Global Yogurt Franchises Attempt to Brand a Homemade Indian StaplePublished: June 28, 2012 in India Knowledge@Wharton
Plain, old-fashioned yogurt has always been a favorite with Indians. Better known by local names such as dahi and taire, it is a staple of the Indian diet. But it has traditionally been a generic product, with little differentiation between brands. Lately, however, globally popular variants like frozen and flavored yogurt are catching Indian consumers’ attention and palate.
Take Red Mango, the U.S-headquartered frozen yogurt and fresh fruit smoothie brand. Launched in January in India, Red Mango is quickly growing in popularity. Here is a typical scenario: A young girl escorted by her father walks up to the Red Mango kiosk at an upmarket mall. She is handed a bright red paper cup to fill with as much yogurt as she would like from the vending machine. She adds two generous swirls to her cup and is directed to weigh the treat on a scale. The next counter offers a variety of toppings for the yogurt. “How many calories are there in a 100 gram serving?” her father asks the kiosk assistant. But he doesn’t wait for the reply. “It’s good any which way,” he tells his daughter as they walk away.
The Indian consumer with disposable income is turning to frozen yogurt as a healthy alternative to high-calorie desserts. And leading international players are fast moving in to tap into the growing market, including Red Mango, Canada-based Kiwi Kiss, South Korea’s Yogurberry, France’s Danone and Switzerland’s Nestlé. The Los Angeles-based chain Pinkberry is reported to be getting ready to enter India by the end of this year. Meanwhile, leading Indian brands such as Mother Dairy and Amul have also been expanding their yogurt portfolio.
The New Delhi–based research and consultancy firm Technopak Advisors estimates the global frozen yogurt market at around US$75 to $77billion and growing at a compound annual growth rate (CAGR) of 15% to 18%. Of this, the U.S. accounts for US$11 billion and is growing at a CAGR of 10% to 12%.
In India, yogurt is classified under the health and wellness food segment. Technopak estimates that in 2011, this segment garnered around US$2 billion in revenues. Over the next three years, it is expected to grow to US$5 billion. Pratichee Kapoor, associate vice president for food services and agriculture at Technopak, says the packaged yogurt market (plain and flavored) currently constitutes around 7% to 8% of the total health and wellness segment in India and was worth around US$150 million in 2011. It is growing at a CAGR of 18% to 20% and is poised to double in size by 2015. According to Technopak the ice cream and frozen dessert market in India -- which includes frozen yogurt -- was estimated to be at US$450 million in 2009-2010 and is expected to cross US$900 million by 2014-2015. A separate figure for the share of the frozen yogurt market was not available.
A New Concept
“The frozen/flavored yogurt concept is new for the Indian consumer, but it’s picking up fast and the processing giants are keen to capture the market,” notes Kapoor. She adds that consumption of this category is still at a nascent stage in the country. “It is estimated that in the year 2010, the per capita yogurt consumption was at 0.3 kilograms per annum in India compared to [per capita consumption of] 17.8 kilograms per annum in France.”
Rahul Kumar, CEO of Maez One Group, who holds the master franchise of Red Mango for India, describes the brand as “India’s first authentic health-food quick service restaurant. The self-service concept where our customers have the liberty to serve as little or as much of their favorite dessert and toppings is new to the Indian market and has been well received in our flagship store. It is on the same lines as our flagship stores in the U.S.” Red Mango, which currently has over 230 stores globally, originated in Korea but now has its largest presence in the U.S. In September last year, it was named as the leading smoothie and frozen yogurt chain in the U.S. in Zagat’s 2011 national chain restaurants survey. The brand is now looking to replicate its success story in India.
Kumar plans to invest around US$1.4 million to set up 10 to 15 Red Mango outlets primarily in the cities of Delhi, Mumbai and Bangalore by March of next year. He has earmarked around US$200,000 for marketing expenditures during this period. He is looking at setting up 250 outlets across the country by 2015. According to Kumar, the Indian operations of Red Mango have been growing at 55% month-on-month since the brand’s inception in January of this year. While Red Mango also offers low-calorie sandwiches, smoothies, parfaits and gourmet waffles, 72% of the India sales at present are from frozen yogurt.
Kumar says that India has been on Red Mango’s radar for the past few years. With increasing awareness around health among Indian consumers in recent times, the brand felt that the time was right to enter the market.
The Healthier Option
Ameer Husain, business head at RAASHA Leisure & Entertainment, the area franchise for South Korean brand Yogurberry for North and East India, is also upbeat. “India [has] huge potential in terms of growth. The typical Indian consumer in the cosmopolitan cities is leading a hectic lifestyle where a ‘meal-to-go’ is part of life. These consumers are now very health-conscious and in search of healthier alternatives for a quick meal. This is where we come in.”
Yogurberry has two outlets each in Delhi and Mumbai. In the next quarter, another five outlets are expected to be up and running, including one in the city of Chennai that will mark Yogurberry’s first foray into southern India. “In five years’ time, our target is to have 100 outlets across India. We are looking at a mix of kiosks and stores right now. The café format will follow eventually,” adds Husain.
Meanwhile, home-grown yogurt brand Cocoberry could offer international firms a cue to success. Launched in 2009, Cocoberry has seen 300% year-on-year growth and expects to generate about US$3.2 million in fiscal 2011-2012. The chain currently has 43 outlets across nine cities including Delhi, Mumbai, Ahmedabad and Jaipur. In the first quarter of this fiscal year, Cocoberry plans to open 25 outlets in Delhi and the National Capital Region and Mumbai. By the end of the year, the target is to open 130 new outlets across India. “When we started, the flavored and frozen yogurt category was completely new to the Indian market,” says G.S. Bhalla, founder and CEO of Cocoberry. “The idea was to create a niche premium product and we began by targeting people from the upper middle class and beyond. Now I am very confident about the Indian market. The demand from consumers is growing and we will expand Cocoberry’s footprint to more than 30 cities in the next two years. We are [seeing] demand from tier 2 cities as well.” Next month, Bhalla plans to unveil a new category of products.
Other players, too, are busy churning out new offerings. Take Danone, which entered India two years ago with its flavored yogurt. In September 2011, the French company created Cremix, a new product specifically for Indian consumers. “The positive consumer response [to the company’s flavored yogurt] inspired us to launch a new category for India. Cremix is a stirred yogurt made specifically for India, keeping Indian consumers and their palate in mind. What differentiates Cremix the most is its unique texture and flavor. It is doing well,” notes Swati Jain, head of marketing at Danone India, which is a 100% subsidiary of Danone Worldwide.
“The market for flavored yogurts is still very small and is starting to grow only now as more and more brands test themselves here,” says Kumaran Nowuram, general manager for dairy at Nestlé India, pointing to Junior Daheez and Fruit Daheez. Nestle also has a range of real Fruit Yogurt. “Steadily building on the insights on consumer preferences, we have created a pipeline of yogurt concepts and the first from the new range have just been rolled out.”
Nestlé has defined its target audience clearly; families within the SEC A market with children between four to eight years of age. (The SEC, or the socio-economic classification is a classification of households in India used to categorize consumer behavior. The SEC A market refers to high consumption potential.) “Nestlé Junior Daheez is developed on the insight that mothers want healthy snacks for their children and also believe that yogurt is very close in nutritional equity to milk,” Nowuram notes. “We worked on this understanding to create Junior Daheez. Two servings of this provide almost the same nutrition as one glass of milk. It is fortified with calcium, vitamin D and protein, which are important during the growing up years.”
Mother Dairy, the 35-year-old Indian dairy brand, has also introduced differentiation into its yogurt portfolio. It had earlier launched probiotic curd and buttermilk, which received a good response from consumers. The firm has now followed up with fruit yogurt in four variants -- blueberry, raspberry, mango and plum. The idea, says Subhashis Basu, business head for dairy products at Mother Dairy, is to offer consumers real fruits in their daily consumption of yogurt at affordable prices -- 36 U.S. cents for a 100 gram pack.
Even as consumers seem to be interested in the new offerings, the going may not be smooth for all of the players entering the market, observers say. A big obstacle is the lack of adequate cold chain infrastructure in the country. This restricts distribution.
Harish Bijoor, brand strategist and CEO of Harish Bijoor Consults and visiting professor at the Indian School of Business at Hyderabad, points to another aspect. “Yogurt in India is a generic item,” notes Bijoor. “It has been known as dahi for hundreds of years and finds dominant mention in our mythology with ‘Lord Krishna’ being the yogurt prankster of yore. To an extent, this is a big disadvantage for yogurt marketers in this country. The product is a bit too generic and is made in every Indian home. When a product is that ubiquitous, it remains a commodity for a long time.”
Bijoor suggests that the yogurt brands could draw a few lessons from the bottled water marketers who faced a similar challenge in India. “The key propositions that you tout need to be strong and need to exude and ooze value to the consumer. Frozen and flavored yogurt brands need to crack this code in India. Brand propositions that work in overseas markets will not necessarily work here,” he says.
Bijoor points to another aspect. “In the ice cream market, there is a caste hierarchy. There are ice creams and frozen desserts. Ice creams claim a close relationship to dairy fat or vegetable fat equally. Out here, there is a strong perception that ice creams are not necessarily healthy items on the menu for the future …. There is a tendency to make frozen yogurt a lifestyle statement with parlors taking the lead.”