 "Deoki Muchhal")
The food business is not exactly the easiest to crack, especially in India. On top of that, if this is going to be one of your very few consumer-facing markets, a market where many of your brands will fight established leaders in their categories, then you’ve got to be a really tough nut to crack.
As we wait for our lunch guest, Deoki Muchhal, managing director of Cargill India, to arrive, we build this mental image of a slightly non-smiling go-getter who would want to get over with the meeting as fast as possible. So when the diminutive Muchhal walks in, with a quirky smile and a warm handshake, we are surprised but feel strangely relieved. Appearances can be deceptive, my colleague says under his breath as we walk into The Pavilion, the award-winning restaurant in ITC Maurya, New Delhi.
“I am not a big eater,” he announces as we settle down in a quiet corner. “If we order two-three standalone dishes it will be very difficult to finish them off. Let’s order one or two common dishes,” he suggests helpfully.
We notice a steward approaching us with a bunch of menu cards and at one point he deftly twists his body to move out of the way of a bunch of kids trying to burst out of the restaurant.
“That’s Baba Ramdev on display,” Muchhal grins. “He has trained people to turn and twist their bodies. He has bought this revolution in yoga and it needs to be complimented. People have benefitted — they have learned the art of living slightly better. But the FMCG offshoots? That is debatable.”
We order fresh lime and soda, which seem to arrive in no time, and we delve straight into the nitty-gritty of running a food business in a highly disintegrated market like India.
Muchhal tells us why it is doubly difficult for Cargill. The thing is, globally the company does not deal with consumers directly. Which means it is a business-facing organisation and its customers would be corporations like, say, a McDonald’s or a Nestle, which in turn would be catering to the end customer like you and me. The matrix of marketing is different because that architecture assumes a certain “distance” between the manufacturer and the end customer. The two other markets where Cargill does have a consumer interface are Brazil and Venezuela.
“Brazil is a more organised consumer space with a preponderence of modern trade outlets. Here we see more of mom-and-pop stores, whereas Brazil is 80 per cent organised. The rules of the game are completely reverse.”
That meant Cargill had to do a lot of consumer research and surveys before setting foot in India. “In fact, we built the market here by acquiring brands rather than by building them because we didn’t know how or where to start building,” he explains.
“Our first brand in India was Nature Fresh which got into wheat flour in 2001-02 and because we did not have the understanding, we thought what was essentially an American concept would fly here as well and that was a bad idea,” he is candid in his admission. “We got out of it in two years, but then we were sitting with this huge Nature Fresh brand — it was popular, it had good recall so we said let’s use this brand for edible oils without even knowing the consumer business during those days. It was after the launch of Nature Fresh that we actually acquired the skills of a consumer business like sales and distribution with the acquisition of Gemini in 2004.”
Before the discussion got too intense, we decide to place the order. There is a prawn festival going on — ITC has recently launched its packaged prawns in the domestic market — and we decide to make the most of it. So while Muchhal opted for a vegetable biryani with a side plate of... well... more veggies, we chose a rawa prawn fry to start with and then prawn pulao with prawn malai curry.
“I can see I am part of the minority here.” Muchhal gasped at the “extent two Bongs could go with their prawn”.
“...So that’s what we did between 2004 and 2015... create a consumer interface in the country...” he continues.
At present, Cargill has a range of brands, each strong in its category. Take Leonardo olive oil, which is No 1 in northern India; then there is Rath, also a key player in the north. Gemini is among the lead brands in western India; there is Sweekar, highly popular across the country. Cargill also acquired the iconic Sunflower Vanaspati brand from Wipro in 2012, consolidating its leadership position in the market.
Our prawn fry arrives and we dig in immediately ignoring Muchhal’s smirk.
Cargill is now hard at work to launch more products, which, he says, would be healthier — in the form of derivatives. Derivatives? “We will go with derivatives of what we already have,” he explains. “For instance, we have wheat flour so we will be looking for derivatives of wheat that people are using in their kitchens. Our stated goal is whatever our consumers are using in the kitchen in the staples form, let’s bring them with our brands. Step two, once we are inside their kitchen with, say, wheat flour, why not sooji. Indian homes use a lot of sooji, dalia...”
Will the new products you are planning to launch come under existing brands, like say, Nature Fresh, or are you looking to launch a completely new brand? That would be an onerous task, we say.
“It all depends on a brand’s positioning, the strength of the brand in regions where we are going to place the new products,” he says. “For instance, in places where I am already in your house through Nature Fresh oil it makes sense to launch the new product under Nature Fresh, but in another part of the market it would be kind of alien. Gemini might make more sense there. We have to factor in all these things before zeroing in on the brand.”
His biryani arrives and straight away he asks the steward to remove half the plate’s content. “It looks so good I might end up polishing the whole thing,” he says faux regretfully. We have no such quams about our prawn pulao and malai curry. So we proceed to polish them off.
He comes to another key factor that can make or break food brands in India: Trust. “People have a lot of loyalty for their chosen brands in our country. In foods, we don’t have many brands that can command trust. A lot of times we go by the recommendation of the trusted kiranawalla next to our house when pick up a brand. Take atta. Even today probably 90 per cent of the market is loose; 8-10 per cent will be in packaged form. In parts of the country, people still prefer buying their wheat and getting the nearby chakkiwalla to grind it.”
He also talks about the kind of research the company is conducting to make its existing portfolio healthier. “Take oils. There
is a lot of opportunity to provide them healthier variants, which not only taste better, but last longer, doesn’t contaminate and give consumers the right portion of fats. That’s very important.”
Have external factors like the enforcement of the Goods and Services Tax made things easier or difficult?
Early hiccups notwithstanding, over a period of time it will be easier, he says. “See, we deal with a lot of trade partners and we need their systems and processes to be transparent and simple. To a large extent, most of the partners are adjusting to the new reality; in the last couple of months they have crossed a bridge and I would say while it’s not over, the transition has been at a rapid pace.”
“There is another aspect to our business which you probably would not know much about.” He would like to avoid discussing policy, we can see. “Our derivatives are used in the sweetmeat industry and in bakeries too. They use a lot of our fats and other derivatives. It’s difficult to put a size to it but it’s huge and growing fast as the market gets branded and organised.”
At that point we pick up the dessert menu. “Oh, not for me,” he says. We almost knew it.
