XYZ Industry

FROZEN FOOD Case

XYZ Industry
FROZEN FOOD Case

By
TEAM NAME: ARIHANT,
Deepak Bartwal Shubham Agarwal
Deepakbartwal.nitie@gmail.com shubhamagarwal09@gmail.com
+91-7666236135 +91-9619578712
PGDIE-39
NITIE, Mumbai
 Stress on Domestic Market

Why Domestic Market?

• 70 Crore revenue comes from domestic market
• With a growth rate of 25%, company would reach 213.62 Crore in next 5 years
• Enhance range of products by introducing products like chicken and Green peas
• Food processing industry is covered under Priority Sector Bank
• Development of 30 Mega food plants across the country in 10th plan of MoFPI
Stress on Domestic Market
• Exemption of processed food items of licensing under the Development & Regulation Act, 1951

Freezer Space in Indian Market

1500

1000
Freezer Space(Cu. Ft.)
500

0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
 Domestic Market Opportunity
STRATEGIES
• To develop contract farming to improve yield and reduce cost
• Introduction of new products like chicken and green peas
• Opening a new plant in some SAZ in northern India
• Improving relations with retailers by giving them volume related incentives and free Freezer

High
Opportunities for Growth

Mass Market basic foods (fruit &

vegetables, meat, poultry &
Fisheries

Niche market products Mass market value

(Snacks foods and added products (dairy
packaged foods) Products)

Low

Low High
Policy attractiveness and Government
Initiatives
 Mixed Type of Distribution Network

Considering Indian Demographics and different Customer Need, one type of Distribution
Network can not meet the requirements. Hybrid (Mixed Type) Distribution is one way to
capitalized Indian Fragmented Market.

The Right Distribution Model depends on the

Sophistication of the Market

Distributor Warehouse
Model Model

Low High
Manufacturer Control
Manufacturer Reach
High Low

Domestic Retail Division Institutional Division

• Fast Movement to Big Customer

• Need High Reach
• Managing Good relation
 Logistics Strategy
Investment in Cold Chain Infrastructure is Capital Intensive: Slow Returns
Use of 3 PL (Preferably RFID enabled) services for the transportation purposes
• Less Cost
• More focus on Core Competency
• Less Security and Quality Concerns
• Ease in Export

New Plant location in Punjab

• Low Cost Sourcing: Less Inbound logistics
• Better Distribution Strategy: Less Outbound logistics

New Distribution Network

• Hybrid Model: Low Cost of Transportation
• Better Service Level and High Reach
 Why Online Ordering System
Internet usage in India: 7% of population (Approx. 81,000,000)
According to International telecommunication union

All Time Open Effective online promotions

Greater reach 24*7*365
Customer Database
Valuable Customer Information Database.
Enables targeted Marketing Campaigns.
Through electronic coupons and
gifts
Accurate Information
Know the Customer Preferences

Attractive Presence
Generate Sales Report Good Brand Value among
Provide Live Sales and Statistics Customer

Customized Menu
Low Labour Cost
According to Customer
Save time and reduced Cost Preferences
Revenue Generation Secured transactions
More convenient way to do business Payments and Information
 Quality Issues in Food Value Chain

Frozen Food Value Chain: Quality Issues Consumer may be facing quality
issues related to:
•Taste •Ingredients
•Color & Texture •Juiciness
Field Losses Developing
(Pest, Diseases, Rodents etc)) Countries –
Relatively
Producer

Pre-Processing
(e.g. inefficient harvesting, drying, milling )
high losses in
the initial
Transport parts of the
(e.g. spillage, leakage) value chain

Storage
(e.g. technical deficiencies)
Rich
Processing & Packaging Countries –
(e.g. excessive peeling, washing)
High losses at
Marketing a later stage
Consumer

(e.g. spoilage, rotting in stores) in the food

Wastage by Consumer chain
(e.g. overeating, food wastage)

Field Consumer
 Quality Solution: Contract Farming
and HACCP
Quality Problem in India:
– More at starting phase of Value Chain

Solution
– Focus on Quality during Procurement with farmers through CONTRACT
FARMING

HACCP: Hazard Analysis And Critical Control Points Approach

“Best Way to maintain quality in Food Supply Chain “

Identify Determine Establish Establish Establish

the the Points Establish a System the Procedures Establish
Potential And Critical To Corrective For Documentation
Hazards Operational Limits Monitor Action Verification
steps
 Branding: ‘Direct Product Profit’ Approach

Selective Branding through Direct Product Profitability

Sales
- Cost of Goods Sold
Gross Margin
+ Adjustment
Adjustment Gross Margin
- Direct Product Costs
Direct Product Profit
High
DPP/unit Sleepers Winners
• Selectively Display • Heavily Advertise and
• Advertise Promote
• Add Shelf Facings • Aggressively Display
• Reconsider Price • Maintain Shelf Stock
Losers Traffic Builders
• Reduce Shelf Allocation • Reconsider Price
• Shift to Outside Supplier • Downgrade Shelf Position
Low
• Possibly Discontinue • Less Promotion
DPP/unit
Low Sales High Sales

•Due to Poor Financial Health, XYZ can’t go for aggressive branding for all products
•80:20 Rule for Branding: All product does not need equal branding
•High Promotion : Winners and Sleepers
•Less Promotion: Traffic Builders
•No Promotion: Losers
 New Plant at Punjab !

Plant At Punjab
• To exploit advantages of SAZ
• To meet higher demand in North India with reduced logistic expanses
• High yield of fruits, vegetables & dairy products
• Easier to involve in contract farming with more knowledgeable farmers

Advantages of SAZ
1
• Cheap & easy sourcing of raw material

2
• Ease of processing and packaging

3
• Funding at low interest rate by government

4
• Presence of participants in SAZ with knowledge about industry standards

5
• Reduction on tax on export of processed food
 ROAD MAP for 5 Years
Plant Location to AEZ in Punjab and
Back End Infrastructure Development:
Contract Farming: tax benefit and easy
For introduction of new product
Purchasing
New product Introduction in Domestic Dairy and Fruits & Vegetables
Market: Frozen Non-Veg and Green Peas frozen Food introduction

Distribution Re-structuring: Introducing Focus on Foreign Market:

Distributor for Better Reach Certification for UK
Online Ordering System: Giving
better service to customer

Continuous Branding and Advertising

Year 1 Year 2 Year 3 Year 4 Year 5