Effect of Cereal Breakfast in Indian Market:

The Indian diversity and culture is one of its kind in the whole world, the depth of its diversity and culture is such that, one may find too many differences travelling across India. The true expression of diversity in all sense whether it is food, style of living, culture, languages, tradition and even the geography and topography of the Indian continent speaks all about its diverse nature.

And into this diversity there came many products and brands as soon as the trade barriers were gone and markets were opened in the in the 1990’s for international trade, Looking at the mighty numbers in terms of population several companies jumped with joy of making good profits and flooded the Indian market with goods and products. Many reaped benefits but many world-renowned brands and companied flopped utterly, one such product rather band was Kellogg’s which was a flop in the Indian market.

Kellogg’s is of course a mighty brand and its cereals have been consumed around the globe more than any of its rivals. Sub-brands such as Corn Flakes, Frosties and Rice Krispies are the breakfast favourites of millions of European and Americans.

In core markets such as the United States and the UK, the cereal industry had been stagnant for over a decade, as there was little room for growth. As a result in early 1990’s the company started looking beyond its traditional markets in Europe and the United States in search of more cereal-eating consumers. It didn’t take the company too long to decide that India was a suitable target for Kellogg’s products. After all, here was a country with over 950 million inhabitants, 250 million of whom were middle class, and a completely untapped market potential.

Soon after the barriers to international trade had opened in India, Kellogg’s decided to invest in Indian market, looking at numbers, and decided to invest USD 65 million in launching its number one brand, Kellogg’s Corn Flakes in India. This news was greeted optimistically by many economic experts, like Bhagirat B Merchant, Director of the Bombay Stock Exchange. He stated that ‘Even if Kellogg’s has only a two percent market share, at 18 million consumers they will have a larger market than in the US itself.

To the surprise of Kellogg’s management and many other experts, the Indian sub-continent found the whole concept of eating breakfast cereal a new one. In a country where there is much importance for breakfast and the most common way to start the day was with traditional breakfast that is prevalent in each region, like the Parathas or Chapattis in the north and Idly, Wada, Dosa, Upma, Oothapams and etc in south and the west and the east having their traditional breakfast culture. While this meant that Kellogg’s had few direct competitors it also meant that the company had to promote not only its product, but also the very idea of eating breakfast cereal in the first place.

Though the first sales figures were promising and indicated that breakfast cereal consumption was on the rise in India. But the happiness short lived and it soon became apparent that many people had bought Kellogg’s Corn Flakes as a one-time novelty purchase. Even if they liked the taste, the product was too expensive. A 500-gram box of Corn Flakes cost a third more than its nearest competitor product.

But Kellogg’s remained unwilling to bow to price pressure and decided to launch other products in India, without doing any further research of the market. Over the next few years, Indian cereal buyers were introduced to Kellogg’s Wheat Flakes, Frosties, Rice Flakes, Honey Crunch, All Bran, Special K and Chocos, Chocolate Puffs, none of which have managed to replicate the success they have encountered in the West.

Further adding to woes of the company in India, an attempt was made to ‘Indianize’ its range of products and that proved disastrous. Its Mazza-branded series of fusion cereals, with flavours that of mango, coconut and rose, failed to make a lasting impression, in short were a flop.

Realizing the relative failure of these brands in India, Kellogg’s has come up with a new strategy to establish the company’s brand equity in the market. If it can’t sell cereal, it’s going to try and sell biscuits. The news of this brand extension was covered in depth by media.

As per reports, the company has started looking at options of alternate product categories to counter poor off take for its breakfast cereal brands in the Indian market. Meanwhile, the Kellogg main stay breakfast cereals have seen frenzied marketing activity from the company’s end. The very idea behind this effort is to establish the Kellogg brand equity in the market, with all these efforts the company is concentrating on establishing its brand name in the market irrespective of the off take, what it has from the Indian market. The focus is entirely on being present and visible on the retail shelves with a wide range of products.

As per the trade, Kellogg India has disclosed to the dealers its intention of launching more than one new product onto the market every month for the next six months, these rapid-fire launches were supported with extensive ‘below-the-line’ activity, such as consumer offers on half of Kellogg’s cereal boxes. Although most of the biscuit ranges have so far been a success with children, due in part to their low price, Kellogg’s is still struggling in the cereal category.

Although the company tried to be more sensitive to the requirements of the market, through subtle taste alterations, the high price of the cereals remains a deterrent.

According to a study conducted by research firm PROMAR International, titled ‘The Indian sub continent in Transition: A strategic assessment of food, beverage, and agribusiness opportunities in India in 2010,’ the price factor will restrict Kellogg’s from further market growth.

Study reports says that while Kellogg’s has ushered in a shift in Indian breakfast habits and adapted its line of cereal flavours to meet the Indian palate, the price of the product still restricts consumption to urban centers and affluent households.

One of the reasons why Kellogg’s and these other brands’ passage to India was not smooth was because they had been blinded by figures. The Indian population may be verging on 1 billion, but its middle class accounts for only a quarter of that figure. A survey conducted by the Indian National Council on Applied Economic Research in Delhi in 1996 found that the sub-continent’s ‘consumer class’ numbers are around 100 million people at the most, and that buying habits and tastes vary greatly between the Indian regions. After all, India has 17 official languages and six major religions spread throughout 25 states.

This was a lesson to many those who eyed India as a potential market for their goods and services, those companies which are in tune with India’s many cultural complexities can only stand a chance, in the Indian sub-continent.

With this one must understand that the companies are looking forward only to make revenues, the messages given out by means of advertisements are to protect company’s interest, It’s the Wealth that has been taken care of not the Health of people. When we the people of India have such a wonderful traditional healthy food practice, Why then, one should run after the new brands and products that are introduced, every now and then into Indian markets.

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