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16th December 2003 FoodPro 2003

Creating InternationalFood Brands from India

Prof. Rishikesha T. Krishnan

Indian Institute of Management [email protected]


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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 talentabroad

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 negotiatingpower 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 useof local Ceylon tea brands to sell low

quality teas in the world market

1984: entry into foreign markets as asupplier to large Australian supermarket


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1988: Launch of Dilmah brand inAustralia

Vision: Build a completely integrated teacompany that produces its own tea andsells it under its own brand

Supplies the same 100% pure Ceylontea grown and nurtured in Sri Lanka todifferent 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. NorthVietnam dotted with Dilmah cafes

3-year sponsorship of SL cricket team


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Pvt Labe lsuppl ier

Pk g innovTea bags

Ow n In t lBrand

Dilmahs Emergence as aGlobal Brand


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Vision and unwavering will

are essential to create

international brands

Lesson #1


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Case Study #2

Jollibee Foods


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Jollibee Foods

Started in 1975 as a 2-branch ice creamparlour in the Philippines

Jollibee mascot created in 1980

Listed on stock exchange in 1993

Today, 400 outlets all over the worldusing the franchise model

Rated the top corporation in thePhilippines and in the top 10 in Asia

Sales $ 472m in 2001


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Jollibee Foods

1981: Used entry of McDonalds tobenchmark and improve its standards

1986: After achieving critical mass inhome market, entered small marketssuch 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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Gaineddominance

in DomesticMarket

1st moverin small,

untappedmarkets

Take onbig players

in estab-lished 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 localmarkets; drive-up service in US

Corporate image based on identity as aproudly Filipino company

Communication strategy rooted in trad-itional values - family, love for children -these values stressed within company


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Avoid face-to-face combat

with strong existing players

Look for loose bricks

Lesson #2


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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 FormulaOne, West Indies cricket team

Links with top fashion designers

Awards in major beer festivals to buttressclaim of international beer

Different approaches in U.K., Japan


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Handle country

of origin issues strategically

Lesson #3


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Associatewith +ve influenceDissociatefrom -ve influence

Use as per convenienceTurn neutral perception +ve


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Build brands around products

that have global appeal oreven if they start as focusing on

Indian expats can be extended toa larger audience

Lesson #4


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Case Study #4

Satnam Overseas


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Satnam Overseas 27-year old, Rs. 350 crore business

KohinoorBrand 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 ofexports


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Satnam Overseas Originally a rice miller

Entered rice export business afterdecontrol 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 fluctuationsin volumes, bargaining power of buyers

Choice of brand name: Kohinoor

diamond with no match

Loyal base of farmers; high processingcapacity


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Satnam Overseas Efforts to build domestic market

Broaden usage of basmati Basmati foryour everyday meal

Attack misconceptions

Education about real basmati Yourtouch 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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Com m odi t y Brand

Satnam Overseas moved froma commodity exporter to

a branded exporter


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Learn from competitors

Quality & process efficiency

in every part of the value chain

Need for distinctive advantage

Lesson #5


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Avoid price wars -

Adopt

premium pricing

orvalue pricing

Lesson #6


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Vision and unwavering will

are essential to create

international brands

Lesson #1


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Avoid face-to-face combat

with strong existing players

Look for loose bricks

Lesson #2


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Handle country

of origin issues strategically

Lesson #3


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Build brands around products

that have global appeal oreven if they start as focusing on

Indian expats can be extended toa larger audience

Lesson #4


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Learn from competitors

Quality & process efficiency

in every part of the value chain

Need for distinctive advantage

Lesson #5


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Avoid price wars -

Adopt

premium pricing

orvalue pricing

Lesson #6


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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 ReviewMarch-April2000

Amit Rai Against the Grain Business Standard,Strategist section, February 4, 2003

Respective company websites

Documents

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