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BW Businessworld

Book Extract: Southern Spice

After the 2007 takeover by Orkla, MTR invested over `100 crore in large-scale upgradation of infrastructure, IT, factories and other resources.

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MTR had grown at a rapid pace in India and had expanded into foreign markets as well. Global private equity firms and angel funds had invested in this company believing in its potential. However, by 2007, the company needed more capital to expand and Mr Maiya decided to bow out and look for investors who would take over the company in its entirety and expand the MTR empire. While many Indian and international companies showed interest, the final bid was taken forward by a Norwegian conglomerate, Orkla.

For Orkla, MTR was a perfect fit as it preferred to acquire companies with strong local heritage and a dominant market position. Unlike other multinational companies (MNC), Orkla has a unique multi-local model of operations. It believes that strong brands and powerful innovations are a fundamental pre-requisite for growth in a long-term outlook of sales and profitability. This synergy in philosophy and value systems was pivotal in Orkla’s acquisition of MTR.

After the 2007 takeover by Orkla, MTR invested over `100 crore in large-scale upgradation of infrastructure, IT, factories and other resources. There was renewed focus on brand building and marketing innovations. The brand architecture was redefined along formal categories and subcategories to ensure appropriate focus on innovation and accelerating growth. This acquisition opened up new opportunities in international products for MTR. However, staying true to its core equity as an Indian food brand, it was decided to maintain focus on the brand’s offering in this space and not dilute the equity by introducing western products.

In 2011, MTR acquired Rasoi Magic, a specialist in ready-to-cook meal mixes. This further broadened its already diverse product range as well as gave it a strong entry point into western and northern India, allowing it to take its pan-India plans to the next level. Rasoi Magic was a boutique company operating from 2000 out of Pune, largely in the west Indian markets of Maharashtra and Gujarat. While MTR was operating in the breakfast/dessert mixes market, there was a gap in its portfolio with regard to meal mixes which was filled with the acquisition of Rasoi Magic.

A deep human insight that defined the brand’s essence Post the Orkla acquisition, MTR started the process of reinventing itself. So after upgrading and modernizing infrastructure and professionalising management, the next obvious step was to accelerate growth.

MTR was a multi-category brand with a presence in eight-nine categories as diverse as spices and masalas at one end and ice creams at the other. But before new plans could be drawn up, it was important to take stock of brand MTR’s perception with its consumer. Research revealed that while the brand had extremely positive associations like innovation, quality and authenticity, it was also seen as a tad traditional.

The young consumer had different aspirations that the brand was not in tune with. A revealing insight was that today’s homemaker does not wish to spend more time than absolutely necessary in cooking as she is juggling more responsibilities than her mother ever did.

This new Indian woman is now actively looking for help to cut down on cooking time. However, at the same time she does not want to completely outsource cooking as she believes she is the custodian of her family’s health and well-being. She plays different roles—that of a nurturer who makes sure that every family member is equipped to do their best; that of a mood uplifter, who makes their worries vanish with delicious surprises; and that of an infuser of enthusiasm who breaks the monotony and predictability of life by making the family try out newer tastes.

Based on these insights, MTR’s role was articulated. MTR would be the friend in every kitchen by providing solutions to cut down the homemaker’s non-value adding effort (like soaking ingredients overnight or blending spices together). At the same time there would be ample scope for the housewife to add her own touches. In a way, the brand allowed her to cut down on the drudgery and concentrate on delighting her family.

The brand essence ‘Modern Crust, Authentic Core’ was coined and the new vision drawn up was: ‘To be an indispensable companion in every kitchen to help create authentic and delicious Indian food’. MTR’s brand strategy was to protect and preserve authentic Indian food while presenting it in a relatable modern format.

A portfolio strategy aligned to geographical preferences: Once there was clarity on the role of the brand in its consumer life, there was a need to have a portfolio strategy in place that would guide future product launches and innovation. In 2010, armed with a new marketing plan, MTR refreshed its proposition and packaging, and created what it named the three pillars of its category growth strategy. It was decided to focus on three categories: Spices and Masalas, Mixes and a whole new category, South Indian Snacks.

The portfolio strategy envisaged a clear role for each category. MTR’s rich experience in the foods business pointed to this truth that while tastes could travel, very deep investments would be required for them to become mainstream. At this stage, MTR preferred to dominate the categories and markets they entered. With breakfast mixes tastes would travel outside of their local strongholds and in spices, masalas they would stay with a regional strategy.

–  Mixes were an interesting category. From the consumer’s point of view there was no category called ‘mixes’ and hence the range was broken up into four sub-categories: Breakfast Mix, Sweet Mix, Health Drink Mix and Snacks Mix. Breakfast and sweet mixes were identified as the areas with most potential. Once Rasoi Magic was acquired, Meal Mix was added to this category.

–  The packaged breakfast revolution was starting in India with western breakfast options like cornflakes and oats gaining traction. It was seen that Indian consumers were looking for packaged solutions for breakfast and the only options available were western which were not a part of the traditional Indian food culture. Identifying this gap, MTR jumped in to provide an Indian alternative in packaged form for consumers who loved Indian breakfast options like idli, dosa and upma. ThusMTR aggressively marketed its break-fast options in places like the north and west of India which did not make the typical south Indian breakfast at home. Mixes, especially breakfast mixes were to be the pan-Indian face of MTR.

– Masalas’ role would be in adding value and, with its superior pounded masalas, the brand’s dominant position in Karnataka and Andhra Pradesh could be reinforced.

– Both spices and south Indian snacks were very regional in terms of the product promise (taste and range) and hence competing at regional level was a prudent strategy. As their presence was limited to the southern markets, activating the categories was easier as media strategy could be localized.

– It is also important to mention that RTE, which was an early success for MTR, was no longer seen as strategic. The RTE market in India had not developed with time and even after a whole decade was worth only `25 crore. From a consumer’s point of view it made little sense as the Indian homemaker was looking for intermediate help and not a replacement or a final solution for her cooking. Hence this category had become a special-use category for occasions when a consumer travelled to places where Indian food was not readily available. It was decided to keep the category ticking till such time as Indian consumers were ready to outsource their meals.

It is at this interesting cusp of tradition and modernity that MTR stands today, straddling worlds of yesterday, today and tomorrow with equal ease.

The path to success
There are many lessons MTR has learned on its journey. There is a constant need to reinvent and recalibrate to cater to the ever-changing needs of the consumer. Today, MTR is a leader in terms of market share in breakfast mixes, sweet mixes, RTE and meal mixes nationally; and masalas and spices in Karnataka, with a very strong No. 2 position in Andhra Pradesh. MTR is already gearing up for future needs of its audience, at the same time looking to grow the size of the constituency.

Riding the packages revolution wave, powered by sharp insights into the Indian consumer.
When MTR classified its mixes as Breakfast Mixes, the category saw a huge jump. In the Indian breakfast options, MTR is the largest player. In fact, the brand found traction in households in the north and west where south Indian breakfast options were loved but not regularly prepared as the method of preparation was not known.

The results from this marketing strategy have been impressive. Company growth, which had been around 12–15 per cent for a decade or so started to grow at an impressive rate of 20 per cent plus year-on-year since the relaunch in 2010. The category strategy paid off handsomely. Earlier a flat growth category, breakfast mixes have been growing at 30–35 per cent year-on-year over the last four years. South Indian snacks, currently being tested in Karnataka, have been a success and the Masalas category continues to deliver a strong performance consistently.

Reinventing for the health-conscious Indian
Consumer health studies that were undertaken revealed that Indians are far more health conscious than most of their global counterparts. They think diet and nutrition are key to creating a feeling of well-being. With the rise in offerings like multigrains and oats in various product formats, MTR launched the innovation of blending different grains and oats in its south Indian breakfast mixes to create products like oats idli, ragi dosa and multigrain dosas.

In addition to these breakfast innovations, MTR decided to extend its expertise in the spice mix category and fill the gaps in the biggest masala market in south India—Tamil Nadu. The rich authentic cuisine of Tamil Nadu seemed to be losing out to products which were cheaper and used low-cost ingredients. Hence a range of superior masalas especially formulated to revive the authentic Tamil Nadu taste was launched. MTR has learned from its past successes that while some new launches will become runaway successes others are a medium- to long-term investment.

As the company continues to modernize yet hold on to its authentic core, such new offerings will build aspiration around the brand in a manner that MTR desires, and consolidate the brand’s shares across categories and markets.

The secret ingredient in MTR’s success
What does brand MTR stand for? All legacy brands boast of some timeless values. There is trust that brands can earn only through longevity. And then there are other values that were once the founder’s philosophy and then became a part of the brand’s DNA. Quality and authenticity are two such values. But for a brand to survive fickle consumer preferences, changing lifestyles and competitive challenges, ‘innovation’ is key. In keeping with this, innovation has been part of brand MTR’s DNA from its very birth as Brahmin Coffee House. However, while the identity and perception of the brand may have changed to keep pace with the times, the soul of the brand—its authenticity, purity and culinary expertise—remains unchanged, making it every family’s favourite kitchen helpmate for different occasions.

With permission from Rupa Publications