Homegrown Kwality to fight it out with Kellogg's to capture cereals market

Plans to set up second plant in Central India to go pan-India

Giving a tough fight to multinational firm Kellogg’s, home-grown fast-moving consumer goods major Kwality will be coming up with its second manufacturing unit in central India dedicated wholly to breakfast cereals production.

With an ambition to go national in the next two years, the new unit to come up by 2021 will help the Bengaluru-based firm to expand in the northern and western markets, especially Madhya Pradesh, Gujarat, and Maharashtra.

The manufacturing unit will have an annual production capacity of 500 tonnes, compared to the Bengaluru plant which produces 425 tonnes of cereals per year. The current plant also has a separate line for spices and instant mixes such as custard and badam milk.

The company on Thursday launched its new series of healthy breakfast range made of wholegrain and multigrain such as ragi. “We believe the consumers’ need for breakfast choices in India is growing exponentially and our range of products is uniquely placed to satisfy their requirements,” said Naresh Pagariya, managing director of Pagariya Food Products, which owns the Kwality brand.

It currently holds 7 per cent market share in the Rs 25-billion cereals market in the country which is growing at a compound annual growth rate of 28 per cent.

The company is aggressively focusing its operational and marketing strategies to capture new markets across India and reach the Rs 1-billion revenue mark by 2020, from the current Rs 400 million.

By introducing smaller packs of Rs 5 and Rs 10, it is also targeting tier II and tier III pockets of South India. The company has also priced its value packs at a price range approximately Rs 25 lower than Kellogg’s, currently the market leader in the cereals space. Delhi-based Bagrry’s and Mohun’s are No. 2 and 3 players, respectively, in this segment.

Kwality also has plans to enter the healthy snacking range with the launch of baked snacks by the end of the year. The company is also eyeing expansion of its spice range which generates almost 50 per cent of its revenues by experimenting with regional offerings. “Spices are very peculiar to a particular region. We are looking at customising them according to the taste of the consumers in different geographies,” explained Pagariya. For example, consumers in Tamil Nadu like the Colombo chilly more than the other regions.

In terms of international footprint, Kwality is already present in neighbouring countries such as Sri Lanka and Nepal, while it has a presence in the spice markets in West Asia and East Africa. The company is currently exploring Thailand and Malaysian markets and would be launching in these countries in the next six months.

Cereal killer

• Plans to set up a second plant in central India
• New unit to focus wholly on production of breakfast cereals
• The plant will come up by 2022 and will help the firm expand in northern and western markets; especially in Madhya Pradesh, Gujarat and Maharashtra 
• The unit will have an annual production capacity of 500 tonnes as compared to the Bengaluru plant, which produces 425 tonnes of cereals