Dr Oetker looks to leverage the e-commerce channel to drive sales

In phase two of growth, the firm hopes to make deeper inroads into the market with diversified offerings and innovative packaging solutions

In a land that has contributed the word chutney to the English language, it’s not easy being a challenger to the popular and versatile condiment. But German brand Dr Oetker has managed to do just that — through innovative product formulation, understanding the changing consumer profile and building on their experiences as much as that of the rivals. By the end of current year Dr Oetker aims to touch Rs 250 crore-plus in revenue, up from Rs 200 crore in 2017.

Having completed a decade in the Indian market, the company has successfully shed the foreignness of its sauces, dressings and other condiments to help them have pride of place on the average Indian’s kitchen shelf next to the bottles of chutneys and pickles. Despite being a late entrant in what is still a niche category, western sauces and dressings, Dr Oetkar is now the market leader and this transformation took place in the face of many challenges, among them the diverse food preferences of the Indian consumers.

For example, an offering such as mayonnaise is not self-explanatory unlike, say, peanut butter where the name itself gives away what the product is all about. “A decade ago, Indian consumers did not have exposure to western sauces and dressings. All this has now changed courtesy the increase in consumer awareness about the usability and reliability of these products,” says Oliver Mirza, managing director and chief executive officer, Dr Oetker India.

Also, for something like mayonnaise, a key product in the category, the added challenge for capturing the large vegetarian segment is aversion, egg being a key ingredient of the emulsion. Keeping this in mind, Dr Oetker became the first player to launch vegetarian mayonnaise targeting vegetarians particularly the Jain community. The move helped it get more consumers in its fold with a repertoire of eggless and 100 per cent vegetarian products.

According to market research agency, Euromonitor, sales of sauces, dressings and condiments grew by 19 per cent in India to reach Rs 16,120 crore in 2017 and is expected to grow to Rs 22,130 crore in 2022. FunFoods (Dr. Oetker’s sub brand), Cremica, Del Monte, Sil, Kraft and American Garden are the major players in the category.

Within western sauces and spreads, the mayonnaise market in India is worth about Rs 200 crore and Dr Oetker enjoys 70 per cent market share in the category. Various industry numbers show that the penetration of mayonnaise has risen by almost three times in just two years from six million households in 2015 to around 18 million in 2017.

All along, the spread of modern trade and the entry of more players have given a fillip to the category, which in turn, has helped players like Dr Oetker expand.

N Chandramouli, chief executive officer, Trust Research Advisory, says, “Western sauces and dressings as a category is not something that Dr Oetker has created. They piggybacked on an existing category built by a player like Del Monte Foods and others. People recognise FunFoods, a sub-brand of the company which it acquired in India in 2008. What Dr. Oetker, a 150-year-old international brand, has done is that it has got the best of the manufacturing processes and technology processes to the industry.”

Mirza acknowledges as much. He says that a decade ago, the conversation focused on pesto sauce versus mayonnaise. The product distribution was limited to few a markets and shops. In 2008, only 7,000 shops stocked Dr. Oetker’s western sauces and dressings, now the number stands at 70,000.
 

Innovations like eggless mayonnaise have helped players like Dr Oetker get an entry into Indian homes, but there are cases where brands have faltered despite offering “wonderful products”, points out Chandramouli. A case in point: dairy brand Danone which “struggled to fulfill the demands of Indian consumers’ varied taste buds”.

Dr. Oetker is looking to focus on product categories in which it is a market leader and experimenting with packaging to make then available and affordable to more consumers.

Inspired by sachets that helped induce trials in many product categories in the FMCG sector, Dr. Oetker launched a vegetarian mayonnaise ‘chotu’ (small) 100 gm pack priced at Rs 35 in 2015. The objective was to introduce the product to more consumers at a low price point. Even today, the sales of the vegetarian mayonnaise original chotu pack are almost twice as much as the standard pack (in terms of units sold).

Experts point out that a product such as mayonnaise is a standardised and commoditised offering. Therefore, the price differential vis-à-vis competitors cannot be much. Leadership in the category will boil down to reach and value.

More importantly, Chandramouli suggests, “the question that Dr. Oetker needs to ask is can it continue to be a leader in the future? And how can it go about creating more demand beyond the top 15 or 16 cities?” Dr Oetker has its task cut out: It has to identify its future consumers and shift more and more people to new age food.

Dr Oetker is also looking to leverage the e-commerce channel to drive sales. According to Mirza, buying online is convenient; the channel also allows brands to have an informed conversation with consumers and run targeted promotions. Mirza says the one challenge that players face in selling online is that that the cost of delivery is high, while the price of the units sold tend to be low.

As of now, Dr. Oetker is present in 490 cities. It counts metro cities and markets like Delhi, Mumbai, Kolkata, Chandigarh, and Tamil Nadu among its strongest markets.