Crunch time

Godrej's foods division wants to revitalise the breakfast cereals market with Sofit

Quick: what did you have for breakfast this morning? If, like millions of Indians, you chose between a paratha or an idli, you'll know why the breakfast cereals market has been stagnating below Rs 100 crore.

It's not a new market by any standard. Local players like Mohun Meakin's have been around for decades while multinationals like Kellogg's entered the Indian market a decade ago.

However, despite new entrants and relaunches, breakfast cereals as a segment are yet to make a major impact in the way Indians start their day.

Now Godrej Industries' foods division is betting that its launch of soya-powered wheat flakes under the brand Sofit will revitalise the market.

"We are looking at graduating people who eat broken wheat for breakfast to a more ready to eat format," says M Y Varma, executive vice president-sales & marketing, Godrej Industries-foods division.

Currently available in three flavours, Sofit has been test launched in the capital and will soon be extended to Gurgaon and Noida. A national launch will follow in April depending on the initial response.

For the foods division, this launch is another step towards becoming a health food company from being just an edible oil manufacturer.

Today, 30 per cent of its Rs 196 crore turnover comes from processed foods (juices and soya milk), while the rest comes from edible oils. This wasn't the case three years back. Says Varma, "We definitely want to improve our standing in the health foods category."

But getting into cereals could prove to be a risky proposition. The unorganised market accounts for more than 60 per cent of the Rs 100 crore market. Also, like Kellogg's, with a crisper and aseptically packed product, is still getting a hang of the market.

Kellogg's entered the market at a premium price point and once the initial euphoria of a foreign brand died down, repeat purchases were slow in picking up. Then the fact that Indians preferred to combine cereal with warm milk rather than cold, as it is had in the west, diluted Kellogg's crispy claim.

Meanwhile Mohun's, available at almost half Kellogg's price, also geared up to face competition. Packaging was improved to match Kellogg's and since the value for money proposition was stronger, consumers shifted back to the home grown player.

Like in 2003, as per ACNielson ORG Marg, a retail audit firm, Kellogg's volume share fell by 18 per cent compared to the previous year, while Mohun's rose by 18 per cent in the same time.

Godrej has launched Sofit at Rs 30 for a 200 gm pack compared to Kellogg's offering at Rs 75 for 250 gm. The target audience will range from young health conscious adults to people above the age of 40.

By the end of the first year, Godrej hopes to garner a 10 per cent market share. Will consumers bite? "The key is to make the product tasty, healthy and available at the right price and we think we've achieved that right combination," says Varma.