NEW BRAND/ PRODUCT LAUNCH
|1.||The Potato – An Introduction (History, Nutrition, Global Production & Diets, Regional Production Trends, Globalisation, Environment, Future)|
|2.||THE BRANDS IN THE CATEGORY|
|3.||SAFAL FRUIT & VEG. UNIT|
|4.||SAFAL PRODUCT MIX|
|5.||Questionnaire - Objectives and research|
|6.||Questionnaire - Sample|
|7.||PERCEPTION OF THE CATEGORY|
|8.||OUR PRODUCT – THE BATATA (including Earning Sensitivity factors and Tie-up)|
|9.||BATATA INC. – AN OVERVIEW (Financial, Future, R&D)|
|10.||THE BRAND - Personification, TA: Demographics & Psychographics, Behavorial|
|15.||References & Acknowledgements|
Potato (Solanum tuberosum) originated in the highlands of South America, where it has been consumed for more than 8000 years. Spanish explorers brought the plant to Europe in the late 16th century as a botanical curiosity. By the 19th century it had spread throughout the continent, providing cheap and abundant food for the workers of the Industrial Revolution.
Potato was introduced in India in the early part of the 17th century by the Portuguese. It was first cultivated in Surat on the West coast. From there it spread to other areas, like Goa, which were under Portuguese influence. In Goa, potato was called "Batata Surrata", pointing towards the likely introduction of Potato from Surat. As early as 1675, Fryer mentions Potato as one of the common garden crops after his survey of Karnataka. The spread of Potato to the Southern parts of the country was apparently quite rapid.
A single medium-sized potato contains about half the daily adult requirement of vitamin C. Other staples such as rice and wheat have none. Potato is very low in fat, with just 5 percent of the fat content of wheat, and one-fourth the calories of bread. Boiled, it has more protein than maize, and nearly twice the calcium.
Potato in Global Diets
Consumption in developing countries also increased: from 9 kg/capita in 1961-63 to 14 kg/capita in 1995-97 according to FAOSTAT (June 1998). These averages are still but a fraction of per capita consumption levels of 86 kg/yr in Europe or 63 kg/yr in North America, suggesting that ample room exists for continued consumption increases. Recent statistics suggest that this trend is already underway in parts of the developing world.
In Asia, per capita potato consumption jumped from 12 kg/capita in 1991-92 to 14 kg/capita in 1994-96— a 16% increase in per capita terms over the last three years. In Africa, annual average consumption remained stable over the same period at 8-kg/person as continued population growth absorbed all of the increase in aggregate production. For Latin America, per capita consumption for the region as a whole rose by nearly 15% in recent years from 21kg/yr to 24 kg/yr. Moreover, consumption increases in certain countries also merit mention, in particular, in Colombia, from 47 kg/yr in 1991-92 to 56 kg/yr in 1994-96; and in Peru, from 42 kg/yr in 1991-92 to 63 kg/yr in 1994-96, recovering sharply from the earlier downward trend in utilization.
Today, potato is the fourth most important food crop in the world, with annual production approaching 300 million tons. More than one-third of the global potato output now comes from developing countries, up from 11 percent in the early 1960s. This is due to the provision of a range of new technologies and potato breeding lines specifically designed for developing-country conditions, to resource-poor farmers, by organisations such as CIP (Centro Internacional De La Papa).
Potato: Growth in Production
Potato production in developing countries entered a new, rapidly expanding phase in the 1990s. Output surpassed 100 million tons by mid-decade, up from less than 30 million tons in the early 1960s. For the last ten years, potato production has increased at an annual average rate of 4.5%, area planted at 2.4%. More remarkably, as the potato output continues to expand, the growth rate for area planted and production continued to accelerate. As a result, the growth rate in potato production has nearly doubled over the last twenty years. Confounding many commodity projections specialists, growth rates for area planted have also accelerated.
Potato growth rates have exceeded the growth rates for many other major food commodities in developing countries in recent years. As growth in production for maize, wheat, and rice slowed—in some cases (e.g., wheat) considerably—in the last decade, potato output surged ahead, thereby increasing potato's relative importance, particularly in Asia.
According to the latest FAO data (FAOSTAT, September 1998), potato production
worldwide stands at 293 million tons and covers more than 18 million hectares.
With the break-up of the former Soviet Union, China is now the world's
largest potato producer. India ranks number four. Although potato production
in Europe has fallen since the early 1960s, this decline has been more
than offset by the growth in Asia, Africa and Latin America, thereby explaining
the rise in global potato tonnage.
These prolonged and increasingly more pronounced divergent production trends in Europe versus developing countries reflect fundamental shifts underway in the global potato economy. In the last four years alone, the share of worldwide potato production produced in developing countries rose from 31% to 36%. This latest development merely accelerates the secular shift in the location of production underway since the early 1960s. In so doing, it reaffirms the increasing importance of potatoes as a source of food, employment, and income in Asia, Africa and Latin America.
Regional Production Trends (Asia Region)
Growth in potato production in Asia in the 1990s has been spectacular, averaging 5.1% from 1985-87 to 1995-97. This represents a 20% higher rate than that for the entire period 1961-63 to 1995-97, suggesting that the pace of output increases has already accelerated.
Several countries have seen remarkable acceleration in recent years, including China with a 6.2% average annual rate of growth in potato production over the last 10 years; Indonesia 10.6%; Nepal 8.8%. India and Pakistan saw their growth rates decline but they were still impressive at 4.6% and 6.0%, respectively.
With access to irrigation, chemical inputs such as fertilizers, continued expansion in post harvest infrastructure in the form of roads and cold storage facilities (in India), producers continue to find potatoes an extremely attractive crop to grow. Strong demand both in the countryside and in rapidly growing urban areas continues to stimulate increases in area planted. China witnessed a growth rate in area planted of 3.3%, Indonesia 7.1%, Nepal 4.1% over the period 1985-87 to 1995-97.
Productivity increases also accelerated lately to an average annual rate of 2.8%, up from 1.6% for the entire period.
Globalization and Potatoes
Many developing countries have recently become much more integrated into the international potato trade. This phenomenon is partly the result of the worldwide trend toward lower tariffs and non-tariff barriers and the emergence of regional trading blocs. Unfortunately, the volume and value of such trade is not always readily apparent because published trade figures frequently do not include data on processed potato products (e.g., frozen French fries, chips, starch). Nevertheless, recent studies suggest that many countries will need to accelerate the development and diffusion of yield-increasing technology if they want to remain competitive in the emerging global market for potatoes in the years ahead.
Potatoes and the Environment
Potato production in some developing countries involves the use of large
quantities of chemical
pesticides. With the advent of new strains of late blight, pressure to sustain food production and preserve the environment is increasing in noteworthy fashion. Efforts are well underway to meet this challenge by developing not only late blight resistant varieties but also systems of integrated disease management that put traditional farmers' practices to control potato diseases to optimal use.
The Potato in the 21st Century
Recent collaborative research involving IFPRI and CIP has included a detailed analysis of historical trends and future projections for potatoes in developing countries. Estimated growth rates in potato production for the period 1993-2020 are 2.02% according to the baseline scenario–based more on past projections, and 2.71% for the high demand and production scenario–based more on historical trends.
As these projections were done as part of a global model for the world's
major food commodities, they also permit estimates of the future value
of production. These calculations show that the potato will most likely
maintain, if not increase, its relative economic importance in the food
basket for developing countries in the decades ahead.
The major players in the branded vegetables market are Safal and Mafco, apart from regional players. We are taking the example of Safal as it exemplifies well the category we are operating in which are our immediate competition in the packaged vegetables category, especially since they (Safal) also manufacture packaged potatoes.
The unit's consumer friendly retail outlets are located in major residential areas in and around Delhi. Each outlet is equipped with a small cold room for keeping highly perishable items. On an average 75,000 customers visit these outlets everyday. There are about 600 employees in Delhi and Mumbai.
At the Mumbai fruit processing Plant, HACCP quality system is followed at every stage. The project is a registered member of SGF, Europe and participates in the Voluntary Control Systems to ensure consumers safety and quality of products. The processing facility has obtained US Food & Drug Administration registration. The plant is ISO 9002 and its products are Kosher certified.
At the request of Ministry of Agriculture, Govt. of India, the National Dairy Development Board (NDDB) submitted a proposal for the marketing of fresh fruit and vegetables in the Delhi Metropolitan region. In July 1984 the Govt. approved NDDB's proposal for an integrated marketing of horticultural produce in Delhi. Twelve retail outlets for marketing fresh fruit & vegetables were started in January 1985 on an experimental basis. Approval of land, cold storage construction, commissioning of production block etc. were made in 1986. Within a span of fifteen months the central distribution and storage complex was commissioned in 1988.
In April, 2001, the NDDB had established Mother Dairy Fruit & Vegetables Ltd. a 900 crore company which is wholly owned by NDDB. The company has two units, one is Mother Dairy unit and the other is Fruit & Veg. unit.
The Fruit & Veg. unit's complex, situated on 22 acres of land, has been designed to handle over two lac MT of fruit and vegetables annually. Apart from the multi-storeyed administrative building and godowns, the complex comprises a prefabricated building consisting of cold store chambers with different sets of temperature and humidity conditions suitable for storage of various fruit and vegetables. The complex has controlled atmospheric chambers and ripening rooms, deep freeze rooms, a preparation hall, a processing hall, a despatch hall, a reception and despatch facilities.
Material handling is done in specially designed plastic crates with the help of forklifts. They have a modern refrigeration plant using screw compressors and having a capacity of approximately 1500 TR and equipment for ripening and controlled atmospheric chambers.
One of the important features of the complex is the ripening chambers, where unripe items like mango, tomato, banana, sapota etc. can be ripened by controlling the humidity and temperature. There are also chambers where level of carbon dioxide and oxygen can be controlled and monitored for ensuring long-term storage. It has deep freezing facilities for freezing green peas, cauliflower, mixed vegetables etc.
Their Fruit & Vegetable unit is established with an objective to provide a direct link between fruit & vegetable growers and consumers. The unit has drawn on three decades of NDDB’s dairy sector strengths in designing its state of the art large and ultramodern central distribution facility to handle fresh, frozen and processed fruit and vegetables.
As a part of diversification, the unit successfully introduced various high quality value added products like Fruit drink, Jam, Jellies, Pickles and Tomato Ketchup, Rice, Squash, etc. under SAFAL brand.
In 1996 the project established a 100% export oriented ultra modern Fruit Processing Plant at Mumbai capitalising NDDB's food processing strength. Sasib-Manzini Cosmaco SPA of Italy has supplied all the equipment and technical knowhow. The plant is located in the heart of India's finest tropical fruit growing region that produces the finest quality mango, banana, guava, papaya, grapes and tomato in abundance.
Hygienic condition are strictly maintaining in every part of the plant. All waste is collected in screw conveyer and transported outside for immediate disposal. Every entrance is fitted with air curtains and all windows and doors are insect-proof. Our forced air ventilation system maintains positive pressure throughout the plant.
Other facilities in the plant include two Tetra-pack filling machines for packing fruit drinks for domestic market. The project's extremely popular SAFAL Mango/Guava drink is also packed at Mumbai.
6. Green Chillies
7. Mango Alphonso Okra
8. Kiwi Fruit Capsicum
9. Green Chilli
10. French Beans
11. Chikoo (Sapota)
17. Sarson ka Sag
25. Lettuce Iceberg
26. IQF Vegetables
27. Processed Food
28. Frozen Peas
30. Tomato Product
31. Frozen Tomato Fruit Drink in Tetrapack
32. Frozen Aloo Tikki
33. Apple Juice Concentreate
34. Frozen Frenchbeans
35. Tropical Fruit Cocktail
36. Frozen French Fries
37. Diced Mango IQF
38. Mango Pulp/Concentrate
39. Guava Pulp/Concentrate
40. Alphonso Mango Pulp
We had essentially a two-fold objective in mind when we decided upon the requirement of a strong research base before we entered the market.
Ø To find out the current perception of consumers to packaged
Ø To find out the acceptance level of consumers to branded potatoes.
The findings if this questionnaire enabled us to understand better the minds of our consumers and put ourselves in their shoes. It helped us in our goal of a better comprehension of the layman’s perception of the category of branded and packaged foods. We were able to put our product into perspective and see where it would fit in with the changing lifestyles and family set-ups of India today.
Age: _____________ Sex: M F
1. Do you buy packaged foods / vegetables? Yes No
2. If yes, which brands do you buy?
3. Who buys the vegetables in your household?
4. How often are vegetables purchased by your household?
5. Would you like to try branded potatoes? Yes No
6. Have you heard of any branded potatoes? If yes,
please name the brands.
7. How often do you go to the supermarket?
Rarely Once a month Once a week More Often
8. In what form would you like branded potatoes
to be sold, given excellent quality and hygiene? E.g. sliced, peeled, diced
9. What price do you buy potatoes at?
Lowest price paid*
Highest price paid*
*(last 5 years, please mention year also)
10. How would you like the potatoes to be packaged?
Polly bag Paper pack Jute Bag
The packaged foods industry is probably one of the most promising emerging markets in India today. Gone are the days when wheat was sent to the local ‘chakki’ to be milled into flour or mustard oil grinded at the local ‘kolu’s’. People today have become extremely conscious and are willing to pay the extra rupee in order to ensure that only quality products enter their kitchens.
There has been a complete overhaul of lifestyles and traditional systems in the last decade or so with the emergence and growth of nuclear families. Meals are no more a family ‘event’ but have been relegated to a mundane routine. People are hard-pressed for time and are constantly in need of that magic something that will save them an additional minute without compromising on nourishment.
This much-hallowed gap has been effectively filled by the packaged foods industry. Starting from instant noodles and soup, packaged rice and flour and on to frozen peas and meat, all of which is conveniently located under the roof of the local supermarket. Branded and packaged foods fill this gap not only by saving time for the consumer but also ensure quality and consistency.
The local supermarket too has come a long way. Today they dot the landscape of urban India by the hundreds. Associated distractions notwithstanding, the supermarket has emerged as the one-stop shopping solution for families, where all domiciles necessarily rub shoulders with each other at prices that are competitive and more often than not even lower than the local ‘Kirana’ store.
Through trial and error, intelligent consumers have realized how very beneficial these ‘alternatives’ are. From salt to noodles, peas to chicken, every thing is available today treated, processed and hygienically packaged ‘untouched by hand’. Consumers have started preferring them in spite of the fact that they are offered at a premium i.e. priced slightly higher than what they would get at the local sabzi mandi or butcher shop unbranded (and relatively more unclean).
Our efforts have been aimed to further ease the consumer’s shopping experience and at the same time giving them total value for money.
Batata Inc. is planning to start full-scale operations in India in October 2002. The company’s key business is the manufacture and sale of potatoes. It plans to concentrate largely on the branded packaged food products (essentially potatoes) and has big plans for the category.
Batata Inc. is involved in the business of trading, processing as well as marketing of potatoes. It is focusing on building a strong branded foods business with the aid of tie-ups with key international players in the category such as Conagra, one of the world’s largest agro product companies.
The company plans to sell its potatoes under the brand name ‘Batata’
The company aims to venture into branded grocery product segment with the launch of new products, focusing (at least initially) solely on potatoes.
Earnings sensitivity factors
Potato production: Operations
are raw material sensitive and critically depend on potato production in
the region. Prices fluctuate in commodity pattern depending on supply.
Currency fluctuations and import duties: A high percentage of raw materials are imported. Therefore fluctuations in the rupee value and changes in customs duties on potato seeds and pesticides have significant impact on raw material cost.
Large set-up costs: Success of new product launches which involve huge investments in brand building and in setting up distribution network.
Market share: Ability to establish position in the packaged grocery and snack food segment.
We are looking at a potential tie-up with ConAgra.
ConAgra is the fourth largest food company in the world with a diversified portfolio of grains, processed vegetables, meats, processed microwave food, etc. ConAgra has a presence in over 35 countries around the world with over 21 leading brands like Wesson, Healthy Choice, Country Western, etc. Besides processed and convenience foods, ConAgra also supplies farmers with quality seeds for growing crops.
The turnover of the company is expected to grow at close to 15 % during
the year due to growth in the branded businesses and with commodity sourcing
and export recommending operation under the intricate downstream distribution
In commodity sourcing and export, the company will build on distribution-based activities in identified agri-commodities. While potatoes are the initial area of focus, this may extend to other agri-commodities depending on opportunity.
One of the objectives of the sale and distribution system is to extend
the reach of the company product to the smaller towns in the urban market
(which is where we shall initially concentrate our promotion and distribution).
We will however, be continually on the lookout for aids to distribution
expansion. Our distribution model will be supplemented well in the case
of our previously mentioned proposed tie-up with Conagra, as they have
a large existing distribution network. If and when the company product
range evolves, the sales and distribution system will constantly gear itself
up to meet the new challenge. Innovation in product, promotion, packaging
and distribution will be held high on our priority list to ensure that
‘Batata’ can always feel the pulse of the consumer and move with it.
Batata is educated and understands the nature of his being. An extremely
health conscious individual, he wants the best for his family and others.
Environmentally conscious (which reflects the way it is packaged) he is
a good cook, especially creative with recipes involving potatoes. He is
not parochial, as in does not strictly adhere to a specific region (this
is because the potatoes are grown in a certain region and marketed all
over). In Punjab, for instance, he adopts a Punjabi dialect and makes aloo
da parantha and in Bengal alu’r dom.
Essentially housewives and also working people in larger towns
Region: India, urban population
Occupation: Housewives, working professional, self-employed
Sex : Unisex
Income: 1,20,000 p.a. upwards
Social class: Middle and upwards
Family life cycle: Young, single, married with children.
Lifestyle: Hard pressed for time, hygiene conscious can’t peel
potatoes or doesn’t want to.
Occasions: Regular, Everyday user
User status: first time user
Usage rate: Heavy user
Loyalty status: Absolute
Readiness Stage: Uninformed
Attitude toward product: Enthusiastic, positive
‘Batata’ will be sold in 1 Kg., 2 Kg. and 5 Kg, packs to the household sector. These packages will be priced at Rs.12, Rs.20 and Rs.45, respectively. The packaging for these quantities will be recycled plastic packs. These bags will be see-through so that the consumer can see the potatoes, which is an essential psychological need of the consumer when purchasing food products. The bag will have the logo of the brand ‘Batata’ which is the name on the bags. The bag is going to have a seal, which is tamper proof to ensure that no spurious products are floated under our brand name. The company thus assures the quality and hygiene of our potatoes, which is essentially our USP.
We will also be selling 20 Kg. sacks of our potatoes priced at Rs.120,
to the various restaurants, hotels, non-governmental organizations etc.
that we have tied up with through contracts. The sacks that will carry
our potatoes will be Jute Bag Sacks with ‘Batata’ printed on both sides.
Thus the packaging will be eco friendly. We hope to tie-up with hotel chains
such as the ITC group to supply in bulk. The 20 kg package will essentially
be not fort he household, but for the intermediate user who will be cooking
and serving our potatoes, which is why there is a discount on the price,
relative to our smaller packs.
1. Recipe Booklets distributed with Hawkins or Prestige Pressure Cooker Company.
2. Sponsoring Food Supplements in newspapers (e.g. the Mid Day Food Guide, or the Telegraph Food Supplement)
3. Spice Boy column in “Thank God its Sunday” TGIS, TOI Pune Edition
4. Sponsoring the “Khana Khazana” show on Zee with Sanjeev Kapoor as anchor
5. Might consider Sanjeev Kapoor as a Brand Ambassador which will include promotions in his “Grain of salt” chain of restaurants
6. Corporate tie-ups with leading fast food chains (such as McDonalds, Nirula’s etc.), with products like Mc Batata Tikki Burger, Batata Mc Fries, Batata Mc Nuggets (in line with the Cadbury’s Mc Swirl)
7. Possible areas of diversification include instant mashed potatoes, hash browns, French Fries, etc. (in line with Amul Pizza generating demand for cheese and milk products)
8. We shall also be going in for long-term supply contracts with processed food manufacturers such as Frito Lays etc.
Summer crop - March- April-------------------August-September
Autumn crop - August-September--------------December- January
Spring crop - January – February---------------May-June
The Himalayan hills above 2,500 m are particularly suited for raising healthy seed potatoes. But the relative paucity of such suitable areas and the increased cost of cultivation and distribution are the primary reason why we shall not be focussing on this region.
The Central Potato Research Institute (CPRI), Simla, supplies about 100 tons of breeders’ seed to us. We multiply the breeders’ seed thrice in their fields or in those of contract/certified growers’ fields, and then it's distributed to the farmers.
Water supply is another critical factor that limits the spread of potato cultivation to the different parts of the country. Fertilizer is another expensive input, second only to seed, in potato cultivation. Our R&D department, in co-operation with the FAO, is conducting several ongoing experiments aimed at finding out the optimum fertilizer application for maximum yields under different agro-ecological conditions will help farmers tremendously.
The monopolization of wholesale and retail distribution by private traders has been a major constraint to expanding the potato production in India. The main reason being the manipulation of market which in turn has often resulted in the swindling of the producers. The most devastating results have been the lack of price uniformity and artificially created glut and shortage. Of late there has been some attempt to institute government and co-operative bodies for facilitating distribution of potatoes. We hope that with the growth of our organisation, such spurious activities will wither out in the country and in the long-term as our market share increases significantly, there shall be uniformity of price across the country, apart from ensuring that there are no artificially created shortages of stock.
PRODUCTION ZONES & STATES OF DISTRIBUTION
1. Northern high hill and valleys - Himachal Pradesh and Uttar
2. Northern moderately high hills and mid or low elevations - Himachal Pradesh., Uttar Pradesh,West Bengal and Meghalaya
3. North-Western plains and sub-mountain areas - Punjab, Haryana and Western Uttar Pradesh
4. North-eastern plains - Eastern U.P., Bihar, West Bengal, Assam and Orissa.
5. Central and Western Plains - Madhya Pradesh, Rajasthan and Gujarat
6. Plateau areas - Bihar, Orissa, Madhya Pradesh,Maharashtra, Andhra Pradesh and Karnataka.
7. Southern Hills - Tamil Nadu
1. Bhardwaj, V.P. 1985. Report on Potato production in India. International
Potato Course IAC, Wageningen.
2. Dhingra, M.M.K. 1978. Report on Potato production in India. International Potato Course IAC, Wageningen.
3. Srivastava, B.N. 1980. Potato production and utilization in India. CIP.
4. Centro Internacional De La Papa (International Potato Centre) Publications.
5. Trends in Agricultural marketing in India – Dipankar Guha
6. indiainfoline.com – Sector Reports & Indian Company Reports
7. Seeds of Despair – Tapash Ganguly in The Week (Oct. 25, 1998)
8. cgiar.org (Consultative Group on International Agricultural Research)