A strategy fit to enter India
A strategy fit to enter India

Germany's Dr. Oetker Group recently took over Fun Foods Ltd changing the brand name to Dr. Oetker Fun Foods India.  The Group, a European conglomerate plans to invest hugely in expanding the packaged food category and production facilities in the country. Oliver Mirza, Managing Director, Dr. Oetker Fun Foods India, shared with us his exclusive insight regarding this acquisition and his take on the Indian market…

 

Vrinda Oberai (VO): What has been the core reason behind this acquisition?

Oliver Mirza (OM): The Oetker Food Division markets Continental cuisine in form of "Ready to Prepare" (i.e. Cake Mix), "Ready to use" (i.e. creme fraiche) and "Heat & Eat" (i.e. frozen pizza) products under the Dr. Oetker brand. Having its roots in Germany and established in 1891; the Dr. Oetker brand has been present in every European country for years now. In addition, the brand is present in Canada, US and parts of South America also.

 

Asia was not at all tapped by Dr. Oetker. Looking at the size of the population, India and China were and are the top 2 markets in Asia showing double digit growth in packaged foods and western and continental cuisine is becoming more and more popular. Fun Foods delivers Western and Continental Cuisine in form of "Ready to use" products and all products are adapted to the local (Indian) taste preference. Hence, Fun Foods was a strategic fit.

 

VO: Is this your first venture in India? If yes, how did you zero on India and precisely on Fun Foods India? If no, what have been your other ventures?

OM: Yes, it is. After observing India for a year or so, we entered India end of 2007. We started selling imported products from our global product basket. When the opportunity came up, we acquired "Fun Foods" as it was a strategic fit and it gave us the opportunity to enter India faster. Starting with an own organization would have taken a few more years. As we are committed to India, we did not mind investing into an acquisition. Apart from obtaining a well known and reputed brand, this acquisition helped us to shorten the build up phase of our Indian base, gave us the necessary critical volume and positioning.

 

VO: Which are the other countries you’re looking at for acquiring new brands and what is the basic criteria like?

OM: We are open towards acquisitions in Asia Pacific as long as it is a strategic fit. We recently - on 14th Jan 2011, announced the acquisition of Simplot's frozen pizza business in Australia. This positions us as a strong frozen pizza player in Australia and New Zealand. We are open towards further company or brand acquisitions in India as well.

 

VO: Dr. Oetker has an elaborate portfolio of brands. How do evolve new categories and what is the kind of research involved?

OM: Food is intrinsic to every country or even parts of a country, depends on cultures and traditions which leads to evolution of basic food habits over decades. You need to have a keen pulse of the changing food habits or introduction of new tastes. For e.g. end of 2010, we entailed an in-depth research on Italian sauces in various metro cities in India which gave us insights as to how Italian cuisine (namely Pasta & Pizza) has become intrinsic to Indian palate and how consumers are now evolving towards Italian offerings. The research focus was on usage & attitude at home as well as shopper behavior in retail stores. Our research always entails a look towards QSR (Quick Serve Restaurants) offerings and the out-of-home-market. Looking at this, we found various trendsetters. For example Pizza Hut is promoting new tastes like Pesto in TV advertising under the Tuscani range while Café Coffee day launched a Pesto Chicken Sandwich offering. These new offerings are signaling the acceptability of new tastes like pesto in this example. If Dr. Oetker Funfoods enters a new category or creates a new offering, we ensure it suits the local palate even if it’s an Italian product.

 

VO: What is your take on the Indian retail industry? Which sector, in your opinion is doing well in India and also, around the World?

OM: The Indian retail industry is the fifth largest in the world. Comprising of organized and unorganized sectors, the retail sector is one of the fastest growing industries in India, especially over the last few years. The are so many segments of Indian retail industry like consumer electronics, food & grocery, health and beauty care, books, toys, gifts and many more items of daily use. Along with the malls, the departmental stores are also getting a lot of popularity in India day by day.

 

Moreover the newly evolved concept of hypermarkets is contributing to the growth of the Indian Retail Industry. Earlier the retail market was restricted to metro cities like Mumbai, Delhi, Bangalore and other bigger cities. But nowadays even the smaller cities are responding very well to the retailing industry because of the shopping centers and malls where buyers can make a good shopping at reasonable prices as well as can have a great time with their family members.

 

Modern Trade is coming up very strongly in India, incorporating its learnings of the past, yet its overall share on total food retail is rather small. Collaborations as they are happening between retailers and manufacturers in Europe are still to happen. In Europe, we collaborate with retailers a lot in category management. We help with shelf placement recommendations based on shopper search logic. We also help retailers analyzing effective promotions (number of promotions and ideal phasing) which help the retailer to gain share rather than cannibalizing the own category.

 

VO: What are your expansion plans for India in the coming years? What categories should we expect for the same?

OM: We will consolidate our current offerings in the Indian market under the Dual brand – “Dr. Oetker Funfoods”. We have in fact scaled down products which did not fit the brand identity, i.e. Indian culinary powders. Having said that the market for packaged products in European and Continental cuisine has still not reached its limits, there is huge potential in store. Besides that, India awakes towards foreign food whether it be Italian or Mexican or any other world cuisine.

 

Also, we are currently evaluating to launch products from our global portfolio. Once we have the results we will share this with you.

 

VO: What is Dr Oetker’s USP?

OM: Dr. Oetker is the most trusted purveyor of European cuisine to more than 50 countries worldwide and is a European household name. As a German Company we have brought the complete product range to international standards in terms of quality, hygiene, appetite appeal and shelf throws. We have changed the value equation through an attractive price positioning and by merging the Dr. Oetker brand with the Funfoods brand. Funfoods brings in the local taste and Dr. Oetker brings in the global link and adds the aspirational dimension.

 

VO: How do you market your brands (especially the newly acquired ones) in foreign lands? How do you reach out to your target audience?

OM: The international policy is to adapt the acquired brands under the Oetker umbrella branding. In India we have gone a step ahead with dual branding. Dr. Oetker brings in the global link and aspirational dimension and the backing of a trusted MNC. Tools of brand communication vary from market to market.

 

We reach out to our target audience by regularly participating in exhibits and fairs in metro cities. For instance, if we have product offerings with a very specific target audience, like – Olive Oil Mayonnaise, we cherrypick the areas and shops where the product is marketed.

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