Krishna Gopalan, deputy editor, Outlook Business: Thank you all for being here. In many ways I don’t think there is a better place or better moment to be in India, one has heard of the emerging middle class, but the ability to spend from the middle class point of view is what makes this story absolutely fascinating. I cannot think of a set of four more enlightened and insightful people to throw light on the discussion, as far as how to create food brands are concerned.
Piruz, I will open the floor by asking you the most basic question. Yours is a household name and you have come into our lives decades ago, when all of us were still barely crawling. The first three years was really about the Jaffe brand and then Rasna took form around 1979. It’s probably fair to say that during this period you have seen ruthless competition, emergence of new categories, and a lot of players also came and went. What is it that you did in your own opinion to ensure that you continue to remain relevant in a market like this?
Piruz Khambatta, chairman and MD, Rasna International: First, I should congratulate you for coming to Ahmedabad, we don’t get too many magazines looking at Ahmedabad and I also congratulate you for taking Agri and food processing as a topic, because this topic actually goes down to the most common man. And as we always say, it’s ‘roti, kapra, makaan’ basically. Coming back to your question, I think I am a great admirer of Amul brand and I am a great admirer of Mr Sodhi himself and I was here attentively listening to him. Our story and Amul’s story is especially in the beginning a little similar, we came slightly later than that. Those were different days. I have always been telling everybody that we need to reinvent ourselves and think of every year as a launch. If you ask me, as soon as the next summer comes, it’s a new year for us and we are one of the few people who have almost been changing our brand identity also. I don’t think brand changes their identity.
This is probably the sixth or seventh change of Rasna in our 30-year journey. That means we are changing every five or six years. There are packaging changes and more importantly, every year after the summer season, we also do a major detailed research on everything that we have done, including the ads, communication, packaging and taste. We believe that the consumer interests are changing, so we try to change our product too. Surprisingly, what we are selling today is very different from what we used to sell 10-20 years back. We used to have a bottle, the bottle is gone, the product is different, the fruit is different. I believe the product has to be changed to the ever-conscious changing need of the customer. We sometimes succeed, sometimes we don’t. Another good thing is that we have always been the most value for money product. In today’s world, to sell a Rs.2 drink product is impossible. And let me tell you, we are not making any money in that product. Yet, we are still selling that Rs.2 product a glass for a simple reason — our entry cost is converting a person from water drinker to soft drink drinker. In 25% of an average Indian middle class home — not a Malabar Hill home or a very poor home — the volume of whatever is drunk is Rasna. If it is a fruit drink it is always 50%+ Rasna, if it is not aerated drink.
You will be also surprised to know that as a brand, in terms of volume, we are probably just after Cola, Pepsi or Frooti in the house. The primary reason is that people buy us because they trust us for being a good product, not too expensive, we don’t fleece the costumer, for being value for money and now, for the last few years we have adopted the strategy of fortification and I am a believer that today as food companies, we need to ensure that just giving food products won’t do, we need to give health also to the customer. And this is something, which we have started from 2003, onwards when we started fortification of all food. Fortification means 21 vitamins and minerals, 10% of the RTA. So in one glass if you drink you get 21 vitamins and minerals, upto 10% of your daily required dose and now you say it is only for costly product? I will say no, it is for the one rupee product also.
I believe that fortification is more needed for the lower cost products for the simple reason that the customer there actually requires fortification. So, we have started fortification in a big way and we have ensured that we communicate fortification in a big way. Other than this ofcourse advertising and marketing has changed, we have been using celebrity in a big way, earlier we’ve never used used celebrities. Last year we used Akshay Kumar. I believe that celebrities were able to reach out to the masses, because a big challenge in Rasna is to go and get more and more people. Thirdly we have also done a lot of changes in what I would say our media mix also we have tried. This year we have done a very major campaign on YouTube. Our social media agency targeted to reach 10 million views. And we made a special film for YouTube and 10 million is not a small number and luckily we have reached that number. On YouTube you can also monitor and double check, which is not possible for TV, where you don’t know how many people have viewed your video and we have also done Facebook marketing.
Piruz, but this is a contemporary or modern Rasna compared to what it was 40 years ago.
Khambatta: See, let me put it this way, if I have to write a book I am going to write a book on how we ensured that maximum multinationals are killed in India. We have ensured that no multinational that has entered our category, has ever succeeded. And people who have done it, who are active, their turnover is probably the same size as their expense and ofcourse they are sustaining it.
Chandubhai, your story started from a canteen store. What opportunity did you see in the wafer business? If you could tell us about the story, because it is quite fascinating.
Chandubhai Virani, founder and MD, Balaji Group: I am from a simple village, with a population of not more than 2,000 people and there was no one else. My father was a farmer and I always wanted to do something and be successful. With that thought in my mind, I came to Rajkot where a new cinema was being set up and there was a canteen there, where I worked for one or two years. We worked well, and so we got the canteen on contract basis. Then we got a girls’ high school canteen. So from 1974 to 1982, we were only selling which is how we got an understanding of business and consumers. Because, before this my father was not a businessman. So based on our eight year experience, we thought of making something ourselves. So we started making chips and selling them in our canteen and we thought why only three counters, lets expand.
Slowly we started getting some great responses and then we moved to an industrial area in 1989. We took a loan for a rickshaw, continued taking loans for expansion and then moved from Gujarat, to all of Maharashtra… we can expand to all of India today, but we like to move slowly. There is an evident demand for our product across the country. Outside India also, there are about 40 countries who are demanding for our products. We have moved slowly but from three counters, today we are distributing products to 8 lakh shops. And we have a team of our distributors now, but it took 44 years to form this team and reach where we are today. We were nothing, but we had the desire – to be something, which is why we are what we are today. We have this brand name and identity, which was our goal. Today we have become a practical example, that you should not be afraid. Even if we have competition from MNCs, we try to learn from them and move forward. We had no fear of failure – either you become a roadpati or a crorepati. You should work without worrying and if you try to make quick money, you will get caught. You have to take tiny steps to succeed and if you continue working towards being a better human being. Making namkeens became our religion and our namkeen is like Prasad.
But for this, trust is very important.
Virani: All our employees, suppliers, 700 dealers, 1 lakh retails and crores of consumers are all good human beings which is where the trust comes from and they buy because of trust. Which is where all the trust comes from.
Parag, it’s a fascinating journey for you since, have been in business for over a century now. Its indeed been an intriguing story but having said that, it was equally operative industry which is highly commoditized. So, it is but natural for me to ask you to think of a couple of key milestones in that context which really helped in the successful process of brand building and how you managed to create a your own niche and what I imagine would have been a ruthlessly competitive market.
Parag Desai, executive director, Wagh Bakri Tea Group: Yeah, thank you for having me over here. When Mr Sodhi was speaking I could identify with most of the things he was saying. He was saying that you know his company sources from so many people. We source from the other side of India, which is eastern India with more than 14,000 tea gardens, and we sell it mainly in central, northern and western India. In the 90s, I am the fourth generation in this family and in the 90s when I went for my higher education in the US, we were a very happy family, we still are a very happy family, but we had made some serious resolutions, one of them being, you should never cheat your customer. Secondly, we should always be honest in quality, and we should always believe in sales and distribution. In 2017 when I am also the third largest tea company in India, the largest in the world in the private sector, technically speaking I operate only in 11 states in India, out of 29 and in only 30 countries outside India. So, although I can grow much faster and I can grow much bigger we have been very sure about our choice of growth, you know we believe that when we approach a customer we should give him/her an option for a better cup of tea, rather than trying to corrupt them through discounts or schemes.
Also, I am fascinated by the fact that all the people who helped us grow in this journey are very fine individuals, from consultants to my employees to my business partners etc. While it is very common for people to change their distributors, I can proudly say that I would have the lowest turnover of even business partners, distributors, so most of my distributors are also in their 3rd generation and as something like GST comes into India, we are one big united family who are trying to resolve whatever is there to be resolved. And we are very passionate when it comes to working so although most of the information is on the net and everyone knows everything we still believe in meeting people, we still believe in resolving conflicts. I spend most of my time travelling, meeting my own customers, we are a very research-based organization.
So every new campaign that we do is based on research and we receive a lot of awards. Recently the prime minister’s office and the president, they awarded us the with the ‘legacy brand of the country’ award. We feel that, we continue doing our good work and someone is watching us and that person more or less is the customer who rewards us through loyalty. Every time Neelson does a research we get the highest rating in terms of loyalty of customers and people really appreciate the fact that we don’t change our prices, we don’t change our quality. Even in our advertising, we are honest to customers. So, the journey has been fascinating and it promises to be continued to be so…
Obviously, you have got many things right in the process but when we speak of creating a niche, would that be one of the things?
Desai: Yeah, we take pride in saying that I was local company, I still am a local company, but I am a local company in every global play that I am …If you meet me in the middle-east, I sell a very different kind of tea, a very different kind of packaging, a very different kind of team that sells the tea. But the brand promise remains the same…you meet me in the US, it’s the same thing. Our quality of tea depends on the quality of milk and quality of water which are in the markets in which I operate.
So, let me give you a small example. There was a discussion that we should go to Maharashtra. And Maharashtra is like Gujarat, a very large state and very strong competitors. Gujarat and Maharashtra used to be one state at one time and hence, there is a lot of cultural connect. But whenever we tasted our teas in the milk and in the water of Maharashtra, especially Bombay, it was a big challenge, because the taste was different. The milk used here is different and the water is very hard, so people have never experienced quality tea. We had to do something radical and so we started Wagh Bakri Tea Lounges – like the Starbucks for tea. We set up the first one in Jaipur, the second one in Ville Parle, near the airport and our intention was never to make money. It was just to get people to come and experience the right way to have tea. Today, we serve more than 40 different types of tea along with authentic Indian snacks. People in Mumbai and Delhi never actually tasted a good cup of tea at their home – their first cup of tea would either be at the local station or in office even though they liked good quality tea. So we had to go with a separate vertical. Today, we have more than ten places where we have tea lounges including Goa, Delhi, Ahmedabad etc. It’s a fascinating experience for us because people who say I have been drinking tea, but this kind of a taste, I never thought I could get in my house. They keep coming back to us with their husbands, mothers-in-law, grandchildren, just to say give me a tea which is popular in Africa or give me a tea which is popular in Scotland. So, in our business our first aim is to make the person experience a god cup of tea, my brand comes in much later.
This is the first of a two-part series. You can read part two here.