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Bagrry's faces tough competition

Bagrry's faces tough competition

Shyam Bagri brought the highly nutritious bran to India's breakfast table. But now he faces tough competition. With PepsiCo dominating the oats market with its Quaker Oat, and companies such as Marico, Britannia and Dr. Oetker all entering the breakfast cereal category over the past year, Baggry needs to buck up.

I can double my turnover by adding sooji, but I will not... our emphasis will always be on healthy products: Shyam Bagri I can double my turnover by adding <em>sooji</em>, but I will not... our emphasis will always be on healthy products: Shyam Bagri
It was Mahatma Gandhi's autobiography, My Experiments With Truth, that sparked Shyam Bagri's lifelong commitment to health foods. While reading it, he was struck by a passage on the nutritional value of chokher, or wheat bran, the outer layer of the wheat grain, and the benefits of including it in one's daily diet.

As a second generation member of a Delhi-based family owning a flourishing, 53-year-old wheat processing business - whose customers included food processing giants like Parle and Britannia - Bagri knew wheat bran well. The family mills extracted vast quantities of it as a by-product while making refined flour (maida) and semolina (sooji), but it was simply sold off to be mixed in cattle feed.

His newfound knowledge prompted Bagri, in the early 1990s, to start selling wheat bran as a health food. "It began as a hobby," he says. "As a miller I knew the process of manufacturing quality bran and decided to work on it." After some in-house research on how best to sift and toast the wheat bran, Bagri began selling it in 500 gm packs with the brand name Wheatex. "We were the first to do so in the country," he adds.

Bagri knew selling would not be easy. Most distributors had never heard of wheat bran, let alone being aware of its high nutritional value. Finding them reluctant to take on the product, he turned distributor himself, choosing select areas of Delhi and selling directly to shopkeepers. "We took an area, sold to a few retailers to create a market, then transferred the area to a stockist," he says. "We covered many areas this way."

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Surprisingly the response from customers was positive from the beginning. So much that by 1993, Bagri felt confident enough to launch a second health product, oat bran - the bran extracted while processing oats. In 1995, he went on to manufacture muesli - oats, mixed with dried fruit and nuts.

It was also in 1995 that the umbrella brand 'Bagrry's' emerged - to go with all the health food products the company sold. "The advertising agencies came up with options, and we changed our surname a bit," laughs Bagri. Bagrry's has since introduced other products, but has remained consistent in producing health foods alone. It clocked a turnover of Rs45 crore in 2010/11.

Devendra Chawla, President, Food and FMCG, Future Group
Bagrry's has always focused on offering quality products and, as a result, has shown growth in the category: Devendra Chawla
In 2004, for instance, Bagrry's launched its own brand of cornflakes, but withdrew it soon after, when Bagri realised cornflakes were not healthy. "To make cornflakes, the corn is de-branned and de-germinated, so that all its nutritive value is lost," he says. "It has only starch. Its glycemic index is also high."

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Glycemic index of foods is a measure of how much they increase blood sugar levels. Bagrry's has, however, re-entered the cornflakes market in September this year, with bran-added cornflakes - once again a first in the Indian market - the bran making all the difference to its nutritive value.

Bagri is truly obsessed with health. "I can double my turnover by adding sooji to our portfolio, but I will not, since our emphasis will always be on healthy products," he says. He also takes care to use highquality raw materials, importing raw oats from Northern England and Scotland, and almonds and natural soya-based antioxidants for his muesli from the United States. "Bagrry's has always focused on offering quality products and, as a result, has shown growth," says Devendra Chawla, Head, Food and Fast Moving Consumer Goods business at Future Group.

The wheat bran, white oats and oat bran are made in Delhi, while another factory in Baddi, Himachal Pradesh, manufactures the muesli and bran-added cornflakes. "Oats is the most important component of muesli," says Bagri. "We have close to 40 per cent oats in our muesli, while another leading brand has only five per cent." He will not name the brand, but the remark highlights how times have changed: Bagri may have been the pioneer of healthy breakfast foods, but he now faces strong competition. PepsiCo, for instance, dominates the oats market with its Quaker Oats, while Bagrry's claim to have a market share of 10 to 15 per cent. Companies such as Marico, Britannia and Dr. Oetker have all entered the breakfast cereal category over the past year with oats, muesli and other ready-to-cook products.

Finally, in the total breakfast cereal market - whatever cornflakes' nutritive value - the presence of Kellogg's cornflakes is overwhelming. The competition will only get tougher in coming years, since the potential for growth is enormous - with Indians' breakfast menus rapidly changing. "The breakfast cereals category is estimated at Rs500 to 600 crore and is growing at 30 per cent annually," says Chawla.

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"Pressure on time, growing health consciousness, the increasing number of nuclear families, and the growth of modern trade are all making this category popular." Vani Gupta, Vice President, Marketing, Quaker, at PepsiCo, agrees. "Oats is growing at 40 per cent, the fastest among breakfast cereals," she says. But Bagri is unperturbed. He believes the best way to fight rivals is to constantly innovate. Bagrry's already has 16 varieties of muesli, but intends to increase the number. Its new bran added cornflakes come in five varieties. The company is also working on wheat-based cereals and whole grain sooji products, which meet Bagri's exacting health standards.

It is investing Rs15 crore in a new facility in Ghaziabad, which will double the production of oats and muesli in the next 18 months. Bagri is even looking at acquisitions. But with a difference. "We will only invest in companies that match our brand's philosophy," he says. "We cannot deviate from that."

Published on: Nov 29, 2011, 12:00 AM IST
Posted by: Navneeta N, Nov 29, 2011, 12:00 AM IST