Spice Wars

Sadananda Maiya built MTR Foods into a giant, and sold it seven years ago. Now his Maiyas brand is challenging the empire he founded.
K.R. Balasubramanyam        Print Edition: Mar 2, 2014
Maiyas founder Sadananda Maiya (left) with MTR Foods CEO Sanjay Sharma.
Maiyas founder Sadananda Maiya (left) with MTR Foods CEO Sanjay Sharma. (PHOTOS: Deepak G. Pawar and Nilotpal Baruah. PHOTO IMAGING: Ravi)

An hour of yoga and an hour of walking every day keep Parampalli Sadananda Maiya fighting fit. The 65-year-old food industry veteran says: "I have to stay fit as I have clear goals to reach in five years." The indefatigable Maiya, who built the MTR food brand, also founded the rival Maiyas brand. And he wants Maiyas to increase revenues from an expected Rs 75 crore this year to Rs 1,000 crore in five years.

Many in the industry consider Maiya the pioneer of ready-to-eat food products in India. MTR started as a restaurant - Mavalli Tiffin Room - in Bangalore in 1924. It was Maiya who led its diversification into packaged food in 1975, with products such as rava idli and jamoon mix. In 1992, he took over MTR Foods as part of a family settlement, and widened its product range. In much of India, and even in some other countries, the name MTR is synonymous with South India's food tradition. Maiya was backed along the way by private equity firms J.P. Morgan Partners and Aquarius India Fund. In April 2007, Maiya sold MTR Foods to Orkla, a Norway-based mining-to-food conglomerate, for Rs 364 crore, with the agreement that he would not launch a rival business for five years.

He didn't, but son Sudarshan Maiya, an IT engineer by training, entered the food business by opening the Maiyas restaurant in Bangalore's upscale Jayanagar shopping area in April 2009. Four months later, he entered the branded snack business. There are now four Maiyas restaurants, and plans for 15 more in six months.

In April 2012, after the non-competition period with Orkla ended, Maiya senior formally entered the instant mix and masala market, dominated by MTR in Karnataka. "We currently have 260 SKUs, and will earn Rs 75 crore in annual revenues by March 2014," he says. SKUs, or stock keeping units, are codes used for product identification. As Chairman of Maiyas Beverages and Foods Pvt Ltd, his goal is to increase the portfolio to 350 SKUs and revenues to Rs 1,000 crore in five years. Son Sudarshan wants to expand his restaurant chain, starting with Delhi next year. Maiya senior has so far invested about Rs 130 crore in the business, and plans to raise money through private equity next year.

"We will go to the market with products that MTR does not have currently," says Maiya sitting in his plush office at his 20-acre modern manufacturing facility on the outskirts of Bangalore. His company's snacks, such as kodubale, khara boondi and masala groundnut, are successful. According to 2013 Nielsen India data, Maiyas has surpassed MTR in the savouries and snacks segment. Industry pundits say the market for snacks is 10 times bigger than that for masala and instant mix, and unbranded players cater to three-fourths of it. MTR Foods CEO Sanjay Sharma explains that his company went slow on snacks as it first entered the market without fully understanding the snacks value chain. "We have relaunched snacks and grown at about 60 per cent last year," he says. "We want to be the Haldiram's of South Indian snacks."


We will go to the market with products MTR does not have

Sadananda Maiya

Founder, Maiyas

In the coming years, Maiya says, half his revenues will come from packaged snacks, 30 per cent from beverages, 15 per cent from frozen foods, and the rest from others. Eventually, he believes, the demand for ready-to-eat food will taper, and the market will shift toward frozen foods - an area where Maiyas is busy experimenting. MTR, on the other hand, is not interested.

Sharma says: "Frozen was a loss-making business with low margins. I shut it down in 2011." He says his company will get back into the business when the Indian consumer is ready for it. He adds that it may take three to five years for the frozen food market to start developing.


We want to be the Haldiram's of South Indian snacks

Sanjay Sharma

CEO, MTR Foods

Maiyas already serves a mix of freshly-cooked and frozen food at its restaurants. Sudarshan says customers are satisfied with the quality. "By using frozen food, we will be serving healthy food with less oil," he says. "It also helps us control waste." On the beverage front, Maiyas is readying a milkshake portfolio with canned chikoo, banana and cold filter coffee, for a summer launch. MTR declined to comment on its product plans.

Maiyas founder Sadananda Maiya (left) with MTR Foods CEO Sanjay Sharma.

Maiya says the secret of his success is maintaining consistency in product quality. For example, he gets around the problem of seasonal variations in the quality of ingredients such as chillies and tamarind by sourcing from different regions. Heeng (asafoetida) comes from Afghanistan, and cinnamon from Sri Lanka. "I will never mess with quality, even if it means having to increase the product price," he says.


The company with greater width and depth in distribution is the one that will win

Sridhar Ramanujam

CEO, Brand-Comm

Bangalore-based independent food consultant R. Prabhakar Rao says: "If you talk of traditional vegetarian South Indian food, then Maiya knows the secrets. It is in his genes."

Sharma says MTR is not competing against anyone, and is focused only on targeting consumers of unbranded products. He says focusing on one's own products makes more sense than fighting rivals. In the masala business alone, he says, there are more than 281 rival brands in just Karnataka. According to Nielsen India, in 2013, the masala market in India expanded with the addition of 249 new brands, taking the total number to 2,066.

MTR's Sharma, who has spent two decades in the food industry, is bullish. His company's research suggests that India is on the verge of explosive growth in packaged foods. "A whole new generation of consumers is coming into consumption bracket," he says. He adds that MTR is targeting the market of Rs 30,000 crore for branded meals, breakfast, snacks and desserts. The Nielsen India study shows that by 2020, the number of consumers in this category will be 2.7 times the current base.

He says the growth rate of MTR, which has 347 SKUs, is three times that of the GDP. Karnataka accounts for 46 per cent of the company's turnover, and Andhra Pradesh and Tamil Nadu are its next biggest markets. In the 2013 calendar year, the company had revenues of about Rs 500 crore, with the highly profitable spices and instant mixes accounting for the lion's share. Sharma says he wants to double his company's revenues in the next four years by building further on spices, instant mixes and snacks. "We will expand our presence in Andhra Pradesh and Tamil Nadu," he says. "The latter is the largest masala market."

Sridhar Ramanujam, brand consultant and CEO at brand-comm, says the rivalry between MTR and Maiyas will be driven by distribution. "The company with greater width and depth in distribution is the one that will win," he says. Maiyas has upped the ante with aggressive campaigning, and MTR is spending 10 per cent of turnover on brand promotion.

Maiya's goals are ambitious, but the market has become more challenging over the years. New players are storming all segments. In January, Coimbatore-based poultry giant Suguna Foods entered the masala industry by launching five variants of chicken masala. More products are on the way, says Mohan V.K., Head of Consumer Products at Suguna Foods.

Maiya says his company will remain vegetarian. "I have not thought about it (non-veg) in 65 years," he says. "It would affect our brand image. Moreover, as a diehard vegetarian I can't taste it." He adds that at a time when people are converting to vegetarianism, there is little reason for him to cater to non-vegetarian tastes. MTR's Sharma, too, dismisses reports that his company may cater to meat- and fish-eaters. "MTR brand will never enter the non-veg market - we are very clear about it," he says.

Ramanujam of Brand-comm is unsurprised. He says: "The vegetarian market is huge and expanding, and can absorb both and many more." MTR and Maiyas also sell overseas, and the US and Australia are major markets.


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