48 ka chicken proves a Real Good deal

The Godrej brand taps the lower income group by bringing down the price point and selling it through butcher shops

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Real Good Chicken's two-month old offering of a 400 gm packet at Rs 48 has helped it penetrate new consumer segments. And the fresh chilled chicken brand from Godrej Tyson Foods has achieved it without bringing down the price of its full bird chicken offering that comes for Rs 175 for a kg.

"Breed and its performance management is the biggest cost-saving effort done by us," says Arabind Das, chief operating officer at Godrej Tyson Foods. "We also invested in chillers upfront to scale up distribution, so the production and supply chain cost came down helping us to launch the product at a low cost," he reasons.

The company says that while its sale of full bird meat that comes in 1 kg stock keeping unit (SKU) has not gone down, its overall sales has increased by 10 to 12 per cent with the addition of this new SKU of 400 gm. The new SKU has 15 pieces including breast, neck, wing and liver meat against the old 1 kg SKU in pre-cut and curry-cut formats that has 28 to 30 pieces of full bird meat. That also explains the continuing demand for the 1 kg packet at Rs 175 a kg against the small packets that come for Rs 120 a kg at the rate of Rs 48 for a 400 gm packet.

The company being an unlisted entity does not disclose its financial numbers, but claims to be achieving a compounded annual growth rate of 12 to 14 per cent in the last five years against the industry average of 8 to 10 per cent. It estimates the Indian poultry industry to be having about Rs 35,000 crore revenue in a year in which the share of organized players is a mere 5 to 6 per cent.

It is this unorganized part of the industry that the company is trying to tap with its new SKU. The company claims that the road side butcher shops have started keeping it as the consumers from lower income group are asking for "48 ka chicken."

Adi Godrej-promoted animal feed company Godrej Agrovet diversified into the processed fresh chicken business under the Real Good brand in 1999. But in 2008, it sold a 51 per cent stake in the company to the US based world's largest meat processor Tyson Foods under a move to turn around loss making businesses of the group.

The $36 billion turnover US company brought its popular breed Cobb to India and after acclimatizing it renamed it Cobb 400. Godrej Agrovet being an animal feed company formulated the feed for Cobb 400 with the genetic details of the breed from Tyson.The feed is one of the most important factors in terms of the cost of the meat as the benchmark of a company's performance in this business is the protein to meat conversion ratio. So about 18 months back, Godrej Agrovet started to rework on the feed to further improve its performance on the given yardstick.

"We are about 10 per cent ahead of the industry today and that is why the cost has come down," says Das. The best conversion ratio in the industry is about 1.7 kg feed required for 1 kg of meat.

The final processed chicken meat that is sold in the market comes through a long procedure. Godrej Tyson Foods sources the parent chicken from Pune-based Venky's which has a tie up with Tyson Foods for breeding Cobb 400. The parent bird goes into the farm where it grows and then it is taken to the layer farm where it gives egg. It takes about 24 weeks for the parent bird to lay eggs and till then it requires feeding. The eggs are then taken to the hatchery where it takes 21 days for hatching. The chick is then taken out and given to the contract farmers with feed and veterinary support. There it takes 37 to 41 days to grow it to a full table bird, following which it is taken to the plant where the processing of the meat takes a day.

"Lot of interventions have been brought in by Tyson with their own expertise in it, which reduces the final cost including feed cost, farming cost, the hatchery cost, the medicine and vet support cost," says Das.

The company has a killing line capacity of 100,000 birds a day at its plant in Bangalore and Taloja near Mumbai.