Shiv’s Third Eye


November 29, 2017

Agriculture: Twenty Years from Now…

Following is a summary of my remarks in an “Agri Panel” at the Global Entrepreneurship Summit earlier today, in response to the question, “What do you think will be game-changing about how we think about agriculture, twenty years from now?”

Soon after the panel moderator sent me this very interesting question a couple of days ago, the first thing I did was to post this question on Twitter, Facebook, and LinkedIn to crowdsource thoughts from my friends. There were nearly two hundred unique responses! They added up to twenty pages of text, without counting the number of pages in the links I received. Overwhelming, isn’t it?

All I am doing now is to simply synthesize those inputs and share with you J

The future of any system is shaped the current aspirations of the key stakeholders. Let’s take a look at the aspirations of the consumers, producers and the society at large…

Consumers want sufficient quantity of food (because we would be nearly nine billion by then, and on average richer than today), that is tasty (although, a friend did say in lighter vein, “since we will have nano-bots in our blood streams, and since our memories could be uploaded on to cloud, maybe we don’t need food and therefore no agriculture; we probably just need some electricity, or batteries, or just a few hours of exposure to sun ;-), is safe (you are all consumers here, don’t you agree that harmful chemicals in food is your topmost concern?), nutritious (scientists say that most of the world is suffering from invisible hunger), and all of these at reasonable prices!

Farmers want higher incomes (as you know, per capita income of farmers around the world, especially in emerging economies, is far lower than the general per capita) with lower risk (weather and disease related production risks, price volatility). Their labour deserves more dignity (as it is, hardly any youth from the next generation wants to be a farmer) and they deserve better quality life (as in, the conveniences and comforts that are common in urban settings).

Society at large would like agriculture to conserve natural resources (water and top soil, for example) and where possible, actually renew them. Agriculture needs to be resilient to climate change (the summer rains and warm winters, extreme climate episodes like heavy downpours on one hand and droughts on the other, etc), and again, where possible, positively impact climate change (sequester carbon, minimize greenhouse gas emissions etc).

An interplay of these different – at times conflicting – aspirations gives rise to three distinct scenarios, all of which will co-exist in twenty years. Let me label them: Farms as Factories, Homes as Farms, and Back to Basics!

Farms as Factories: By using the metaphor of factories, all I am saying is that the consistent quality of output will be produced, crop after crop, by leveraging the evolving technologies – both farming (like seed, nutrients, farm-equipment, agronomy practices etc) and digital (IoT, block chain, hyper-spectral imaging, GPS / GIS etc). A friend called them, “hardware, software, and liveware”). Another friend went to the extent of visualising a self-managing seed! These seeds will analyse the experienced conditions like soil, weather, water etc and invoke the necessary embedded features that would maximize the yield and quality. This may sound like fantasy today, but those of you who are familiar with experiments on seeds with multiple layers of coating in the past may very well say this could be a reality in twenty years!

Homes as Farms: I am sure, you have heard of vertical farming, balcony farming, kitchen gardens and such other names. Once supply chains are established to supply DIY-type mini production units, seeds, nutrients etc to the households, this phenomenon will expand more rapidly. This food is safe without any doubt in the consumer mind, and zero carbon miles! Business Models are also in the works for another kind of service. If you are not adventurous enough to grow crops in your backyard yourself, you can simply let out the space to Service Providers who can grow crops on a BOO model. Besides experts growing the crops in this model, a colony-level kitchen garden is more optimal than a household level garden. And a third model, which is not a ‘home-as-farm’ strictly speaking, is a partnership between a group of, say, five thousand, consumers and a community of, say, five hundred farmers. I know of several such partnerships across cities, built as WhatsApp Groups integrating even the e-commerce functionality.

Back to Basics: Much of today’s ills of agriculture are due to chemical-intensive mono-cropping paradigm. A more sustainable future scenario would be an integrated farming system consisting of polyculture, permaculture, organic compost, bee-keeping, animal husbandry, renewable energy. In fact, I already see some farms where solar energy brings larger revenue than the conventional crops.

As the panel went forward, there were other questions, but for now I am wrapping up this post without covering them.

Source: shivsthirdeye

Royal Enfield’s UK Technology Center Tour


November 29, 2017

Written By Brent Jaswinski

We go inside the Indian company’s English development facility

Thomas R. “Big Tom” Callahan, Jr., an auto parts salesman from Sandusky, Ohio, once said, “You can get a good look at a T-bone by sticking your head up a bull’s ass, but wouldn’t you rather take a butcher’s word for it?” When it comes to steak, we at MO would be inclined to heed the butcher’s advice, but when it comes to motorcycles, we’d prefer to take that “deeper” look to see for ourselves…

Royal Enfield invited us to take a comprehensive behind-the-scenes look into its UK Technology Center in Leicestershire, England. There, with the collaboration from the Chennai, India factory, they have designed, engineered and tested two all-new from-the-ground-up models that both feature the new 650 parallel-Twin motor. These new models include the Interceptor INT 650 and the Continental GT 650. While there, we were able to speak with several of Royal Enfield’s reps, including all the top dogs, and gain further insight into the company and its new products.

Royal Enfield may not be the household name in America like it is in many other parts of the world. So, to give a little background on the company, Royal Enfield is not only the oldest motorcycle manufacturer in continuous production since 1901, but it’s also the fastest-growing motorcycle brand in the world, as well. Royal Enfield has grown 16-fold in the last eight years. The company has gone from building 50,000 units in 2010 to more than 800,000 by the end of this year and is aiming to produce 950,000 units next year. Royal Enfield’s sales are equivalent to the global sales of Harley-Davidson, KTM, BMW, Triumph, and Ducati, combined. Let that sink in for a second.

What’s most interesting and unique about Royal Enfield is the approach it has taken to become this global heavyweight motorcycle manufacturer. It’s important to make clear what Royal Enfield is, and what it isn’t. Siddhartha Lal, Royal Enfield’s CEO, explicitly states that the company isn’t interested in making high-performance sport bikes or big-displacement cruisers. But rather, it’s chasing after the middleweight market, specifically the 250-750cc segment. For years now, Royal Enfield has been making 350 and 500cc variants of its Classic, Bullet and Thunderbird models, along with the 535cc Continental GT café racer. However, there hasn’t been a larger-displacement bike to upgrade to since 1970, when Royal Enfield stopped making its 736cc Interceptor.

Enter the all-new 650 Twin. It’s a 648cc air/oil cooled parallel-Twin with a single overhead cam and four valves per cylinder. These features combined with a 9.5:1 compression ratio yield a claimed 47 horsepower at 7100 rpm, with about 39 ft.-lbs. of torque waiting at just 4000 rpm. These output numbers won’t make you the king of your local drag strip, but that’s not what Royal Enfield is about.

“Royal Enfield aims to lead and expand the middleweight segment globally,” Lal told us about why RE chose to make the 650 Twin. “While the new 650 Twins will be a compelling upgrade for our large customer base in India, we believe they will attract customers from other developing markets in Southeast Asia and Latin America to graduate to the middleweight segment as well.”

Unlike here in the United States, where many believe there’s no replacement for displacement, developing markets in the rest of the world don’t have a need for such big-bore bikes. In many cases, the roads just simply don’t allow for it. On top of that, certain countries’ governments either restrict engine size or make it very difficult to own large-displacement bikes by implementing steep import tariffs or luxury taxes. For example, learners in Australia are restricted to a motorcycle with a motor no bigger than 660cc for their first two years. In Indonesia, some provinces have import taxes on large-displacement motors starting at 30-40%, and tariffs in Malaysia can be hiked all the way up to 125%.

Royal Enfield reps say they’re out to capture the consumer, not the competition. They’re here to grow the market, not steal other manufacturer’s customers, although that might end up being the case. At the core of Royal Enfield’s goals, more than anything else is to provide motorcycles that are versatile, fun, agile and yet unintimidating and accessible – the key words here being, fun and accessible because that’s what CEO Siddhartha Lal and RE President, Rudratej (Rudy) Singh believe motorcycling is all about.

Now, before all you middle-aged guys holding onto your 15-year-old R1s (who, mind you, aren’t buying new motorcycles anymore) start typing away in the comments section writing off Royal Enfield by complaining that these new bikes are ugly and grossly underpowered, understand this: These bikes aren’t designed for you. Instead, young, urban riders – many of whom are women – are the key demographic to motorcycle growth right now. More and more young people are flocking to cities, where not only is the cost of living higher, but also navigating the urban sprawl is becoming exceedingly difficult and time-consuming. This is where a fun and affordable motorcycle begins to become attractive to a learning rider. This is a big segment of the market that Royal Enfield is after.

Giving budding riders a unique option is not just reserved for young people, although I imagine the new Royal Enfields will pique their interests. The new engine also answers the call of Royal Enfield loyalists who have long yearned for more mid-range torque and top speed from the traditionally styled bikes. In the past, especially in America, the 350, 500 and even top-spec 535cc (29hp) Continental GT models haven’t cranked out enough power to comfortably ride in modern, high-speed traffic conditions (And vibrated to annoying levels…-Ed.), so the new counterbalanced 650cc models will help remedy this situation.

There should be a lot of inherent value built into the new Royal Enfield motorcycles for a variety of reasons: They’re approachable in the sense that they’re unintimidating motorcycles. They’re simple in the sense that if you need to work on them, you can easily do so without the hassle of removing multiple body panels to access whichever components need attention. Their basic engineering makes them authentic in the sense that they’re not a replica, recreation or knock-off of some other style bike that was once popular. Royal Enfield has been around for a long time and it has stayed true to its heritage and has stuck to its guns (pun intended, as RE was once a gun manufacturer). And, finally, they’re affordable. The Interceptor INT 650 will cost about $6,000, according to hints from RE reps, and the Continental GT 650 will only be a few hundred more at around $6,500.

If classic roadster or café racer styling isn’t your cup of tea, Royal Enfield is also offering the Himalayan, a more adventure worthy bike with off-road capability. Some of its features include a single-cylinder, fuel-injected, 411cc air-cooled motor, 21- and 17-inch wheels, almost eight inches of suspension travel front and rear, and plenty of room and mounting points for hard and/or soft luggage. The Himalayan is currently Royal Enfield’s most versatile motorcycle and should take you from the beaten paths of the city, off the grid and into the wild. And at $4,499, it will keep your wallet happy too.

Of course, there are plenty of other, more sophisticated, more powerful bikes out there that will blow the doors off of any Royal Enfield in terms of performance. But, like we mentioned earlier, the company is not out to compete with the high-tech, high-performance machines other manufacturers are making. RE is in the business of selling passion with the mantra less is more.

Above all else, what makes Royal Enfield’s approach to selling motorcycles interesting is that it’s essentially striving to build the Toyota Camry or Honda Civic of motorcycles – relatively simple and cost-effective vehicles that can serve the duties of most buyers. This is in no shape or form an insult of any sort, because there’s one of these cars in just about every other driveway in America…

The new twin-cylinder Royal Enfield models are expected to hit the States and become available to the public sometime in April, about a month after we get to throw a leg over the Interceptor INT and Continental GT 650 during its launch in March. It will be interesting to see how these models stack up against the significantly more expensive Triumph Bonneville lineup of bikes that begin with the $9,100 Street Twin and rise up to $13,000 for a Thruxton. While looks and performance are obviously important, so is price.

We’ll see how this strategy works out for them. If Royal Enfield’s global performance is any indicator, we expect RE’s strategy to make waves Stateside, too.

Source: motorcycle

Alia Bhatt joins long list of star startups investors: Why entrepreneurs rope in celebrities


November 21, 2017

Written By Sulekha Nair

Getting a celebrity investment in a startup spurs interest from investor/customer interest. At least in the initial days

The most popular way to start up would be to have an idea, funds and then the best heads to run it. Of course not necessarily in that order always. But even if you get the fundamentals right, that will not ensure your startup will be the talked about and known. Having a celebrity to not only endorse but also to put her money in the venture seems to work wonders in the overcrowded startup space.

The latest celebrity to invest in a startup is Bollywood star Alia Bhatt who has taken a minority stake in fashion tech startup StyleCracker. There have been several leading names from the film industry who have invested in startups. One of the bright stories would be Amitabh Bachchan’s investment in JustDial. Bachchan invested just Rs 6.27 lakh in JustDial in 2011. His investment at current market price, assuming his shareholding remains at the same level as earlier, is valued at Rs 3.42 crore. That is a whopping 5368 percent increase. And JustDial is not the only startup that he has invested in.

Not just Bachchan, other celebrities who have worn investors’ mantle include Yuvraj Singh, whose YouWeCan Ventures Technology LLP provides seed funding and angel funding capital ranging from Rs 10 lakh to Rs 25 lakh. Singh is an active investor in the startup sector. Other names that come to mind in the context are Shekhar Kapur and AR Rehman who have invested in Qyuki Digital. Not to mention Sachin Tendulkar, who has invested in several startups.

StyleCracker, in which Bhatt has invested, was founded in 2013 by Dhimaan Shah, a former investment banker and Archana Walavalkar – former fashion editor of Vogue magazine. The startup claims to use advancements in technology to develop The StyleCracker Box – a way to get styled and look great.

So, why are entrepreneurs looking for investment from celebrities?

Firstpost spoke to four startups to find out — Flickstree, in which Sourav Ganguly has invested; Happydemic, in which singer Shaan has a 50 percent stake; Beardo, in which actor Suniel Shetty has invested; and Bag Talk, in which TV star Anita Hassanandani has invested. The co-founders of these startups vouched for the importance a celebrity name lent to their company. Though a celebrity name is not a guarantee of success, there are obvious gains by way of publicity they pointed out.

A celebrity’s name makes the customers more than just curious. It may prompt them to buy the product or service of the startup. They believe successful celebrities don’t lend their name easily to anything unless they are convinced about it.

Paula Mariwala, an alumnus of Stanford University, with over 20 years of entrepreneurial and operational experience with technology companies in the US and in India and is currently partner, Seedfund, says the celebrity angle works initially for a startup provided it is the right fit. For instance, getting Alia Bhatt for a fashion startup or singer Shaan for an entertainment platform.

“The celebrities bring in a value with their association and that opens doors with investors. It works in a glamour-struck country like India irrespective of the celebrity association being financial or adding value as a brand ambassador, for people view these startups differently,” said Mariwala.

In a country like India, where starting up is the new craze (there are 5,200 startups in the country, according to a Nasscom report) and there is a huge crowd vying for investor and customer attention, a celebrity investment is a big bonus for a budding business.

Sourav Ganguly and Flickstree

Sourav Ganguly, cricket legend and former India captain, was piqued in the startup space enough to invest money in a Mumbai-based startup Flickstree, started in 2014. The startup enables people to view films on the go. It also has health and fitness shows, short films — a range of 22 categories at present.

Started by Saurabh Singh, Rahul Jain and Nagender Sangra, the trio approached Ganguly through a common friend and pitched the idea to him. Though it took him six months to be convinced, Ganguly joined the startup as a partner, investor and catalyst. His being associated with the startup led to traffic shooting up 3x to 5x, says Rahul Jain, co-founder. “Visitors to the site know that a celebrity will not lend his name casually to a site. What has worked for us is that in this age of startups where one is launched almost every day, we have been able to differentiate ourselves with Ganguly on our site. It gives credibility to our startup.”

Though the startup has not yet started monetising the venture, it has had investor interest about the business model. “From increasing traffic to even hiring people is not an issue since Ganguly has joined us. Not just that, he attends the monthly board meeting,” says Jain, emphasising Ganguly’s hands-on approach with the startup.

Singer Shaan and Happydemic

In 2016, singer Shaan and his wife, Radhika Mukherjee along with wealth advisor Amar Pandit launched Happydemic, an entertainment platform that connects music lovers and musicians. The platform went live in April 2016.

“I often wonder what happened to the scores of singers who take part in competition, lose out narrowly and have no career in singing to look forward to. Even the winners are remembered for a short period of one season until the next season throws up a new winner,” Radhika Mukherjee, Co-Founder and Chief Executive, Happydemic, had then said while talking about the reasons for entering the startup sector.

With Shaan’s name associated with the startup, traction for artistes from day one has been steady and growing, said Pandit. Shaan is associated with everything to do with the artists — cutting albums or getting them work in the industry. He even houses them in his apartment at times. So far, 800 artistes have signed up and the company expects to break even this year. Last year, revenues were Rs 1.5 crore and it expects to be profitable this year. “We are confident of having revenues of Rs 6 crores this year,” said Pandit.

Suniel Shetty and Beardo

Beardo, a male grooming brand founded in October 2015 by Ashutosh Valani and Priyank Shah, got the backing of actor-turned-entrepreneur Suniel Shetty in 2016. “We were successful earlier,” said Valani, co-founder, but roping in Shetty gave the brand a big boost. In September 2016, the company crossed a GMV of Rs 120 lakh per month, according to a report in the Hindu BusinessLine. “We are growing 60 percent quarter on quarter,” said Valani.

Anita Hassanandani and Bag Talk

In February 2017, television actress Anita Hassanandani co-founded Bag Talk with husband and investment banker Rohit Reddy and Tushar Jain — owner of High Spirit Commercial Ventures Pvt Ltd (HSCV). HSCV has been into manufacturing and retailing of bags for two decades. Jain and Reddy have invested $600,000 in the venture, besides leveraging office and manufacturing from HSCV.

The startup, which claims to be India’s first online marketplace for curated bags, has an exclusive line of bags made for celebrities available on its site. Besides Hassanandani’s line of handbags, it has roped in TV host, anchor and actor Rannvijay Singh for adventure and travel bags and South African cricketer Jhonty Rhodes for sports range of bags. Rhodes line of bags will be out on Bag Talk this month.

Hassanandani is involved right from the ideation of the bags — she is given the sketches by a design team on board which she goes through and at times tweaks to her choice. From approving samples to the manufacture of the product, she is hands-on, says Reddy.

So far Hassanandani has launched the largest number of bags in 14 designs while Rannvijay has 5 designs and Jhonty Rhodes will come out with two this month. Reddy says that the reason for Hassanandani’s bags being lapped up quickly is primarily because women’s fashion does well and the consumers want the latest accessory to match with their apparel. Around 2,000 of her bags have been sold so far. The startup has clocked over 10,000 orders since its launch, says Reddy.

The Bag Talk hopes to break even in a year’s time and come out with a showroom concept – where customers can look at its products offline and buy it online.

Celebrity connection

Clearly, the startup that ropes in a celebrity who is well-known gets traction unlike any other newbie in the field, says Paritosh Shrivastava, associate vice-president at Venture Catalysts who was briefly associated with a Delhi-based diagnostics and wellness healthcare marketplace, Healthians backed by cricketer Yuvraj Singh. When Singh invested in the startup, the orders increased. “Celebrities add a lot of value and startups associated with them usually do well,” said Shrivastava. When a celebrity gives money and an endorsement, the startup has to rev up on the product/service and development because at stake is the celebrity’s name.

Devangshu Dutta, chief executive of Third Eyesight, a consulting firm focused on retail and consumer products sector, says often a startup may already be well-placed and therefore gets interest from a high profile investor – media, film, music artistes, sports, etc. But there have been failures too despite a celebrity investment. These are not talked about, said Dutta.

The celebrity and the startup have to have a connect, else it may raise eyebrows. “If there is a connect with the celebrity by way of her relevance in the product or service, then it is a believable concept that may get just initial traction,” says Sanchit Vir Gogia, chief analyst, founder and CEO of Greyhound Knowledge Group, a global strategy and transformation research, advisory and consulting group.

“But nothing works beyond the initial hype that the startup will generate because of the celebrity endorsement or investment. As a venture capitalist I would look at the expertise of the company. For instance, if it is a Sequoia-backed venture that has huge experience, I would go for it instead of a celebrity-endorsed or invested startup,” Gogia said.

Source: firstpost

Will Coca-Cola’s New India Strategy Have Fizz or Go Flat?


November 17, 2017

Written By Knowledge at Wharton Staff

Is it time to pop the bubbly at Coca-Cola India? After quite a few quarters of decline in volumes, the company seems to be getting its fizz back in the country. At a recent investor call announcing the July-September quarterly results, James Quincey, president and CEO of the Atlanta-based Coca-Cola Company, said: “India returned to growth with volume up 6%, driven by solid performance across the portfolio.” He went on to add: “Our business successfully moved past the recent difficulties related to demonetization and implementation of a goods and services tax during the first half of the year.”

Coca-Cola is India’s largest beverage maker and is estimated to have around 40% share of the country’s branded beverages market. For Coca-Cola overall, India is currently the sixth-largest market after the U.S., Mexico, Japan, Brazil and China. While Quincey’s mandate to his India team — led by T. Krishnakumar, president Coca-Cola India and Southwest Asia — is to move India one notch up in the foreseeable future, his long-term vision is for India to be among the company’s top three markets globally.

In September, in his first visit to India as head of Coca-Cola (he took over the reins of the $42 billion beverage giant in May), Quincey said in a press meet: “We are building the fundamentals of a much bigger business to give the consumers what they want.” Reiterating the company’s global strategy, he added: “We will be guided by what the consumers want …. So, while brand Coca-Cola will be the heart and soul of the company, the company needs to become much bigger by participating in many more categories.”

In the past 15 years, the contribution of carbonated drinks to Coca-Cola’s global revenues has declined from 90% to 70%. By 2025-2030, this is expected to reduce further to 50%. In India, however, carbonated drinks continue to account for a large chunk of the firm’s sales. The new team — the management reshuffle took place nearly a year ago — is now all set to change that. According to Krishnakumar, the management changes were “part of a planned transition process.” Recent appointments, he says, “are in keeping with the company’s approach of creating and leveraging a pool of global Indian talent. The new organization structure is in keeping with economic reforms that have the potential to convert India into a single national market.”

Neeraj Kakkar, cofounder of India’s leading ethnic drinks company Paper Boat and formerly a senior executive at Hindustan Coca-Cola Beverages, Coca-Cola India’s largest bottling arm, notes that Coca-Cola has a “very strong team” in India at present. Says Kakkar: “They have got in some of the best performers from Coca-Cola worldwide. This will result in faster decision making.”

Describing the India scenario, Kakkar points out that it is a high value-for-money market, and consumers are not ready to pay too much of a premium. This impacts profitability. Also, the rural market in India is large and mostly untapped. One key parameter that Coca-Cola needs to focus on for the next few years, he says, is how many new consumers are coming into the fold every quarter. Says Kakkar: “For Coca-Cola to boost its growth it needs to recruit more consumers at the front-end and at a much faster pace than it is doing at present. It needs to bring them into the fold of packaged beverages and then work at moving them up the value chain. One answer to this is product innovation. You have to create new and exciting products which offer high value for money.”

A New Recipe

Krishnakumar has his game plan ready. “The Indian market has tremendous growth potential, and we are working with our bottling partners to leverage this growth,” he says. “We have had a flattish situation possibly for 14-15 months. However, we believe there is serious opportunity that exists simply because we could penetrate a lot more in terms of distribution. We also believe that by expanding our portfolio, we will be recruiting more people into it. And so we are getting into a more segmented portfolio approach.”

According to Krishnakumar, in line with Coca-Cola’s long-term strategy of becoming a “total beverage company,” the India arm, too, is broadening its portfolio across five category clusters. These are sparkling; energy; dairy/juice/plant-based; water/enhanced, water/sports drinks; and ready-to-drink coffee and teas. “The India strategy replicates the global strategy of providing choice. In India, we will localize these choices. You have seen this with the recent launch of our Indian fruit juice-based offerings such as the Minute Maid Mosambi,” he says.

Fruit is one big area of focus for Coca-Cola in India. In June this year, the company announced that along with its partners, it would contribute $1.7 billion to the agri ecosystem of the country over the next five years, spanning the entire supply chain from “grove to glass.” Close to $900 million of this contribution will be towards the procurement of processed fruit pulp and fruit concentrate while the remaining will be invested in creating the required infrastructure including manufacturing lines, juice bottling infrastructure, fruit processing plants and equipment, and agricultural interventions.

“We propose to use fruit products in four ways,” explains Krishnakumar. “One is to develop juices as a category, which is straightforward. The second is that we will be looking at adding fruit to our sparkling products. The third is to introduce newer products in the beverage space. Lastly, we would like to increase the share of our exports to the global Coca-Cola systems that stands at $240 million currently. We are working on all four fronts, which will be a huge 360-degree approach.”

While expanding its fruit-based portfolio is largely perceived as a move by Coca-Cola to dilute its “unhealthy” tag, Krishnakumar is quick to defend. “I must first state that none of our beverages is really unhealthy. What we provide is choices for different occasions. Some of our products are meant for indulgence, some for nutrition, while some provide functional benefits. We will play our part in shaping choice but, eventually, it is for the consumers to decide.”

Industry experts believe that expanding its portfolio in India is a smart move by Coca-Cola. They point out that unlike in the U.S., where carbonated drinks are often a substitute for water, in India drinks such as Coca-Cola and Pepsi from rival firm PepsiCo are used more for occasional consumption. Their pricing is considered premium, and these brands fall in the luxury and aspirational category. They also face competition across the country from local cola drinks such as Bovonto (in the southern state of Tamil Nadu), Jayanti Cola (in the northern state of Rajasthan) and Xalta Cola and Campa Cola (New Delhi) that are priced cheaper.

In addition, like in other parts of the world, in India, too, there is a strong move towards healthy alternatives. “Regional players will play on price and undercut Coke. There is also probably the fakes market in rural areas. Besides, there are shrewd local players like Paper Boat, which has a smart ethnic story, and Patanjali Ayurved, which is selling the story of India going back to its roots. Not just price, but credible alternatives for consumption and a slowing fizz drink consumption can make it a tough battle,” says Y.L.R. Moorthi, professor of marketing at the Indian Institute of Management Bangalore.

Pointing to what he sees as “more locally relevant offerings from domestic competition such as Paper Boat,” Devangshu Dutta, chief executive of consulting firm Third Eyesight, suggests: “To succeed in India, and I would say worldwide, Coca-Cola needs to let go of the monolithic approach founded on its past growth in the U.S. and truly engage with the markets of the future and the local consumers’ needs.” Harminder Sahni, founder and managing director of consulting firm Wazir Advisors, adds: “I am certain that Coca-Cola needs to focus beyond carbonated drinks if it wishes to achieve its growth target in India. The general awareness about sugar and carbonated drinks is the major reason for stagnation of the category and hence Coca-Cola’s slower growth. Believing that Indians will consume these drinks as Americans do, just because of westernization of lifestyle and clever advertising, is far-fetched. ”

What Will Work?

Nitin Gupta, professor of marketing at the Institute of Management Technology (IMT) at Hyderabad, feels that unless Coca-Cola “successfully broadens its assortment of products, the goal that CEO Quincey has in mind seems quite ambitious.” According to Gupta, Coca-Cola can probably “fare well” in the dairy/juice/plant-based segment, but other segments like sparkling, energy, water/sports drinks, he says, are currently “too niche” in India and would continue to be so in the near future. Ready-to-drink coffee and teas, he feels, “can be considered, but the competition in this segment is huge, and Coca-Cola’s success with its current offerings has been very limited.” Suggesting that the best bet for Coca-Cola in India could be packaged juices, Gupta says: “The going would be tough for Coca-Cola in the packaged juices market in India, but that’s where the future lies. I feel that this initiative of Cola-Cola, though expensive at the outset, would reap future benefits.”

Kakkar agrees that fruit juice as a category has a lot of potential, but he warns that the ecosystem and the market need to develop. The biggest challenge in the ethnic drinks category, he adds, is lack of scale. He goes on to elaborate: “Take jamun (black plum), for instance. At Paper Boat, we are happy if we source and sell 200 tonnes a year. But for Coca-Cola, it doesn’t make sense to do anything less than 10,000 tonnes to begin with. Otherwise, it will simply get lost in the overall portfolio and will not get the required management attention. But to source jamun at this scale will be a challenge because at present farmers don’t grow so much of it. Of course, just as the ecosystem and the market for mango drinks have developed over the years, it can be done for other fruits also. But it will require time, effort and investment.”

Kakkar sees potential in ready-to-drink tea. He points out that in China and Japan, which have high tea consumption like India, the conversion to packaged tea has been huge; it is one of the biggest categories of packaged beverages. “Some of the highest selling brands in beverages in Japan and China are in packaged tea. I believe that there is a lot of scope for product innovation in tea in India. There is a huge opportunity to move consumers from unpackaged to packaged tea. It’s not that others [like Pepsi Lipton and Nestle] have not tried in India, but it has not worked out so far. I think if Coca-Cola makes the effort, it has the wherewithal to make it work,” he notes.

Wazir’s Sahni expects Coca-Cola’s water, juice and dairy products to do much better than other categories. “These are already large and growing, and Coca-Cola can use its research, innovation and branding power to dominate the segments. The other segments are too niche, and India isn’t rich enough yet to have significant volumes in them,” he says.

But even in the growing categories, it may not be all that easy. According to data from Nielsen, from October 2016 to September this year, the share of Coca-Cola’s mango-based brand, Maaza, which is the market leader in the juices, nectars and still drinks category, declined from 35.4% to 33.1%. During the same period, Pepsi’s mango drink Slice fell from 13.9% to 9.6%, while Indian firms Parle Agro and Dabur increased their shares. Parle Agro’s Frooti moved up from 14% to 15.7% and Dabur’s Real brand of mango juice inched up to 9.8% from 9.2%.

In an interview with business daily The Economic Times, Nadia Chauhan, joint managing director at Parle Agro, said: “While we have been extremely aggressive with our overall marketing strategy, we have also worked on building an extremely advanced go-to-market strategy.” Mayank Kumar, marketing head of juices and beverages at Dabur, said: “Our understanding of the Indian palate and preferences has helped us stay ahead of the curve.” Dabur is estimated to have more than 50% share of India’s packaged juices segment.

Meanwhile Coca-Cola’s arch rival, PepsiCo, is also on a similar track of expanding its portfolio. It recently launched two vitamin-fortified flavored drinks. In a recent interview with business daily Business Standard, Vipul Prakash, senior vice-president beverage category at PepsiCo India, said: “Value-added dairy, hydration and juices are the three growing categories now. Any beverage company that wants to be successful has to play in all these three product segments.”

Moving Up the Hierarchy

So, can Krishnakumar achieve Quincey’s target? Sahni of Wazir Advisors thinks that “while it is ambitious, it is achievable…. The challenges are manifold, starting from incumbents to creative startups, but Coca-Cola has many strengths like its distribution muscle, marketing prowess and deep pockets. It can also go inorganic and acquire some of the interesting startups. Further, it has a fantastic brand portfolio across categories and is an innovative company and can create new categories, products and brands.”

Kakkar, too, believes it is “very achievable.” Says he: “The per capita consumption story in India is very low and not yet fully played out. Once that happens, consumers will typically start spending more on non-essentials, and impulse purchases will go up.”

Kakkar points to another aspect. While there is a definite shift away from carbonated drinks towards health and wellness in India, this is primarily among the top 100 million population. For the next 400-500 million, the wellness move is from “unpackaged to packaged beverages.” This, he notes, is a huge market waiting to be tapped. However, he points out that while Coca-Cola has a very strong relationship with the retailers and is very strong in on-the-ground execution — their chillers are very clean, the brands are readily available and the products are placed very well — the category excitement has been missing in the past few years. “For instance, during the 2004-2007 period, the marketing and advertising campaigns captured the attention of the consumers. That has gone missing. They need to bring it back,” Kakkar notes.

Jagdeep Kapoor, chairman and managing director of Samsika Marketing Consultants, feels “the unsaturated nature of the Indian market and aggressive marketing by Coca-Cola” can be a winning formula for the beverage firm. Kapoor was director at Parle Agro, the makers of cola drink Thums Up, from 1989 till 1994. He had a ringside view when Coca-Cola acquired Thums Up in 1993 when it re-entered India after a gap of 17 years. Interestingly, Thums Up continues to be the top cola drink in India.

Kapoor lists four recommendations, which he says could be used to boost the top-line and bottom-line growth of Coca-Cola in India. “First, India is not a ‘soft drink’ market. It is a ‘cold-drink’ market. Refrigeration is going to be a key element in this tropical country, and it needs to be enhanced. Second, the focus on distribution and penetration must be increased. India has 8,100 towns and 650,000 villages…. These need to be penetrated. While visibility and taste are important in a country like India, availability is extremely important. Third, in order to increase sales, the company needs to move consumers from occasional consumption to regular consumption. Fourth, India being a diverse country with various languages and consumption behavioral trends, regional sensitivities need to be crafted into marketing strategies.”

According to Kapoor, the five beverages clusters are “a sensible portfolio of categories.” He says: “Each of these categories has tremendous potential for growth, but care needs to be taken to appropriately use segmentation and positioning for each of them.” Moorthi adds another note of caution: With all of its initiatives, Coca-Cola might be able to offer an interesting story in India. But, he adds, “it is unlikely that the company will have a walk over. The market will get them to slog for every rupee.”

Source: knowledge.wharton.upenn

Amazon delays rollout of online food retail venture


November 1, 2017

Written By Shambhavi Anand, ET Bureau

NEW DELHI: Amazon’s online food retail venture, which was expected to start during Diwali, is getting delayed as the company needs to keep this separate from its marketplace, which functions as a platform to connect sellers with buyers, said people with knowledge of the matter. Food is the only segment where it’s allowed to sell directly to consumers.

The Seattle-based firm is the first global company to seek and get government nod to sell food made and packaged in India directly to consumers. India allowed 100% foreign ownership in food retail last year to promote local farm produce. Amazon and other foreign retailers are not allowed to sell any nonfood items directly to consumers.

The government has asked Amazon to keep the food and the marketplace businesses at arm’s length from each other with separate offices, inventories and accounting systems. An Amazon India spokesperson declined to comment. “We have not announced any dates or details about our approval for food retail licence and we cannot comment on future plans,” said the spokesperson.

Amazon plans to invest $500 million in India over five years to sell third-party and its own private-label food articles, sourced and packaged locally.

The warehouses that Amazon uses are leased to Amazon Seller Services Pvt., some of which need to be moved to Amazon Retail India Pvt. as part of the segregation. In some cases, lease agreements will have to be signed with both entities, said one of the persons cited above. The company will also have to get Food Safety and Standards Authority of India (FSSAI) licensing, the person added.

The move is being keenly watched as it’s expected to trigger a price war with organised brick and-mortar retailers and online grocery companies, given the US company’s aggressive strategy.

It currently offers food products in some Indian cities through Amazon Pantry from third-party sellers. It also offers same-day grocery delivery on its Amazon Now app through a tie-up with retailers such as Big Bazaar and Hypercity in some cities.

Amazon debuted its first private grocery label in the US last year with products including coffee and baby food. Private label items are sold exclusively through Prime membership in the US and are priced lower than other popular brands. As it expands the grocery business in its home country, it will also open offline Amazon Go stores that will offer customers a checkout-free experience through technology.

The timing of the opening will be determined by Amazon’s ambition, said Devangshu Dutta, chief executive of retail consultant Third Eyesight.

“It depends on what scale the company is planning to launch at,” he said. “If it is a big-bang launch, then the vendor base has to be ready because the backend is already there as Amazon runs Pantry, assuming they don’t get into perishable categories.”

Source: economictimes