How branded players in the Indian poultry business are fighting the effects of bird flu. In mid-February 2006, the Indian poultry industry woke up to a major crisis. Bird flu had hit Navapur in Maharashtra. As the message spread across the country, panic spread faster than the H5N1 virus (carrier of the Avian influenza).
Even as homemakers emptied their refrigerators of eggs, airlines and five-star hotels slashed all poultry from their menus. In a flash, the daily turnover of the Indian poultry industry dropped from Rs 100 crore a day to a mere Rs 5-10 crore (industry estimates).
As more chicken were being culled in the farms, rather than sold in the market, industry estimates that sales in Mumbai city plunged from an estimated 400,000 chicken a day to between 30,000 and 50,000. Prices followed the slump in demand, dropping from Rs 45-60 a kg to under Rs 15 a kg. A poultry retailer in Mumbai sums up the situation: "The bird flu killed more customers than chicken," he says.
Maharashtra was just the beginning. According to a report in Business Standard (March 3), the poultry industry in Karnataka lost close to Rs 50 crore in a span of 10 days.
Anuradha Desai, chairman and managing director, Venkateshwara Hatcheries and the chairman of the National Egg Co-ordination Committee (NECC) estimates that losses across the country run into more than Rs 1,000 crore.
Even the organised sector (brands like Venkateshwara Hatcheries', Venky's and Godrej Agrovet's, Real Good), which accounts for about 5 per cent of the industry, was affected. Says B S Yadav, vice president, integrated poultry business, Godrej Agrovet, "Our sales were hit by about 60-70 per cent."
Crisis is the real test of business. As branded players in the poultry business sit in the middle of a storm, the strategist looks at the marketing strategy adopted by branded poultry and egg players to win back customer confidence.
Price catch
The impact of the bird flu was most evident in the unorganised market. Blackboards outside chicken shops displayed new lows in chicken prices everyday. But the branded players did not blink. Venky's did not change its price tag of Rs 65 per kg and Real Good stayed true to its Rs 70 a kg pricing.
Says Yadav, "We did not see any merit in reducing prices. Then, we couldn't have matched the prevailing prices." Ad professionals say that even when situations differ, ground rules remain the same.
Says M G Parameswaran, executive director of ad agency FCB Ulka, "Dropping the price would lower the image of the brand. A low price will increase consumption from lower and middle income group, but they will move away once the price increases."
Value 'ad'
Branded chicken players claim that more than 60 per cent of sales happens during weekends "" chicken dishes require elaborate preparation and families prefer to relish their Sunday meals at ease. Industry players point out that summer is an extended weekend, as schools and colleges remain closed after exams for their annual vacation.
"During vacations we see an increase in consumption, as relatives come visiting," says an industry executive. Typically, therefore, branded chicken campaigns are launched around April-May.
With the outbreak of bird flu, though, the rules of the game changed. NECC launched a Rs 6-crore campaign across 15 national and local newspapers, while Godrej Agrovet claims to have spent close to Rs 50 lakh in a confidence-building exercise.
Says Yadav, "We usually do not advertise in this season, but considering the current situation we chose to advertise." The print campaign across eight cities focused on saying that "Indian chicken is healthy, rather than just a brand building exercise".
Both Venky' and Real Good also increased their presence at the point of sale. The promotions there emphasised that these products are clean, of course, but went a step beyond to concentrate on the rational aspects.
For instance, emphasising that the Indian style of cooking, where chicken is cooked at high temperatures, typically above 100 degree Celsius, made chicken consumption completely safe (companies claim that the H5N1 virus dies at 70 degree Celsius).
Chicken-and-egg?
But with customers staying away, stock pile-ups were imminent. So the industry organised "Chicken and Egg Melas" at more than 200 different locations all over the country "" with specially-prepared delicacies served free or at very low prices.
Movie stars like Sanjay Dutt, Suniel Shetty, Zayed Khan and Fardeen Khan were roped in to endorse their liking for poultry "" they added meat to their words by eating chicken and egg at public events and media conferences. Even the English cricket team batted for Indian chicken: Real Good issued a press note saying the team had consumed chicken during their stay at Nagpur.
The branded players claim that in less than a month, sales have started looking up. Most poultry retailers in Mumbai claim that sales are improving and are back to 50-60 per cent of normal levels. Yadav agrees.
"Previously we sold close to 350-400 tonnes of chicken a week. This dropped to about 100 tonnes. Now it has grown to 220-240 tonnes," he says.
A survey on www.business-standard.com confirms that customers are returning to chicken. In response to a question, "Have you started eating chicken again?" as many as 62.16 per cent of the 222 respondents said, yes.
But even as this story was being put to bed, the Central government confirmed that bird flu had been detected in Jalgaon, Maharashtra. Would this mean that all efforts undertaken by the branded players and the industry, till now, is wasted? Industry executives feel that this is not a major threat and the worst has passed.
One, in fact, counts these threats as a part of the business cycle "" the poultry business had suffered a similar scare in 2003-04. But one thing is for sure. To regain the complete confidence of customers is never going to be easy. Ask the cola manufacturers.
