by intnl group Core menu same but adaptation to local markets; drive-up service in US Corporate image based on identity as a proudly Filipino company Communication strategy rooted in traditional values - family, love for children these values stressed within company
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Lesson #2

Avoid face-to-face combat with strong existing players Look for loose bricks
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Case Study #3

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Kingfisher
Best-selling Indian lager worldwide Available in 52 countries Manufactured in India and the U.K. First imported into U.K. in 1982 High penetration of Indian restaurants Mfg, pkg elevated to global standards Premium pricing strategy
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 Association with celebrity chefs and NGOs sponsor of National Curry Day Diverse sponsorships - Benetton Formula One, West Indies cricket team Links with top fashion designers Awards in major beer festivals to buttress claim of international beer Different approaches in U.K., Japan
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Lesson #3

Handle country of origin issues strategically

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Associate with +ve influence Dissociate from -ve influence Use as per convenience Turn neutral perception +ve
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Lesson #4

Build brands around products that have global appeal or even if they start as focusing on Indian expats can be extended to a larger audience
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Case Study #4 Satnam Overseas

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Satnam Overseas
27-year old, Rs. 350 crore business Kohinoor Brand of basmati available in Harrods, Costco, Safeway Spends about Rs. 10 crore p.a. on marketing, i.e. ~3% Exports are 70% of sales Branded exports about one-third of exports
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Satnam Overseas
Originally a rice miller Entered rice export business after decontrol in 1978-79 Originally focused on Saudi Arabia Realised importance of quality early
Upgrade machinery broken grains Polishing to give whiter look
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Satnam Overseas
Sold to leading Saudi brands Moved to other gulf countries Decided to brand to reduce fluctuations in volumes, bargaining power of buyers Choice of brand name: Kohinoor
diamond with no match

Loyal base of farmers; high processing capacity

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Satnam Overseas
Efforts to build domestic market
Broaden usage of basmati Basmati for your everyday meal Attack misconceptions Education about real basmati Your touch will tell, your smell will tell Pataudi and Sharmila for ad campaign Focus on woman customer (2001-02)

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Satnam Overseas
Strong presence in India helps overseas sales
Indias largest-selling basmati brand comes to the US

Targeted at ethnic Indians residing abroad Indian radio stations Anup Jalota show Innovative packaging (ethnic, smaller sizes) to enter foreign supermarkets
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Commodity

Brand

Satnam Overseas moved from a commodity exporter to a branded exporter

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Lesson #5

Learn from competitors Quality & process efficiency in every part of the value chain Need for distinctive advantage
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Lesson #6

Avoid price wars Adopt premium pricing or value pricing

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Lesson #1

Vision and unwavering will are essential to create international brands

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Lesson #2

Avoid face-to-face combat with strong existing players Look for loose bricks
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Lesson #3

Handle country of origin issues strategically

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Lesson #4

Build brands around products that have global appeal or even if they start as focusing on Indian expats can be extended to a larger audience
16th December 2003 FoodPro 2003

Lesson #5

Learn from competitors Quality & process efficiency in every part of the value chain Need for distinctive advantage
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Lesson #6

Avoid price wars Adopt premium pricing or value pricing

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This talk is based partly on a study by Anshu Goel and Sachin Sharma, PGP (2001-03) at IIM Bangalore under my supervision.

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References
Bartlett and Ghoshal Going Global: Lessons from Late Movers Harvard Business Review March-April 2000 Amit Rai Against the Grain Business Standard, Strategist section, February 4, 2003 Respective company websites

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