Indian packaged food category is rapidly expanding with substantial opportunity for growth. It presents an attractive growth adjacency in the overall Indian agribusiness and food landscape. Sathguru advised a leading Indian tobacco company to pursue this diversification opportunity with a well conceived business plan and roadmap for technology adoption and market entry.
Client context and growth aspiration
Our client, a mid-sized Indian family business group, and one of the largest manufacturers of tobacco products with a pan India presence was challenged with declining revenues due to market and regulatory hurdles. The need for diversification was obvious and the group was keen on venturing into the food business. However, they were also aware of the various challenges within food sector that was predominantly mass market driven, highly cluttered and competitive. Further the sector also posed challenges with limitation of quality product development professionals, high marketing costs and uncertainty of viability of products especially for new entrants. The company sought strategic and operational advisory from Sathguru to traverse from ideation to a feasible business in processed food sector.
Scope
Scope of the engagement included:
- Conducting extensive market research (primary and secondary research), identify and prioritize categories and products in the Indian branded packaged food market with substantial growth opportunity and business merit
- Formulating product development pathway and roadmap to accelerated translation of vision to marketed products for identified categories of packaged snacks / beverages
- Evaluating manufacturing technologies and recommend vendors, provide technical assistance in facility development
- Developing marketing plan for launch of branded snack range including strategy for market placement and product promotion
- Handholding during the implementation phase and strengthen operations backbone for R&D to manufacturing and food safety integration: developed various policies and SOPs for smooth operation of business, building in-house research and product development capabilities etc
Approach
Sathguru’s approach was
- Competitive portfolio backed by extensive research on market gaps and technology integration: Identify the gaps between the Indian consumer’s expectations and the value proposition offered by existing products in packaged food segment and identify innovative technologies and products to create a niche business proposition for the client
- Marketing strategy: Devise a unique cost effective marketing strategy with an optimal mix of ATL and BTL initiatives
- Innovation and technology roadmap: Identify technologies that were broad based rather than specific given the nascent stage of client in the food sector to enable the client leverage the same technology for multiple products
- Prudent investment plan: Stagger infrastructure development, product development capacity and market penetration
Recommendations
Taking cognizance of the client expectations, bandwidth and risk appetite, Sathguru’s dedicated food industry advisory team made the following recommendations to steer accelerated market penetration by the Client in the Indian FMCG landscape:
- Adopt an innovative and differentiated product portfolio and operate in a niche segment that is not cluttered by competition along with mass market products to optimize risk
- Engaging external product development experts during the initial phase and eventually build in-house product development capabilities
- Adopt flexible versatile technology package capable of producing multiple product categories to minimize risk and dependence on a single product
- Phased product launch, promotion and market placement to minimize the risk and investment in market development