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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