Friday, January 30, 2004

Kellogg, Cereal, and Women in Uniform, kinda.

"All the required elements of your application are complete".

Finally ! I logged into the Kellogg status check website and was greeted with this change of status message. It's nice to see some action on this front even though this one doesn't mean much. The app is not going to be sent for review until after my interview and i am interviewing almost at the end so there's going to be a long wait for the result. I got back onto BW today :) and read that everyone gets an under-review email from HBS. I haven't heard from them, but I'm not stressing on HBS/MIT right now. Their interview invites will start trickling in starting 10 feb or so - according to the number-crunching gurus on the boards - so I'm going to take in the delightful chaos that is Bangalore until then.

I was walking by a small grocery store this morning on the way to work and noticed boxes of Kellogg's cereal on the shelves. Their story in India is very interesting. Kellogg's entered India in wake of its economic liberalization program in 1991. They had spent well over a decade trying to enter South American markets, especially Brazil, and had succeeded, and India was one of their next big markets. They setup a factory at Taloja, near Bombay, and went about trying to change Indian food habits. I grew up on breakfasts of idli-vada, upma and dosas, traditional south indian food. But, I remember clamoring for Kellogg's when it was launched. Everything American was awesome in those go-go days when our markets were opened up. Apparently there were many like me. Kellogg's did get off to a good start but over the years their sales growth rates have plateaued. People tried the new cereals, and went back to what they were used to. So, kellogg's introduced newer flavors - chocos, frosties - to keep the interest levels high. Unfortunately, I don't believe they really succeeded in getting Indian consumers habituated to eating cereal for breakfast on a regular basis. I think this is key in a business like theirs. If they did, their advertising dollars could be put to use towards new customer acquisition. Now, they were still trying to convince the same folks to buy the next box of cereal.

Around 1998, Kellogg's made a radical move - they entered the biscuits market, one of largest convenience food segments in India on the basis of volumes. Their cereals business would be a money-maker only in the longer term and they needed another growth area. The biscuits would be branded Chocos, thereby extending the brand umbrella. However, the biscuits business needed a completely new distribution chain and their intent, as I understand it, was to use this to push their cereals into new customer segments. The biscuits launch was followed by Cheez-It and Keebler in 2002. Unfortunately, these were unknown brands in India that needed investments to be nurtured. After a few years spent trying to become more of a convenience-foods company, Kellogg's India decided to pull out of all their non-cereal businesses and concentrate on their core competency, cereals, last July. It puts them back in a medium-growth category that's going to take a lot of time and effort to be profitable. Kellogg's has the deep pockets to stay in the game, but this episode is an example of the difficulties foreign companies face in bringing global brands to Indian shores.

My apologies for the long blog. It must be painfully clear by now that I am itching to get back to writing essays again ;-) On a final note, I saw something curious yesterday - a full-service gas station manned entirely by women. I should say I was a bit surprised. I haven't seen that before either in India or the US. The women were doing an excellent job handling the throngs of two, three, and four-wheelers. And, they had uniforms too.


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