V-thought- A Knowledge Initiative by Vertebrand

7/30/2019 V-thought- A Knowledge Initiative by Vertebrand

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V-thought- A Knowledge Initiative by Vertebrand

Topics

Vol5 The Business of Agriculture

Vol4 Education Branding

Vol3 The world of Service Branding

Vol2 B2B Branding

Vol1 Branding Trends


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The Business of Agriculture

Volume 5VA VERTEBRAND KNOWLEDGE INITIATIVE


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03Vthought I Volume 5

From the Editors desk 04

Emerging trends in Indian Agri Business 06

Branding Agriculture - Creating brands rom commodities 09

Around the world - Stories o successul Agri Branding 12

Challenges in Branding Agri Businesses 14

Down to Earth - Young India turns to Agri Business 16

Expert Speak - Interview with Mr. Prabhakar Rao, Chairman, NSL Group 18

C o n t e n t s


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The very mention o Agri businessinvokes the memory o Farming; hardwork, some poignant memories andsome not so pleasant thoughts as well.

Our thoughts have also been ashioned

with the belie that India is an agrarian

economy and yet at the same time

the current state o aairs bears grim

testimony o the act that there is an

urgent need or rapid transormation.

Agriculture contributes to about 14.2%

o our GDP and yet provides livelihoodto close to 52% o the Indian working

population. This possibly leads to

agriculture being seen more as a social

phenomenon rather that just an industry

or a business.

Agriculture in India is largely dependant

on 2Gs.The rst is God or more

specically monsoon God. With the

monsoon playing truant this year, the

buzzword is certainly about how India

will cope. The cascading eect on other

sectors cannot be discounted and hence

every business entity in India is worried.

The 2nd G is Government. Agriculture

is perhaps one sector where every

aspect is controlled and infuenced by

the Government. There is a social angle

to this sector requiring government

intervention. However, while reorms in

every other sector have taken some shape, agriculture

has been lagging behind. Also the number o ministries

involved in the entire chain, compounded with manylegislations at both central and state level makes it

dicult or changes to be brought about. Industry-riendly

eorts o allowing private players to directly purchase

rom armers is probably a right step in that direction.

Yet, the APMC Act and the EC Act impose signicant

barriers and states are yet to make changes to them.

A billion mouths to eed with overfowing warehouses,

sharp rise in ood infation and more than 50% o domestic

spending on ood products does not bode well or aneconomy wanting to grow and become a super power.

Agri business is an indirect growth driver and i India

needs to propel itsel to being an economic super power,

several structural reorms are necessary in this sector.

Government spend towards agriculture is 80% towards

subsidies and 20% towards investment. Unless that

situation changes to more share or investment and less

or subsidy, problems will continue to plague this sector.

However there is a silver lining. While mega changes

have not taken place at expected levels, small innovations

are sweeping the sector. These are driving this sector to

become more ecient, more customer-centric and in all

boosting local economies.

We, at Vertebrand, have partnered many o our clients who

are part o the agri business. Our experience in working

with clients has been across the value chain. We are

actively partnering a Seed company in their marketing

initiatives and in the past have created and managed

successul brands or clients in the agro processing

FROMTHE EDITORSDESK

04 Vthought I Volume 5


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business. The Vertebrand team has also been involved in

providing expertise on the retail and logistics aspect o the

agri value chain. Our collective experience o working withseveral clients in this sector has been the prime mover

behind this issue o Vthought.

This issue o Vthought traces certain key trends sweeping

this sector. With Indian economy opening up, there have

been marked changes in the consumption pattern,

especially o urban India. This in turn has given rise to the

marked changes in the way agri products are processed

and consumed. This issue traces the emerging trends in

agriculture and the challenges in branding o key sectors.There are some interesting stories o branding which have

taken place in the agri business sector across the world.

We are specially indebted to Mr. Prabhakar Rao, Chairman

o NSL Group and Managing Director o NUZIVEEDU

Seeds Ltd or his contribution to this issue. He talks about

the uture o this sector and how to bring back the past

glory o agriculture.

We do hope you enjoy what you read here. We look orward

to hearing rom you. Please write back with your eedback

and comments to [email protected].

To read and download the online edition o this Vthought,

visit www.vertebrand.com

Happy reading!

Aparna Lakshmi

Chie Editor



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Aquick update on where India standsin the world agricultural production:Ranksnumberoneintheproductionof

commodities like

- Mangoes, Papayas, Bananas, Spices,

Millets like Bajra, Ragi etc

Secondintheproductionof

- Silk

Thirdintheproductionof

- Tobacco, Coconut, Tomatoes

Sixthintheproductionof

- Coee

Indiahousestheworldslargestlivestock population and is number

one in the production o Cow milk and

Bualo milk.

The Green revolution has been the

starting point or Indian agriculture in

its quest or growth and automation.

However, the biggest game changer or

the sector happened in the 90s when

cropping patterns which hitherto were

determined by agronomic conditions,

moved to being determined by market

orces. This in turn, marked a shit

rom subsistence arming to that o

cash cropping. This has led to several

emerging trends which characterized the

last decade o the 20th century and rst

decade o this century.

The movement rom being just ood

crops to cash crops and then cropping

based out o market and consumer

demand has brought interesting trendsin this sector.

Movement rom Agriculture to Agri business

Agriculture or a long time has been associated only with

arming. For a long time, a strange belie has existed,that arming is not a business and armers can never be

businessmen. However this mind set is changing. With

the decline in cultivation and trade o traditional ood

crops and non ood / horticulture gaining prominence,

agriculture is no more about arming only. It has evolved to

Farming, Processing and Preserving beore it reaches the

rst level o intermediaries. The evolution o organized

retail has not just spruced the supply chain but has made

the entire chain agile and nimble. The increasing afuence

has led to changes in the consumption pattern o people.

This in turn adds enormous pressure on the sector tovalue-add their oering and adopt technology just like

any other industry. The trend is encouraging, yet there is

a signicant distance to be covered on the processing and

logistics ront to truly become an ecient sector.

Corporate involvement through Contract Farming

Indian Inc has been in the oreront in acquiring lands

or arming in Arican countries. The legal ramework in

India does not permit such direct participation. However

corporates have been investing in the sector actively

through contract arming. The changes brought tothe APMC Act by several states have also provided

an impetus or the adoption o contract arming.

One o the pioneers in this area has been PepsiCo when

it initiated contract arming or sourcing tomatoes in

Punjab. Contract arming has enabled armers to access

better seeds, adopt better arming techniques, improve

yield and also get an assured market and price. In turn

companies have beneted by getting consistent quality

o supplies. Contract arming today has grown leaps and

bounds with many giants turning to contract armingacross dierent crops ranging rom potatoes, basmati

rice, cotton, wheat, soyabean to name a ew. The biggest

challenge in Agri business was the access to capital

and the absence o recourse to armers when there was

EMERGING

TRENDS ININDIANAGRI BUSINESS



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crop ailure. Today the model has come o age. Financial

institutions like ICICI have partnered with Unilever and

other contractors in providing access to capital orcontract armers. Weather based insurance products have

also come into play to prevent loss due to crop ailure.

There is a fip side to contract arming as armers

are dependent on contractors and produce only non

local crops. Hence there is a danger o a lopsided crop

pattern. However given the need or rapid improvement

in productivity, contract arming is indeed a must or

the growth o the sector as well as or the rest o the

economy.

Inormation technology enabling a smart armer

Inormation & communication technology has enabled

the armers on two ronts - Risk reduction and Price

maximization. Weather updates and orecasts have

enabled armers to plan their sowing accordingly. The

critical inormation on the correct market price enables

armers to get the right price and not be completely

dependent on the intermediaries. Some solution providers

have also been able to provide guidance on uture pricing

based on global trends. This has taken the arming

community one step urther to critical decision making

on selling and thereby not alling victim to price all.

The pioneering and most prominent success story o

harnessing inormation technology to build a arming

community network at a large scale can be attributed to

the ITC e-choupal initiative. Today, this initiative is spread

across 15 states, touching the lives o over 4 million

armers. Much o the success o e-choupal can be

attributed to the act that it is not just a pure play IT

solution but was backed by strong physical inrastructure.

It cannot be denied that this initiative opened up the

arming community to adopt inormation technology or

a mutually beneting relationship.

Mobile telephony now touches the lives o more than

two thirds o India. With the advent o smart phones, the

next generation o technology adoption has come o ageand is in turn leading to smart arming. An initiative o

Thomson Reuter Group - Reuters Market Light (RML),

was rst piloted in Vidharba in 2007, as a proessional

content service or armers. For an annual subscription

ee o `800, armers receive daily weather updates as

well as personalized content. RML equips the armers

with market intelligence and keeps them updated on

prices o dierent markets to help them understand

broader current trends and uture projections. From a ew

thousand subscribers who received the service ree o

cost during a test-run in 2007, RML today reaches 250,000armers in 13 states, signalling a staggering growth driven

by greater rural consumer interest.

With the growth o value-added services, mobile phone

companies have also dived in to provide value added

services to the arming sector. Bharti Airtel, in June this

year added a new value added service geared toward

rural India. Called Behtar Zindagi; the interactive voice

response service was rolled out rst in Rajasthan.

At INR 30 per month, the operators Behtar Zindagi

service is ocused on arming and allied communities.

It allows customers to receive various data on their

mobile phones, including weather updates, market rates,

live stocks, agriculture, sheries, health, education and

nance. The service is powered by Handygo, an India -

based wireless services provider specializing in mobile

entertainment. Handygo has worked with various private

and government bodies to collate relevant inormation and

disseminate the data to armers.

The service is available 24/7, supports several dialects and

is available in Hindi and 17 other regional languages.



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Other corporate entities like TCS have

piloted mkrishi - a personalized and

integrated service in the local languageto armers on their mobile phones.

Farmers in remote areas will be able to

connect to their stakeholders, access

good quality agricultural inputs, nd

advice on arming practices, and get

inormation on market prices, weather,

and other essentials or improving yields.

While providing inormation on weather

and market prices tops the chart, there

have been other initiatives which are

utilitarian. There has been a glut in

services which allow armers to use

mobile phones to remotely monitor and

switch on irrigation pumps used or

watering crops in remote locations.

Rise o Organic Farming

The green revolution might have

propelled India to move towards sel

suciency, but there have been several

unavorable consequences which are

being experienced now. The emphasis

on increasing productivity has resulted

in deterioration o soil health. The

mounting ertilizer subsidy itsel is also a

case in point that all is not well with that

ormula or increasing productivity.

Organic arming has been an answer to

getting back to a process o cultivation

o agriculture naturally. It helps in

the reduction o synthetic ertilizers,

avoids building up o those substances

in the soil and in turn creates a

balanced ecological chain that ensures

sustainable, eco riendly and pollution

ree environment. Awareness has been increasing

about the ill eects o synthetic ertilizers and the bio

amplication o it, which in turn has translated intoincreasing demand or the organic products.

However, there are two essential derailers to the rapid

adoption o organic products. Given that armers in India

have very small land holdings, their ability to adopt the

usage o bio ertilizers and judicially use it to reap good

results has so ar been low. On the consumer ront, urban

consumers have high awareness o organic method o

cultivation and do aspire to buy organic products. But are

they willing to pay or that? Sadly, No. The demand side

is still weak. Consumers like to have organic ood but are

not willing to pay a premium or it.

It is hoped that in the near uture there will be much

more rapid adoption o organic arming. As agri retailing

becomes more entrenched with organized players coming

in, there is ample scope or improvement in the demand

or organic products. This in turn will acilitate technology

transer and will boost adoption o organic arming at a

much larger scale than what it is now.

The road ahead

As they say We live in interesting times. Indian agri

business culture has been seeped in the middle ages, with

lack o inormation and market being a key impediment

to its development. There have been small steps taken to

move to a transparent market mechanism. It is hoped that

this eort will only go up in the days to come. However

with monsoon vagaries continuing to haunt the Indian

armer, there is a paramount need to manage water.

The next wave o innovation needs to address the issue o

water management. Another area o interest will be that

o adopting bio technology. Barring Bt. Cotton, India has

not moved orward. While there are pros and cons to that

debate, it will be interesting to see some concrete action

on that ront.



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BRANDINGAGRI BUSINESSCreating brandsrom commodities

Arecent study has revealed that, there is a shit in theconsumption pattern rom cereals to value-addedcommodities owing to the change in dietary habits, socioeconomic and socio demographic actors. As consumers

income rises, demand becomes more discriminating,

i.e. wider variety and higher quality are sought. It is

believed that the share o value-added products in ood

consumption would reach 50% by 2015.

However, the majority o agri products in India are sold

to the market as commodities with very little value

addition. In the current situation, it is no longer sucient

or agri business to continue ocussing on productivityimprovement. It is important that agri businesses adopt

strategic planning models that address the development

o strong brands, a unique selling proposition, the

ormation o close relationships throughout the supply

chain and the development o market orientation.

Commodity Vs Brand

Kotler and Keller (2006) dene a commodity as a product

that is presumably so basic that it cannot be physically

dierentiated in the minds o the consumer. HoweverTheodore Levitt (1980) in his classic article titled,

Marketing Success Through Dierentiation - o Anything,

states There is no such thing as a commodity. All goods

and services are dierentiable.

At Vertebrand, we believe that A brand is dened as a

bundle o unctional benets and added emotional values

that some people value enough to buy into repeatedly.

A brand gives an identity to a commodity and desirability

to purchase. Not only does it help in quality assurance,

but also product repurchases have been allied with good

quality branded products thereby increasing loyalty among

the customers. In essence, a brand is the tool to create a

sustainable competitive advantage.

Why branding is important

Proper branding o products ensures that the armers/

producers receive prices o their products according to

their quality. Branding is an incentive to improve quality.

It also saeguards consumers against adulteration.

Branding narrows the gap between the producer price

and the consumer price. Branding creates a avourable

position in the consumers mind and hence the

willingness to pay a premium. Empirical studies indicateconsumers willingness to pay at least a 10% premium on

branded agri products over commodities. Branding is a

means to create a loyal consumer ollowing who is ready

to buy your product repeatedly, thereby giving an edge over

competition.

Branding Agri business

A brand is a mix o both unctional and emotional

attributes and hence it is necessary to look at the

business not just rom a pure product basis. Agri businessis no dierent rom other industries in the eorts required

to build a brand. Brand creation needs to necessarily

go through the ritual o Mapping consumer needs,

Market segmentation, Product dierentiation and Brand

communication. However, there is a signicant challenge

in this business. The nature and size o arm holdings

which are small and heterogeneous means that scale is

not possible and hence individual arm owners will not

have the wherewithal to create brands. Also product-

led innovation is dicult and again, will not achieveeconomies o scale easily. Creating an agri business is

raught with challenges, but there is a method to the

madness.



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Core product packaged well

In many agri products, the opportunity

or real product dierentiation is verylow. However, consumers have a very

strong need or saety given the threat

o adulteration and poor consistency in

the quality o produce. Brands typically

start o with oering a packaged product

which sae-guards consumers rom

adulteration and also meeting a certain

basic product quality. Typically, staples

like rice and pulses start o with this

route, promising customers a certainminimum assured quality. However, the

opportunity to charge price premium is

minimal over unbranded commodities.

In most situations, the brand owner

isnt the agri product producer but an

intermediary.

Augmented product oering

Evolution o ood processing technologies

along with Farm to Fork concept has nowgiven the opportunity to provide added

value to the core product, which can

be used as a signicant dierentiator.

A brand needs to give assurance o

certain quality and consistent product

innovations which new technologies in

ood processing enable. For example,

long grain rice or unpolished dal with

long shel lie are examples o oerings

which have ound signicant consumeracceptance.

Value added products or discerning consumer need

Organic arming and Specialty agri produce are some

o the ways to create a dierentiated product oeringand in turn create brands which command much higher

premium pricing. Typically, there is a partnership

between the armer and brand owner to create such

dierentiated products which are high up on the value

chain. In such cases, the rst mover has the biggest

advantage as they create a need or a certain category

o products in the consumers mind. Along with product

innovation, investment on brand building is essential to

sustain the branding eort. Otherwise, the advantage o

a dierentiated product is lost with competition crowdingin. For example, special rice or diabetics, ortied milk,

oil etc. all into this category. Over time, every agri brand

needs to nd a real dierentiator to stay in this space, or

else the advantage o pricing will be lost.

Retail Brands

Organized retail has been at the ore ront in adding

value to agri products. While branding the source (arm)

is not easy, branding at the point o sale has been a

way o creating brands. While store brands in manymanuacturing categories are considered inerior to

producer brands, in agri business store brands are seen

as that o superior quality. Almost 60% o organized retail

chain businesses are rom ood and related items. With

changes in the APMC Act & FDI in retail, the uture will

see a more direct relationship between arm and store.

Retail branding is then expected to pick up.

GI as a brand building tool

Geographical Indicator is an indication; it originates roma denite geographical territory, and it is used to identiy

agricultural, natural or manuactured goods. GI is similar



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to trademarks except that they point to the place o origin

and not to the owner o the goods. World over, GI has been

eectively used or agri products especially with relevanceto export markets.

GI is applicable or Agricultural/Horticulture products that

have qualities derived rom their place o production and

are infuenced by specic local actors, such as climate,

type o soil, altitude, etc. Some criteria which are essential

to meet GI registration are

Producearedistincteco-typeswithmanyappreciable

eatures.

Producehavebeenundercultivationforalongtime.Producewithstronglocalreorganizationand

commercial impact in the zone o their cultivation.

Noindividualororganizationhasclaimedownershipof

these crops.

Thelocalcommunitieshaverecognizedsuchcropsas

heritage crops.

While much o the evidence surrounding the dollar

benets derived rom GI branding is anecdotal, some

empirical research has shown that geographic origin

plays a key role in consumer decisions, including

willingness to pay a higher price or regionally branded

ood products. For example, researchers have ound that

geographic location is an important component o wine

pricing as well as ood products, such as bee and resh

produce.

While GI can be an eective tool or dierentiation,

an eective marketing program is a must to take the

message across to the consumer. This is challenging,especially or developing countries which have an inherent

imagery disadvantage. The producer boards which till now

Some of the GI registered

agri products

BasmatiRice

DarjeelingTea

AssamTea

NilgiriTea

GoaFeniMalabarPepper

KeralaCardamom


have ocused on productivity and product improvement,

need to reorient themselves towards building the brand.

Historically, the ocus o agri business has been to remain

protable by minimizing costs (improving productivity).

Today, an increasing number o agricultural producers

are examining how to increase prot through product

dierentiation. GI branding, in conjunction with an

eective marketing program, can help agricultural

producers and processors develop more protable

operations.


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AROUND

THE WORLD-SuccessulAgri businessbranding stories

Abrand gives an identity to acommodity and desirability topurchase. Not only does it help in qualityassurance, but also repurchases have

oten been allied with good qualitybranded products, thereby increasing

loyalty among the customers. Majorityo agri products in India are sold to

the market as commodities. Howeverincreasingly it is observed that there

is greater opportunity to make protsby selling branded produce. Branding

eorts in agri business in India owe theirgenesis to Basmati rice and since then

has been extended to Darjeeling tea andother products.

These eorts though, are minuscule

compared to the opportunity available.While the domestic market is raught

with its own unique challenges,branding is the need o the hour in the

export market. Branding is the way ordeveloping countries to be a orce o

reckoning in the global ood economy.Typically, agri produce branding has

been linked to the geographical regionswhere they are grown. Think o cheese

and wine rom France which carriesthe appellation dorigine contrle

certicate and the prestige that itenjoys. However, developing countries

like India are at a disadvantage. Productsrom developing countries are always

viewed with suspicion and a higherdiscount is expected by consumers in

the developed world. However globally,

there has been success demonstrated bydeveloping countries in creating strongagri brands

Brazil- Viva Tango

Brazil has one o the top rated agri branding programs.

Not only has Brazilian coee been promoted extensively,but also branding programs have been in existence- Brazilian ruit, Brazilian chicken and even Brazilian

Lobster tail! Brazil holds seven percent o the worldsagricultural commodity market and is the worlds third-

biggest exporter o agricultural products. Agricultureis the most globalized sector o the Brazilian economy,

accounting or 25 percent o GDP and 36 percent oexports. Brazil is the worlds leading exporter o: red meat

(24 percent o the total), chicken (39 percent o the total),sugar, alcohol, orange juice, coee and tobacco.

Part o BRAZILIANS success can also be attributed totheir acumen in market selection. Brazils ocus or exportis not the US or EU where they ace trade road blocks, but

the other developing countries. They understood that thegreatest potential or growth in ood and agricultural trade

is among developing countries due to the large populationand the rising income growth. Now Russia is the main

buyer o Brazilian pork while Egypt is the main importer oBrazilian resh bee and China is the biggest importer o

Brazilian soy beans.

Brazil has ollowed a strategy o diversication,

globalization and brand dierentiation, thereby reinventingBrazilian agricultural produce. The country today is seen

as a producer o many high-quality products.

Colombia- Rebranding a nation

A well thought-out branding program or agri producewill do a great deal in even building the country brand.

Perhaps the best example would be Colombia coee.Colombia or a long time was synonymous with crime and

narco terrorism until the Colombia coee program camealong.

Similar to BRAZILS branding eorts, Colombias coeegrowers ederation took the initiative and started buildinga brand or their product back in 1959. They created the

strategy that built recognition and distinction or 100percent Colombia coee. The aim was to emphasize



14/103

coees origins, on the same lines as Bordeaux or wine.It was successul too. Although it only grows about a

quarter o Brazils coee harvest, it is Colombias coeethat has the reputation or quality.

Perhaps that has been the only positive thing about the

country and it has changed the overall impression o thenation itsel!

Experience, across the world, indicates that aggregation

and quality is a precursor to branding agri business.

BRASMAR -

Lobster tail turns gold

The story o Brazilian Lobster tail is a case in

point. Interbras is an export promotions board setup by the Brazilian government in 1976. One o its

most successul ventures has been to organize thecollective marketing and branding o lobster tails.

Interbras recognized the opportunity to increaseBrazils penetration o the large US market or lobster

tails. They set about organizing the shermen in sucha way, as to ensure reliable supplies and to develop

a strong brand identity. Interbras was initially able toconvince about 50 percent o the shermen to give

them exclusive rights to export their lobster tailsto the US. In return, Interbras gave them a better

margin than the shermen had been getting throughthe importers. Interbras oered a rm price to both

the shermen and to the brokers and in each casethat price was guaranteed or a three month period.

Moreover, whenever Interbras exceeded its targetmargin, surplus prots were channeled back to the

shermen.

Subsequently, Brazilian Seaood Marketing Associates

(Brasmar) was ormed. Brazilian lobsters were

packed in good quality cartons bearing the Brasmarlabel giving the product a single brand identity. Theproduct was promoted on its quality attributes and

so, was positioned as a direct competitor to SouthArican lobsters. A rigorous quality control systemwas instituted to ensure that the brand image was

sustained. Suppliers who consistently ailed to meetthe quality standards set by Interbras were ultimately

excluded rom the scheme.

As or the South Arican product, restaurateurs are

the principal buyers o Brazilian lobsters. Brasmarrecognized that in addition to reliability o quality, the

restaurants were concerned about portion control

and were thereore interested in buying a product ouniorm size. Interbras developed a grading systemwith 14 size categories instead o the 6 category

system used by others. This augmentation o theirproduct was well-received by buyers who could

then purchase a carton o lobsters, knowing that itcontained lobsters o uniorm size.

The success o Brasmar can be measured in anumber o ways. Perhaps the most important o these

is that 8590 percent o Brazils lobster shermennow collectively market through Brasmar and the

organization is able to claim that their marketingsystem brought US$6 million more into the country

than did the system it largely displaced.

Source: FAO corporate documentation repository


Geographical indicator is a great tool or branding agriproduce. Till recently, about 31 agriculture products

including Darjeeling tea and Alphonso mango have gotGI registration. Currently, the action related to GI appears

concentrated on the registration o GI goods and has notmade any headway in adoption o strategies or branding

and promotion o GI products as well as their marketingand distribution in both domestic and export markets. It

needs to be noted that GI coupled with eective marketingcan mean greater prots to the local producers.


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CHALLENGES INBRANDINGAGRI BUSINESSES

Why is it in a country like Indiawhich produces huge quantitieso agricultural products, there exists avoluminous gap between proportion o

branded and unbranded products? In

a market where commodities like rice,

pulses, ruits and vegetables are bought

by visually and physically assessing the

quality, establishing a brand is a colossal

challenge.

The act o the matter is that export

opportunities have contributedsignicantly to the eld o agri-branding.

For example, the overseas market or

basmati rice gave an impetus to the rice

producers and marketers in India to sell

branded basmati rice. On the domestic

ront, the basmati and non basmati rice

varieties are made available in various

branded package variants suitable to

consumer preerences. Similar is the

case with pulses which is in nascentstages.

Although commodities like Basmati Rice

and Darjeeling Tea are well known and

have a huge market overseas, the need

o the hour is to look beyond to branding

o such commodities with signicant

export value and look at developing

brands in the domestic ront

So what prevents the wide prevalence o

branding? Currently the branding eorts

in India or agri products are driven by

the ood processing and organized retail industry only.

While organized retail has been growing, its contribution

is still in single digits. Hence, vast majority o Indiacontinues to buy only unbranded agri produce.

Key Challenges which impede branding

Value-Seeking Indian Consumer

The value conscious Indian consumer is always on the

lookout or the lowest price. The perception that branded

products are costly is deeply rooted in the Indian psyche.

To many consumers, a branded product still means a

product with an attractive label rather than an assuranceo quality.

The great Indian retailer

India has been a land o Shopkeepers. Indian retailers

enjoy high trust quotient by virtue o their superior service

and relationship with their customers. This in turn means

consumers trust the retailers choice implicitly and hence

do not eel the need or branded products. However, this

trend has been changing with increasing awareness about

various products. Retail consolidation has also been aprime mover in the picking up o branding eorts in agri

produce.

Scalability Challenge

A brand needs to stand or something to someone. The

heterogeneity o the Indian population in turn means

extensive localization and hence becomes unviable or

making investment towards building a brand across a

large geography. Only players with deep pockets have the

capabilities to invest and build a brand. Since the verynature o agri business is oriented towards supplying

to the local community at large, branding eorts are

sporadic.



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Market Structure

The system o aggregation or arm produce (Mandi)

by itsel is against branding. This method strives toconsolidate without any allusion to the source and hence

wipes out any opportunity or dierentiation at the rst

point o sale. It does not incentivize armers to provide a

much superior produce and charge premium accordingly.

This in turn goes against the grain o branding.

Poor Farmer Awareness

The average holding in India is way too small or any

armer to make eorts towards branding. Although dairy

has seen the co-operative movement being successulin creating great brands like AMUL, there have been no

concrete eorts in other spheres o agri products. The

arming community in India is still caught up on eorts to

sell and does not have the awareness o the relative merit

o branding.

The Way Ahead

It is only a matter o time beore the challenges are

overcome. What are the ways to overcome this branding

conundrum?

Quality First

Cheap&bestpossiblyexistsonlyintheIndianlexicon.

However, increasingly people are realising that both

cannot always exist together. Continuous eort needs

to be put on highlighting the superior quality o branded

produce.o Visual dierentiation is a key method o highlighting

quality. For example, when branded sugar came into

vogue, very clear communication about how the sugar

is whiter and uniorm in crystal size was highlighted.

Dont undermine value - seeking

Indianconsumerscannotbedivorcedfromseeking

value. Use any scope o dierentiation to highlight

superior value to customers.

o For example, long or rounded grains can be

highlighted to prove that less quantity is required or

cooking.

Dont scare consumers

Oneofthestrategiesadoptedmanytimesbybrandsis

to scare consumers about adulteration in unbranded

commodities. That is not a good way to build a good agri

brand. It might give temporary results. However, it does

not add any value to the brand in question.



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DOWN TO

EARTH -Young Indiaorays intoagri business

Agri business today employs about52% o the Indian population.However, there has been large scale ruralto urban migration. People take up agri

business not by volition but more because

it has been their amily tradition or

because that is the only proession they

can take up.

Recently, the wind o change has been

blowing in this direction with a chunk

o educated proessionals taking up

agri business with gusto. Thanks to

the economic slowdown and all-out o

countries, educated youth are realizing

the importance and prospects o agri

business and are exploring new avenues

in this eld. Agri business is one sector

that will stay or long - till the survival

o mankind. Young entrepreneurs

are realizing this act. Even when the

economy is shattered, people need ood

to eat.

Any business, i it has to attract new

people, needs to provide intellectual

stimulation and nancial rewards.

Its the same in agri business as well.

Floriculture and Horticulture have been

at the oreront o attracting new-age

entrepreneurs.

Down to earth - What do youngsters

bring to the table?The risk appetite o these new-age

entrepreneurs is denitely more - hence

the ability to experiment with crops which have a high

export potential has been a trend. We have witnessed the

eorts made by a 28 year old entrepreneur Mr. Rahul Galawho has successully cultivated the Iraqi Bari Dates in

Gujarat, which have a very lucrative market abroad.

Todays youth are also willing to adopt technology.

A complete wave o computerization has taken place in

some arms, and technology is used to such an extent that

a click on the computer will irrigate and ertilise the entire

land as per requirements!

Emergence o a new service engagement with the

young entrepreneurs, has given rise to a completely new

service industry o supporting the arming initiative with

Know how. A successul revenue model which works on

providing a one-stop solution on key arming inormation

has created a new service business stream.

Getting the youth to the earth - the need of the hour

India has 60% o its population below the age o 30.

A robust economic growth is achieved only i this youth

population is gainully employed and agri business doesprovide the impetus. Initiatives have already been rolled

out by various governments. For example in Kashmir,

foriculture by youth is actively promoted as a means to

combat even terrorism. A sustained eort o this nature

needs to be done across the country.

Educating the youth-The agri education system needs a

bigger impetus to reach out to more youth and educate

them on practices leading to better revenue generation.

This is absolutely critical to gainully engage the youth and

bring them back to working on the ground.



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EXPERT SPEAK-Mr. Prabhakar Rao, ManagingDirector, Nuziveedu Seeds Ltd.,speaks on the challengesand uture o Agribusiness

Mr. M. Prabhakar Rao is the

Visionary Chairman o the NSLGroup and the Managing Director

o Nuziveedu Seeds Limited.

Hailing rom an agricultural amily,

Mr. M. Prabhakar Rao is a post

graduate in agriculture and has

nurtured Nuziveedu Seeds to

become the countrys largest seed

manuacturer and the dominant

player o Bt. Cotton seeds. Today,

Nuziveedu seeds is recognized as a

leading Bio-Agri company o India.Apart rom seeds, the group has

also diversied into several sectors

like Renewable Power, Textiles,

Integrated Sugar Factories and IT

Inrastructure.

In this exclusive interview, he talks

to Vertebrand about the boon and

bane o the agri sector.

The contribution o agriculture to GDP

has been steadily declining. The general

impression seems to be that the uture

growth prospects or this sector are

weak. On the other side there are a

billion mouths to be ed. What is your

opinion on the uture growth prospects

o this sector?

The Contribution o Agriculture to GDPis certainly declining. This is natural

when other areas like manuacturing

& services start to grow and hence

contribute more to the GDP. However,

The role o government in this industry is very important.

Yet the general eeling is that reorms are signicantly

pending in the sector. What are the signicant reorms

you think need immediate priority and attention?

Iagree that Government intervention and role is very highin this sector and there is an urgent call or reorms.On the policy ront, we urgently need a well thought-out

policy on genetically modied crops. There needs to beadequate sae-guards, but in the larger interest o the

people, we need to adopt GM crops soon.

We need signicant changes on the policy or subsidies

or agri inputs. It is paramount that the benet needs

to reach the armers directly. Currently, this is being

partly implemented and we need a whole-hearted

implementation going orward.

Beyond raming policies, there is a larger government role

in building rural inrastructure. With Indian agriculture

being dependent on monsoon, we need better irrigation

acilities. Point to note is that we already have a low

cropping intensity (i.e. area under cultivation as against

available area). Hence, it is important that priority is given

to improve the availability o water supply.

absolute growth in this sector cannot be compromised.

In a country where about 60% o the population is engaged

in agriculture and related occupation, it is importantthat society inequalities do not crop up and growth is

maintained in this sector.

I strongly believe that 4% growth is possible i we ensure

that productivity is enhanced rom the current levels

and that is possible by virtue o bringing in technological

innovations, extensive education to the armers and

developing a strong linkage between armers and markets

Yes, Agriculture can continue to make a healthy

contribution to GDP and can grow at modest levels,

provided right measures are taken.



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Inormation technology has been a game changer in

many sectors. What do you think will be the role o IT in

transorming agri business?

IT is now an essential part o any business. A key area will

be the availability o real-time inormation. Inormation

about market prices and trends to armers will certainlyenhance their decision making capabilities. At a larger

level, inormation on global commodity trends and

innovations across the world will positively transorm the

industry. There is no doubt that inormation will play a key

role in connecting the armers to the world.

Apart rom BT cotton there seems to be no urther roll

out o GM seeds. Do you see any uture or GM seeds

getting into India?

I believe that adopting GM traits in all crops will improveproductivity, reduce losses and also improve the quality

o output, thereby making agriculture protable.

However this is an area which needs the consensus o all

stakeholders. As told in an earlier question there is a need

or a well thought-out policy.

To start with, we need robust and transparent regulatory

mechanisms to roll out GM crops. This must be ollowed

by extensive education programs to general public on the

saety o GM oods. There is no doubt that India needs GM

crops.

In your line o business i.e. Seed industry, what do you

see as the signicant challenge in the coming years?

Currently, the agri sector is plagued with issues o low

productivity due to poor agronomic practices in the

context o constant arable land and increasing demand or

grain and bre. Hence, it has become imperative or the

industry and government to enhance yield per unit o land.

To accomplish that, there needs to be signicant

investments in R&D and technology. We also have too

many regulatory challenges. A number o legislations

are involved right rom Seed Act; PPV & FR Act; EPA;

Essential Commodities Act; State Cotton Control Acts;

Biodiversity Act etc. to name a ew. There needs to be

concrete eort by the government to rationalize the

controls. Unless it is done, R&D and its adoption will be

stifed. The uncertainty in GM ood crops is a dampener.


Warehousing acilities and Connectivity to Market need to

be signicantly improved. Government should champion

PPP model in this area.

Government needs to incentivize R&D to bring out

innovative products.

With rising afuence o consumers, a signicant change

in the dietary pattern is experienced. What is your

prediction o the consumption which is expected? In act,

price rise o dals has been attributed to the increasing

consumption o protein rich ood by Indians. Do you see

any such uture trends in ood consumption in India?

It is true that the rising income o the population has led

to changes in the dietary pattern o people. The increasein demand or ne rice, vegetable/ruits, eggs and meat

clearly indicates this trend. In act, ruits & vegetableshave registered signicant growth not just in India but

in all developing countries with the demand growthoutpacing the production growth.

Along with the increasing consumption o eggs and

chicken, the demand or maize grain has also increased.

Thereby, an increase in demand or maize hybrid seedis seen. As a seed manuacturer, we need to takeconsonance o such trends.


21/103

There is a lot o buzz about Organic

arming. Do you think it will be a

sustainable movement and what will beits uture in India?

I dont think we are ready or organicarming on a large scale. Our task is cut

out - We have one o the lowest levels oagricultural productivity and that should

be improved to match at least the globalaverage. Once we attain that standard, we

may look at high-value agriculture. Fornow, it is not a priority area.

I multi brand retail FDI becomes a

reality, how will the ace o Indian agri

business change?

Allowing Foreign Direct Investment

in multi brand retail will benet thearmers. In act, both the armers and

retailers may benet by avoiding themiddle men. Lets wait & watch.

Indian corporate sector has made signicant acquisition

o arms in Arican countries. Do you see this

corporatization o arming ever happening in India?Many corporates have initiated arming related activities in

Arica. One has to wait or some more time to understandtheir success. I have no doubt that Arica is going to be the

ood bowl or the world in the uture. The basic dierencebetween Arica and India is the availability o large tracts

o land in Arica, which is not so in India. Within thenatural limits o our agriculture (like dependence on

rain), we can grow only to a limited extent and hence amdoubtul about this.

There seems to be a trend o many youngsters returning

to arming. What will be your advice to the budding

entrepreneurs in the agri business space?

Till recently, the rural young have been shying away

rom agriculture. I am not aware i there is a large trendo youngsters turning back to agriculture rather than

turning their back on agriculture. However I it is true thatyoungsters are returning to this sector, it is the best thing

that can happen to Indian Agriculture and I wish them thevery best!



22/103

THE EDITORIAL TEAM

Aparna Lakshmi (Chief Editor)Aparna Lakshmi is the Head o CorporateCommunication and Knowledge Management at

Vertebrand. Her sectoral interests includes oods andconsumer goods.

Syed HaqueSyed Haque is an Associate Vice President atVertebrand and leads the Research and StrategyDevelopment domain. In addition to businessstrategy and consumer research, Syed is also aspecialist in supply chain management.

Richa ChhabraRicha Chhabra is an associate and part o thebusiness development team at Vertebrand. Herinterests lie in tracking consumer patterns andbehavioral trends.

Karthik SunkaraKarthik Sunkara is an associate and part o the mainbusiness development team at Vertebrand. His areao interest is digital marketing.



23/103

ABOUT VERTEBRAND

Vertebrand is Indias premier Brand Equity Management partnership. We take

turnkey accountability or managing brand equity o products and services on an

outsourced basis and help entrepreneurs take ideas rom mind-to-market.

Occupying the hitherto-vacant space between Management Consultancies on the

one hand and typical Communication and Design rms on the other, Vertebrand

adopts a 360 perspective towards enhancing the business-stakeholder connect,

across all touch-points.

Vertebrand oers a comprehensive array o services spanning the science o

building & managing Brand equity. We have handled dozens o prestigious

assignments across sectors, assisting clients in New Product launches,

Channel Structuring & building, Internal Brand Alignment of employees,

Brand Architecture & Positioning, Corporate Identity Creation as well as Brand

Valuations.

Our expertise spans several industry verticals rom Foods to Fertilizers, Consumer

Goods to Chemicals, Automobiles to Apparel, et al.

Our scientic & proprietary consulting tools are deployed by a team o over 35

consultants with deep-domain Sales & Marketing experience across various

industry sectors.

Vertebrand is todays Indias largest single-window brand-building partnership.

Headquartered in Bangalore, the company has ull-service oces across Delhi,

Mumbai, Chennai & Kolkata.

Most recently, Vertebrand was chosen as the global alliance partner and the

exclusive Asia-Pacic licensee o Equancy International(www.equancy.com ),a premier Digital & Strategic Marketing global consultancy with a network

spanning Paris, New York & Shanghai. Vertebrand & Equancy collaborate actively

in knowledge-sharing & cross-border assignment-handling.

For more details, do visit us at www.vertebrand.com

For business enquiries, contact us at: [email protected]



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Vertebrand Management Consulting Pvt Ltd, No. 119, 1st Cross, 2nd Main, HAL 3rd Stage, Indiranagar, Bengaluru - 560 075, India.T+ 91 80 2521 0277-79 F +91 80 2521 0280 www.vertebrand.com

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V-thought- A Knowledge Initiative by Vertebrand

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