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Birth Pangs

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What seems to hold sway over the Indian market today is curiously seeing a revival in the West. Even as India just begins to savour an explosion of out-of-home food experiences, an entrepreneur is staking a claim to reverse the same, and turn Indian consumers into at-home chefs.

More and more urban Indians appear to be jaded with conventional Indian style cooking, if the growing preference for the Italian, Mexican, Lebanese and Oriental cuisines is anything to go by. While supermarkets in USA are offering more consume-at-home meal kits and functional food solutions for budget conscious shoppers in a recessed economy, some Indian manufacturers and retailers are pushing the convenience of home cooking through new products and services.
 
Thus, while Spencer’s at its Chef ’s Corner would have a ‘Live kitchen’ for gourmands, Amalgam Specialty Foods Limited (ASFL), is spicing up the experience with niche herbs, seasonings and spices to add flavour to home preparations. Will an amalgamation of these twin trends result in a new generation of home-grown culinary gurus?
 
ASFL, a subsidiary of Amalgam Enterprises, is in the throes of a national roll-out of some speciality products that are currently available in leading retail outlets such as Spencer’s, Foodworld, Nilgiri’s, Varkeys, Shoprite, Reliance and , in Mumbai, Bangalore, Chennai, and Kerala. The portfolio of ASFL comprises three brands – ‘Keya Simply Fantastic,’ ‘Keya Secret Chef ’ and ‘Hale & Hearty’. 
 
‘Keya Simple Fantastic’ is ASFL’s range of speciality herbs, seasonings and spices along with a series of instant cup soups, premium batters and breadcrumbs. Keya Simply Fantastic soups are differentiated from the rest in that these have 12 international flavours including mixes as unique as Japanese Miso and Thai Tom Yum. The instant soups are also be available in chicken, tomato and corn flavours, and are priced between Rs 18-20 for a single serving. ‘Keya Scret Chef ’ is Amalgam’s range of freeze dried shrimp, shrimp prawn powders, pawn chutney, Tempura batter, taste makers and nonveg pickles. Hale & Hearty is the health snacks, morning meals and baby foods offering from ASFL. The initial roll-out of Hale & Hearty is expected to begin by September. Saumil Thanawala, director of marketing at Amalgam Specialty Foods
 
Limited, remarks, “We are sure our products will take the end consumer by surprise, and will form part of the daily diet for both children and adults in times to come.”
 
Amalgam Enterprises, the parent company of ASFL, was established in the year 1977, and has developed expertise in the food arena across segments such as frozen foods, processing for animal and aqua feed industry, production of fish oil and extracts of Shrimp, Crab, Clam and Chicken for the food industry. While Amalgam Specialty Foods Ltd specialises in packaging and blending of premium culinary herbs, spices, seasonings, batter mixes, canned, pickles and dried seafood products for Indian institutional and retail markets, another company under Amalgam Enterprises – Freeze Drying Co. Limited – specialises in freeze-dried ingredients and caters to international food majors. 
 
Freeze drying is an extremely sophisticated process of dehydrating perishable substances in order to preserve them without tampering with their morphological structure. The credibility of the freeze drying process is so high that it is also used in preservation of blood plasma and tissues, for therapeutic purposes. The process has also been used by NASA for making freeze-dried ice creams for its astronauts.
 
The shelf life of a freeze-dried product is extended by several years, which not only provides an edge to its users over the competition, but also sustains the natural worth of the product itself. The process is used by ASFL in all its three brands. As a matter of fact, Amalgam claims to be the company to introduce the Indian food industry to the freeze drying technology.
 
Ace of spades
 
Even as Amalgam exports processed and value-added food ingredients to food majors in Japan, North America and the European Union, a noteworthy point is that the world’s largest spice and seasoning brand, McCormick – which manufactures, markets and distributes spices to far and wide countries – uses Amalgam’s speciality spices, seasonings
and herbs directly in its retail packs.
 
Thus, in contrast to the common practice of the pre-independence era – when fine raw materials were exported at cheaper prices and finished goods were imported back and sold at a premium – a ‘reverse flow’ of using its own ingredients under international brand labels motivated Amalgam to get into serving its domestic consumers at lower price propositions. “Given the growth of modern retail in India, we discovered many of our export products being re-imported under international brands for sale in India,” Thanawala Says.
 
“Consequently, Amalgam Enterprises saw an opportunity of substantial growth potential, to introduce world-class products under its own label, at substantially lower price levels than the imported products.” 
 
The price range of Keya Simply Fantastic herbs and spices varies between Rs 55-80, while the Keya Secret Chef range of dried shrimp and prawn variants, which come in stand up pouches, have a price range of Rs 40-60. Hale & Hearty snacks are priced between Rs 20-40.
 
Dream to reality
 
Several dichotomies are in evidence in the Indian marketplace. Given that a rapidly evolving market typically displays a high degree of innovation and expanding consumer choice, it is anything but easy for a new brand to find its place under the Indian sun. While established food and FMCG brands continue to leverage formidable distribution networks and brand visibility, newer brands grapple to find visibility on retail shelves. In the end, even if it is a retailer’s responsibility to provide greater choice to consumers, there is shared risk in promoting innovations that may or may not find favour as expected with the target audience. “Every invention always appears to carry great promise, but also has enormous risks,” Thanawala agrees. “What appears like a great product may just not move on the shelf and die a natural death.”
 
“A product that is ahead of its time, in terms of its manufacturing technology and value proposition, might sometimes just not receive the acceptance which is expected from retailers.” 
 
“Since the Group has expertise in producing world class ingredients, we spent most of our time in developing products that would be especially suitable and exciting for consumers pan-India. The product categories of spices, herbs and seasonings in glass bottles; instant soups that just require addition of boiling water and, pure health snacks were categories, which still had no presence on Indian retail shelves. Thus, we saw an opportunity of carving a presence in niche categories that had a huge future growth potential.”
 
“The aim was to match or even exceed the quality of major international brands of like products. Here, we kept renowned international players as our benchmarks, and carried out a number of blind tests with potential customers to better our product range,” he states.
 
The fault lines
 
When product innovation takes effect in a retail landscape, besides the consumer himself, there are other factors that could play truant with the acceptability of such developments. And this includes the retailers themselves being unconvinced about the feasibility of the product. At the recently concluded national conference of food retailers and brands – Food Forum India, 2009 – , president of and Food Bazaar, called for a rapid pace of innovation in food and FMCG categories specifically for modern retail. What was not, however, specified was the criterion by which a retailer was to judge the ‘innovation’ factor of a particular product or brand (unless the product was tested on the basis of consumer purchases and feedback itself ). Indeed, at the same platform, Thanawala voiced his concern about a substantial number of Keya Simply Fantastic herbs, seasonings and spices being faultily placed at some stores that were not ‘mutually decided’ with the chain Retailer.
 
Even as Thanawala contends that retailers largely efficiently execute mutually-discussed product placement strategies, the occurrence of faulty product placement, even for once, might provide ammunition to contradict the same.
 
“Placing a product with a retailer is only half the battle. The brand must be in constant interaction and dialogue with the retailer,” he further Notes.
 
“Company merchandisers must make frequent visits to ensure that new products get appropriate shelf presence and display. The manufacturers cannot, in all fairness, expect the retailer to promote its products once placement takes place.”
 
Thanawala further concurs that consumer feedback from retailers also helped ASFL make requisite changes in packaging and labelling of its products. Feedback from retailers on product mix according to the respective catchment has also helped ASFL align its products in accordance with the demands of the Consumers.
 
Bridging the divide
 
Moving from the front-end to back end, the success of any brand greatly depends on its distribution strength. In fact, the distribution might of majors such as and ITC, among others, has facilitated the runaway success of many brands launched in just the past couple of years. And the lack of same may prove a deterrent for a new brand. “A company may have the capability to process and package a world-class product, but establishing a national distribution of its own is the single biggest challenge for any manufacturer,” Thanawala agrees.
 
“Being an SME (Small and Medium scale enterprise), ASFL does not have the financial muscle or distribution width to take on established food brands.”
 
Refuting the utility of a outsourced national distribution agency, Thanawala states, “A national distribution organisation in the long run never really works, as the manufacturer never really has full control of its destiny.”
 
“In most cases the company never gets the required attention for the distribution and sale of its products. The only real advantage of going through a national distribution organisation is a single point payment of receivables. The company is freed from the hassles of receivables collection.” “Amalgam Specialty Foods is in the process of establishing its own sales and distribution outfit for sale of products under its Keya, Hale & Hearty and Secret Chef brands,” Thanawala further informs.
 
Having said that, even as the success of Keya Simply Fantastic herbs, spices and seasonings motivates ASFL to launch Hale & Hearty and Keya Simply Fantastic instant soups in the month of September, Thanawala suggests a few do’s and don’ts for a new brand manufacturer in the market.
 
“A new entrant must use technology as a differentiator and an ‘entry barrier’ to create a national brand, rather than cater to local tastes and flavours on an opportunistic basis,” he notes.
 
“It is imperative for a new brand manufacturer to have an outstanding product offering in order to create a distinct brand identity. An unmatched product quality along with reasonable price points and product packaging of international standards carry equal weightage when it comes to making first impressions,” he Adds.  
 
However, Thanawala cautions a new entrant on foraying into a me-too product category, which already has presence of established brands, unless the product is of exceptional quality and is being offered at particularly attractive price points. “Outsourcing manufacture of a food product is never a safe course unless production is always under direct supervision,” he further Contends.
 
“Build a modest own distribution network, which can be slow, difficult and high cost initially, but will pay-off in the long run.”