Abstract
Companies that wish to operate internationally need to understand different cultures. Successful brands, like McDonalds, are easily recognized all over the world. While many products of successful global brands are marketed in a consistent manner, there is a need for these companies to understand regional differences. Organizations must accept these differences to succeed in different parts of the world. The present case concerns Vimal Agro Private Limited, Bardoli (India), a food processing company, with a special focus on brand Swad. Promotional activities conducted by the company at local and international levels have been studied. The secondary as well as primary data has been used for the purpose. The case poses questions on the company’s survival in different countries.
Introduction
Food processing industry in India is one of the largest industrial sectors in terms of consumption, growth, export and production. India’s export of processed food for the year 2013–2014 recorded a figure of US$ 4.432 billion. This included contribution of the following products: Guar gum (US$ 1.758 billion), groundnuts (US$ 0.477 billion), cereal preparations (US$ 0.428 billion), alcoholic and non-alcoholic beverages (US$ 0.358 billion), other processed fruit and vegetables (US$ 0.342 billion), miscellaneous preparations (US$ 0.327 billion), pulses (US$ 0.261 billion), jaggery and confectionary (US$ 0.170 billion), mango pulp (US$ 0.116 billion), dried and preserved vegetables (US$ 0.111 billion) and cocoa products (US$ 0.086 billion).
Vimal Agro Products Private Limited (VAP) is one such company engaged in processed food. It entered the business in 1975 with the setting up of a rice mill. The company established a processed food division in 1988 at Bardoli, a town in the Indian state of Gujarat situated on the western coast and 250 km far from Mumbai, the Indian commercial capital. The company, through the years, has been continuously innovating new products and improving its operations. The company has 60 skilled employees and around 300 unskilled workers. Figure 1 depicts current organization of the company.
The company manufactures and exports over 80 different food products like fruit pulp and slices, canned vegetables, chutney, papads, 1 pickles and ready-to-eat food products. Vimal Agro keeps on adding new products to its existing range of products like hygienically processed, cleaned and packed pulses, frozen vegetables, frozen snacks, frozen naan, 2 rice, roti, 3 parathas, 4 sweet corn, fresh milled wheat flour, fruit juices, sauces, and peeled, diced and wedged tomatoes. The company markets its range of products under brand names of Vimal, Swad and Big Pantry.
The company has been recognized as the Star Export House of India. The products are available in more than 25 countries of the world, including the United States, the United Kingdom, China, the Middle East and Japan since more than 25 years. It was able to attain growth rate of 15.5 per cent (in terms of revenue) in the year 2013–2014 as compared to the year 2012–2013 and 44 per cent in the year 2014–2015 as compared to the year 2013–2014. The company projects to attain a growth rate of 20 per cent in terms of revenue in the year 2015–2016 as compared to the year 2014–2015. Table 1 provides company turnover and promotional spending over the last four years.
For ensuring food safety, every stage of the food production, from purchasing, receiving, transportation, storage, preparation, handling, cooking to serving packs, is required to be done and monitored with precise care. The company follows the Hazard Analysis and Critical Control Point (HACCP) principles for detection, documentation, maintaining and reviewing food hazards that occur during the process of food production. It has secured The Food Safety Management System Certification, ISO 22000:2005 and produces food that is safe to consume. Vimal Agro also got a certificate from the Halal India, an emerging quality symbol for food products worldwide among the Muslim community and a guarantee that animals are slaughtered as per Islamic practices. As a part of the social initiative, the company regularly donates US$ 7,500 to the Rotary Eye Club, Navsari, Gujarat, India. It also runs its own physiotherapy centre at reasonable charges in Bardoli. The company also donates to the needy for other social causes.
Company Turnover and Promotional Spending
Distribution of company products in domestic and foreign market is depicted in Figure 2. Figures in bracket show the number of channel members/intermediaries. From manufacturers to consumers, at each intermittent level, there exist some incentives, mostly in the form of quantity discounts, like getting free products when purchased in bulk.
During festive seasons, the company advertises in local newspapers and in fliers as well. For the foreign markets, the company runs television advertisement for Alphonso
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and Kesar Mango
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Pulp on Zee Network in Hindi and English languages. Zee Network is running this advertisement in different zones to cover various foreign markets, which it has divided into marketing zones:
Zone 1: USA, Canada Zone 2: Africa, Australia, New Zealand Zone 3: Dubai, Muscat, Bahrain, Qatar, Doha Zone 4: UK, Europe
Apparently, the advertisement campaign largely targets non-resident Indians (NRIs) and joint families. The whole family is shown to be enjoying every moment of their life with Swad brand mango pulp, initially husband–wife and then rest of the family members (including parents) in beautifully designed, ripe mango theme interior set-up. The daughter-in-law serves the joy to every member by demonstrating different applications of mango pulp–to be consumed with khaja/puri, as raw, mango milkshake and as toppings to delicious ice-creams. The advertisement concludes with a note that Swad helps in enhancing sweetness in relationships today as well as in time to come. At last, Swad brand logo appears on screen along with tagline-Distintctly Different. This logo is a unique artwork (covered mostly with ripe mango color) combining brand text and mascot face enjoying taste. The company spent US$ 67,395 in the year 2012–2013, US$ 77,880 in 2013–2014, US$ 1,12,325 in 2014–2015 and US$ 1,34,791 (expected) in the year 2015–2016 on advertisements (figures from VAP).
The company website,
In line with the latest trends, the brand Swad is also available online at Amazon and Snapdeal websites.
Local product selling share is approximately 20 per cent of the total production. Swad sale share, in percentage of total sales, in select foreign market countries in the year 2014–2015, as per company’s information, is as under:
USA: 17; London: 36; Europe: 8; Canada: 7; Singapore: 2; Africa: 2 China, Dubai, Japan, New Zealand, Australia, Gulf countries and others contribute 4 per cent each.
Thus, Swad in the USA ranks second after London in terms of total sales. Attempts are needed to increase the presence of Swad in other countries as well.
Swad mango pulp and chutney are top selling products at 40 per cent each of total sales in 2014–2015. Papad, pickles, ready-to-eat products, etc., provide the remaining 20 per cent share.
Major Exports of Mango Pulp from India
The company is facing competition from Rajkot (Gujarat, India) based ADF Foods Limited and other food processing companies of the world. During 2013–2014, India exported 1,54,820.69 metric ton worth US$ 1.25 billion of mango pulp to the globe (“Mango Pulp”, n.d.). Mango pulp export data from India is given in Table 2 for different countries and for last 4 years (“India Export of Agro Food Products”, n.d.).
Issues for Discussion
Although VAP appears to be doing well, there is a huge scope if comparisons are made with the domestic competition or more importantly with the potential world market. The present sales are focused on non-resident Indian population in general and of Gujarat origin, in particular, concentrated in select pockets such as London, Canada and the USA. The total campaign to market is suited to Indian food culture or habits. For VAP, the time has come to expand its market by introducing innovations that involve local food habits and the country specific food culture.
Lazović (2012) presented brief overview of past cross-cultural content analysis of advertisements.
Lazović commented that international advertising cannot be standardized in all countries because of the differences in the cultures. For formulating effective localized advertising, advertisers first need to understand cultural norms and values of its intended target audience. It necessitates company to go for communication adaptation either using one message and creative theme worldwide, but adapting the ad execution or using one message in every country, varying only colours, name and language in some nations (Kotler et al., 2013, p. 552). Specific questions that need to be addressed include understanding food cultural norms of countries to be focused on exports, development of country specific publicity policy, and innovative use of India’s exports in local recipes/cuisines. The introduction of McAloo burger by McDonald and KFC introducing vegetarian preparations at its outlets are successful initiatives for emulation.
Footnotes
Acknowledgements
The author acknowledges the support extended by Vimal Agro Private Limited to develop the case and consent to publish the same. The author also wishes to thank Mr Sanjay Joshi – formerly associated with Uka Tarsadia University in materializing this case study. The author would also like to thank Dr Prashant Joshi, Dean and Professor, Faculty of Commerce and Management, Uka Tarsadia University for extending all necessary support in developing this case.