Professional Documents
Culture Documents
CASE
Noria Farooqui
t was 10 in the morning of a hot day in May 2010. The heat wave of Delhi was
driving people mad with no signs of rain, and adding fuel to the fire was a
terrible traffic jam ahead. Taab Siddiqui had to catch hold of her team to assign
some work to them as she would be away for a couple of weeks from May 24, 2010
onwards. She had planned a trip to South Africa, after having a really hectic closing
of the financial year.
While moving towards the corporate office at Mahipalpur (Extension), perhaps the
most congested area of South Delhi near the airport, her car crossed the BRT corridor near Chirag Delhi flyover and stopped at the traffic signal. While crossing the
signal, fiddling with her blackberry phone, she looked out of the window and started
wondering what the green colour meant to her as a business woman and to Delhi as
a city.
During that time in Delhi, the government was giving a lot of emphasis on protecting the environment and saving the ecosystem by planting trees and adopting practices to create a green atmosphere. The major reasons were the forthcoming
Commonwealth Games and the increasing pollution in the city. Small hoardings
were installed across the city with slogans such as GREEN DELHI CLEAN DELHI,
GO GREEN etc. Marketers were trying to sell green marketing concepts, finding
innovative ways to show their concern for the environment.
But for Taab Siddiqui, green colour answered many of her critics queries there
were persistent mails from people who thought that her soft bread contained egg.
The fact was that egg was never used as an ingredient in the Harvest Gold bread and
to highlight the vegetarian character of its products, the company started printing a
green mark on the packing.
KEY WORDS
Indian Bakery Industry
Green Marketing
Procurement
Packaging
Quality Standards
Cost-cutting Measures
She had to reach the office by 11 am as she had invited Equus Red Cell, the Ad shop,
for launching their website. This was an important meeting for building the brand
image of the company. Moreover, she was planning to go national and hence to be on
par with the other competitors, internet presence and social networking were a must.
As her car drove into the parking area, she heaved a sigh of relief that she could
escape from the peak traffic and was still running ahead of her schedule; she could
thus afford to spend a couple of minutes with her staff as she had to inform them
about a new product. She walked in and called everybody in the Conference Room
to announce the breaking news, particularly to the male employees. I have a good
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Hot Indian breads made of wheat flour. Most Indian people prefer to
have them hot.
CNG(Compressed natural gas) is an alternative fuel and is widely accepted by vehicle owners because of low cost and clean burning
aspect.The government has made this option mandatory for trucks
and autorickshaws, i.e., they have to get their vehicles CNG fitted.
118
hard task for them. For that matter it was a crucial issue
even for other food companies like Mother Dairy and
Perfect Bread because their business too depended on
good logistics.
The most important issue for the company was expanding in other parts of the country and managing the distribution of fresh bread in such a way that her customers
got the product at the right time and were not attracted
to the alternate options offered by the retailers. Now the
task ahead was to develop a business model for gaining
national presence it could be franchising or contract
manufacturing.
Harvesting gold in the Delhi market during the nineties, but strapped by the investment ceiling of Rs 30 million in the reserved sector of bread manufacturing,
Harvest Gold realized that the future lay in franchising
its brand and technology across the country.
Taab Siddiquis strong conviction for outstanding quality had brought laurels to the organization, which she
did not want to lose just by expanding the business. In
fact the organization faced a major challenge when it
started outsourcing the jobs. Their major objective was
to fulfill the need for a good quality product involving
low cost techniques that the customers could trust. (See
Appendix I for cost control methods). What differentiated them from others was quality, and their endeavour was to follow it 365 days.
a Rs. 400 million turnover in just five years. They further diversified into related products like hamburger
buns, pizza base, etc.
Earlier there was a domination of two manufacturers
Modern and Britannia. Demand was high and supply
inadequate; hence whatever was produced was sold.
Bread was sold in wax papers. People used to stand in
queue for hours for delivery vans to get their loaves.
Such was the dominance of Britannia and Modern
breads. Other competitors like Taaza and Bakemans
were not so popular. Since the national players were Britannia and Modern (now limited to a few parts of the
country), every state had its own local brand. Short shelflife of bread made it difficult for big players to distribute bread at distant places. From 1995-96 up to 1998-99,
Britannia bread market share witnessed a fall due to the
stiff competition from Modern Foods. Still Britannia
could manage to regain its shape due to the takeover of
Modern Foods and the time spent in its restructuring.
Again that could not last long and Britannia faced some
problem in its distribution of bread. This particular crisis was the reason behind Harvest Golds success as the
market leaders were fighting with their destinies.
Harvest Gold did not have any distributor for its bread
at that time; so, it approached the distributors of Britannia and Modern. These distributors agreed to keep a
stock of Harvest Gold bread and sell it whenever there
was a demand for it. It also approached the Nirulas for
keeping its bread on their counters. But everything took
a turn when customer response turned out to be overwhelming. Within a span of two years, there was no looking back for them. Harvest Gold was 17 years old with a
turnover of more than Rs. 1.2 billion with one plant, one
city, and one product. Its only plant was in Bhiwadi from
where all its products were distributed. What was most
remarkable was the companys distribution system the
trucks were painted with Harvest Golds name and logo
a true example of mobile branding. This was a case of
a local player taking on a big brand and emerging as
the market leader within a span of just one to two years
of launch. Other than the normal white bread, it also
made sandwich bread, Bombay pav, burger bun, brown
bread, kulcha, pizza base, sweet bun and milk rusk,
daliya (Porridge) bread, garlic bread, and multi-grain
bread and sold its own atta (wheat flour). Their label
accounted for 80 per cent of the bread consumed in Delhi
and NCR and headed a Rs. 1.2 billion (and growing)
VIKALPA VOLUME 37 NO 2 APRIL - JUNE 2012
INDUSTRY OVERVIEW
The Indian bakery market was valued at Rs. 32.95 billion in the year 2008 and was expected to reach Rs. 43.08
billion by 2012. The market was split into rural (22.5 %)
and urban (77.5%). The two major bakery products,
bread and biscuits, held about 82 per cent of the market
share.4 The per capita consumption of bread in India was
only around 1.5 kg to 1.75 kg in various zones.
The consumption pattern in the four zones of India was
27 per cent in the North, 32 per cent in the South, 23 per
cent in the East, and 18 per cent in the West.5
Ibid
Ibid
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Operations
Procurement at Harvest Gold
The flour was procured by the Purchase Department at
Bhiwadi through the millers and suppliers who first sent
the flour samples to the Quality Control (Standards)
Department, where these samples were tested on various quality parameters. If a sample met the required
specification, it was accepted. The rates were then decided by the Purchase Department and finally the order
was placed. The company maintained the suppliers
profiles and the orders were placed only when required.
Price
The price of wheat flour (See Appendix 2) was determined on the basis of the price of wheat, atta, suji, and
bran prevailing in the market on a day-to-day basis.
Maida, atta, bran, and suji were made out of wheat in the
ratio of 55:15:25:5. At Harvest Gold, the formula used
for calculating wheat flour rate was:
Wheat flour
rate/kg
The wheat flour was tested on various quality parameters before procurement. These parameters played a
very important role in deciding the products to be prepared, e.g., bread-making required strong gluten, more
than 12 per cent protein, hard wheat, etc. Following
quality parameters were required to be satisfied:
Wheat Non-grade Data
Hardness: This was an important parameter for product development as soft, medium-hard, and hard wheat
was required for biscuits, chapatis, and bread respectively.
Alkaline water retention capacity (AWRC): It was an
important parameter for evaluating the quality of biscuit and had a negative correlation. A value of less than
60 per cent was considered ideal for making good quality biscuits.
Flour Data
Extraction rate: Milling industry was interested in
higher extraction rate (flour recovery). An extraction rate
of 55 per cent was generally preferred.
Dough Properties
Alveo graph parameters: The alveo graph was used
mainly to evaluate bread-making potential of wheat
flour. The four alveo graph parameters were:
P
L
P/L
W
Peak (mm)
Elasticity (mm)
Ratio of peak and elasticity
Overall resistance
Moisture content: The acceptable limit of moisture content was less than 12 per cent. This parameter was very
important for storing wheat in the godowns/silos. The
moisture content depended on the weather conditions
at the time of harvesting. Higher moisture content adversely affected the keeping quality of wheat.
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Quality Assurance
Quality had always been the central force for any business proposition. Harvest Gold had adopted a strict
quality policy in its unit, which was well monitored by
the Quality Control & Assurance (QC&A) Department.
The quality was stringently checked at different levels
of production, which included:
Primary inspection of raw materials
Quality assurance during work-in-process
Quality check of finished material.
Besides this, the Quality Assurance Department paid
meticulous attention to post-production handling and
packaging of their products to improve breads shelflife. Due to the companys adherence to the quality of
products, it was accredited by the prestigious ISO certificate. Raw material was procured from various vendors who had to follow strict norms and adhere to
various standards of quality. The company did random
sampling of raw materials and checked samples in its
own R&D lab and stored in dry cool and sanitized stores
in its own facility.
Commercial bread-making was held to strict government guidelines regarding food production. Further,
consumer preferences compelled bread producers to
maintain a high quality standard of appearance, texture,
and flavour. Therefore, quality checks were performed
at each step of the production process (Appendix 3).
Producers employed a variety of taste tests, chemical
analyses, and visual observation to ensure quality.8
Moisture content was particularly critical. A ratio of 12
to 14 per cent was ideal for the prevention of bacteria
growth. However, freshly baked breads had moisture
content as high as 40 per cent. Therefore it was imperative that the bakery plants be kept scrupulously clean.
The use of fungicides and ultraviolet light were two
8
MARKETING
Some ad practitioners were of the view that wit must
come at a later stage, when the brand was already established, and was seeking to build a connection with
the consumer. But in the case of Harvest Gold bread,
the company and the advertising agency, Equus Red
Cell, decided to go the funny route right from the start
with a tone and language the consumer would under9
10
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12
13
http://www.expressindia.com/news/fe/daily/19980223/05455374.html
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DISTRIBUTION
The marketing system in the bread industry was based
on a strong retail-wholesale distribution network and
being a highly price-sensitive low-margin food product
with very short shelf-life (about four days on an average) and the resultant return of more than 10 per cent of
dispatches, the industry was witnessing a very competitive environment with the result that inter alia the consumers choice and preferences played an important role
in the sales pattern of different brands of bread in the
market.18
14
15
16
17
Harvest Golds success largely depended on its excellent distribution system enabling fresh delivery of various items. Its competitive advantage lay in owning the
distribution system and continuous upgrading with innovation and latest technologies. The best thing about
Harvest Gold was its small size which facilitated smooth
distribution of its products. However, for having national presence, there was no option other than outsourcing
of the distribution.
The owners of Harvest Gold recalled the days when they
had to sell the breads on the traffic signals to generate
an awareness besides increasing sales. Those were the
toughest days of their lives not in monetary terms but
in terms of having a burning desire to become a successful entrepreneur.
The couple had recently returned from an extensive
world tour where they had been looking for the latest
professional practices in distribution of fast-moving consumer goods with emphasis on bakeries. Many millions
of Rupees-worth of cost-saving opportunities and service improvements were identified e.g., attractive
schemes for big retailers, capturing the shelves of modern trade channels, improving on management information system, excellent demand forecasting and special
delivery vehicles on different occasions, sticking with
the policy of cash on delivery (COD) for big retailers
and three to four days credit policy for small retailers.
A long-term strategy was created that affected everything in the supply chain from the profitability of individual products, through breadroom operations, even
to examining running costs of individual delivery vehicles. There was a firm opinion in the industry that distribution was a major driver of manufacturing efficiency
and once a person understood its role in fresh food he
could not afford to get it wrong.
Generally there are two peak slots when bread is distributed, morning and evening. Harvest Gold used to
dispatch hundreds of thousands of loaves daily to hundreds of sales outlet. One was the morning sales slot,
i.e., Harvest gold dispatched hundreds of thousands of
loaves daily to several thousand sales outlets with each
outlet having two sales peaks one was the morning
sales slot from eight till ten and the other was the evening
18
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transportation.20
In case of bulk transport, Harvest Gold made use of
trucks and tempos, and in case of smaller deliveries to
the retail shops, the producer used smaller tempos and
bicycles. A producer also had to make sure that all vehicles were thermal proof so that the bread could be maintained at a lower temperature. All the products were
transported preferably in the night or early morning in
order to avoid heat and humidity and also traffic delays.
Even after the product reached the retail outlets, the producer had to educate the retailer to keep the bread away
from direct sunlight. Otherwise the bread would start
sweating and result in fungus formation, reduction in
weight due to loss of moisture, change in the texture,
etc.21
The Bhiwadi plant was the only plant and the product
was distributed from there. What was most remarkable
was the companys distribution system where the trucks
were painted with Harvest Golds name, thus also serving the purpose of mobile branding. The products were
loaded in these trucks and unloaded at various depots
in Delhi. From the depots, the products were carried by
the outsourced trucks to the various corners of the city
as per the demand of the customers. The retailers of the
suburbs in Delhi demanded 400 gms of the white bread
the most whereas the retailers in the posh localities like
Vasant Vihar, Vasant Kunj, Greater Kailash, Defence
Colony, and demanded different variants of Harvest
Gold bread. The mode of revenue collection was cash
on delivery from the retailers by these outsourced truckmen. In a very few instances, they gave the product on
credit and that too only for a couple of days.
The breads were packed in plastic crates each of which
was around 1-2 kgs; each person carried 3-4 such crates
on his shoulder. While unloading, the person freely removed the load which on impact with the ground caused
serious cracks after several falls. One crate full of breads
weighed around 6-7 kgs; four crates weighed around
24-28 kgs and would cost around Rs 200. Breakages were
common at the edges.
Around 50,000-60,000 crates were circulated everyday
in the market in a cycle. Breads needed to be delivered
20
21
Ibid.
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COMPETITORS
Among major competitors of Harvest Gold was the company manufacturing Premium bread under the brand
name PERFECT which figured in most of the Premium
stores and virtually all the 5 Star joints in Delhi. It had
started its business in 1993 with a small plant, Seeta
Foods Pvt. Ltd., located in a small industrial town,
Hathin, Faridabad with a very minimal turnover. In a
span of just a few years, by adding on two most modern
plants, LR Foods (established in 1997) and Harpreet
Foods Pvt. Ltd. (established in 2000) at Faridabad, and
further coming up with Perfect Bake in 2006, LR Foods
Pvt. Ltd. had garnered 45 per cent of the market share
HARVEST GOLD: DELHIS NO. 1 BREAD
Major Brands
The two major players, Britannia and Modern Foods,
had a market share of 10-12 per cent and 7-8 per cent
respectively in 1998. Apart from these two, there were a
few large regional players such as Spencers in South
India, Vibbs in Maharashtra, Kitty and Bonn in Punjab,
365 days in Delhi NCR, Haryana, etc., and Harvest Gold
and Perfect Bread in Delhi and NCR.24
23
The Modern bread brand was available in a wide variety of white sandwich bread, brown bread, Atta (wheat
24
22
25
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26
27
28
126
Energy
Energy also contributed to the cost of manufacturing; hence
reduction of cost of energy should be a priority for manufacturers. Following are some ideas for reducing energy cost:
Getting an energy audit done and implementing the auditors suggestions
Saving fuel through energy efficient burners
Saving power energy through energy-efficient motors
Seasonal variation: The monthly price of wheat flour usually went up in the rainy season because the demand of
wheat bran would go down due to green pastures available. The millers in this situation would increase the price
of wheat flour to recover the total cost of wheat.
Stock of wheat (procurement and minimum support prices):
The governments policy was to have a buffer stock of food
grains for emergency situation, and it procured wheat accordingly through the Food Corporation of India (FCI)
godowns. This not only increased the maintenance cost of
the government but also created artificial shortage in the
open market. Again, when the government tried to dispose
off the stock, the price was fixed in such a way that the open
market price was less than the FCI price. On the other side,
India was unable to export wheat because of poor quality
and price difference in the world market. Thus the stock was
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30
Atta is the Hindi word which means wheat flour, out of which indian bread like roti/chapati is made.
31
32
Bran is the outer layer of cereal grain which has high dietry fibre.
33
34
35
36
37
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Fermentation
The grains were ground in the grain mills and then sold in
bulk to Harvest Gold which kept the grains in storage sacks
until they were ready to be used. In the baking factory, water and yeast were mixed with the flour to make a dough.
Additional ingredients such as salt, fat, sugar, honey, raisins, and nuts were also added in the factory.
Raw materials used in bread manufacturing were flour, fat,
sugar, salt, yeast, sodium stearoyl lactylate, smp solution,
bread improvers, ascorbic acid, potassium bromate, calcium
propionate, acetic acid and other additives. Plant and machinery required for bread were spiral mixers, silos, sifters,
conveyors, bowls, dividers, hander up, interproover,
moulder, final proovers, baking ovens, depanners, cooling
racks, cooling tunnels, slicers and sealers, and plastic trays.
Utilities like chilling plants, air compressors, boilers, and
cold storage rooms were required for different applications.
Mixing and Kneading the Dough
38
The sifted flour was poured into an industrial mixer. Temperature-controlled water was piped into the mixer. This
mixture was called gluten and gave bread its elasticity. A
pre-measured amount of yeast was added. Yeast was actually a tiny organism which fed off the sugars in the grain
and emitted carbon dioxide. The growth of the yeast produced gas bubbles, which leavened the bread. Depending
on the type of bread to be made, other ingredients were also
poured into the mixer.
From the prover, the pans entered a tunnel oven. The temperature and speed were carefully calculated so that when
the loaves emerged from the tunnel, they were completely
baked and partially cooled. While inside the tunnel, the
loaves were mechanically dumped from the pans onto
shelves. The baking and cooling process lasted approximately 30 minutes.
129
130
Mixing
ingredients 1
Mixing
dough 2
Dough
dividing 3
Rounding up
4
Prooving
5
Moulding
6
Final prooving
7
Baking
8
Depanning
9
Packing
10
MIXING INGREDIENTS
5-10 MINUTES
15 MINUTES
FINAL PROOVING
75 MINUTES
BAKING
30 MINUTES
COOLING
60-90 MINUTES
PACKING
15 MINUTES
39
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Noria Farooqui has been an Assistant Professor in the Department of Management at Hamdard University, Delhi since 2006.
She was earlier associated with the Institute of Clinical Research, India as a management faculty. She has been in the
teaching profession for the last eight years and teaches Strategic management, Advertising, and Strategic retail management
for post-graduate students of management. Her research areas are agriculture and rural management, the thrust areas be-
40
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