Expert case by Gaurav

Grain Co-operative – Brand Launch

Grain Co-operative – Brand Launch Grain Co-operative – Brand Launch
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Rating:
3.3 (< 100 ratings)
100+
Times solved
Intermediate
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Problem Definition

MeGrain is a co-operative of 5000 farmers in the central part of India. As a co-operative, the farmers came together to sell the grains to retailers and wholesalers. They are the 3rd largest grain sellers in India and sell 10million quintals of grains annually. They have operations in 4 regions in India, and head office in Mumbai.

MeGrain mainly deals in 3 types of grains. Viz. Rice, Wheat, and Maze. The grains are collected from the farmers attached to the co-operative. The grains are sorted, packed, and stored at storage facilities spread across towns in the region. MeGrain sales team brings orders by visiting retailers and wholesalers across the country and abroad. The grains are dispatched directly from the storage facilities to the customers. Customers make the payment to the MeGrain co-operative, which then is forwarded to the bank accounts of the individual farmers.

MeGrain management has observed that the FMCG market, including foodgrains, is changing rapidly in India. Mom and pop stores have given ways to supermarkets. Consumers are adopting branded products rapidly. Although there is no branded grain product yet, the management believes that there is a huge scope for a branded product in the grain market as well. Management is contemplating about launching a MeGrain branded grains in the Indian market. They have called you to advise them whether they should launch their own brand in the Indian market.

Short Solution

Solution

Paragraphs highlighted in green indicate diagrams or tables that can be shared in the “Case exhibits” section.

Paragraphs highlighted in blue can be verbally communicated to the interviewee.

Paragraphs highlighted in orange indicate hints for you how to guide the interviewee through the case.

1. How would you structure your approach to the problem?

A good structure should cover the following points:

  1. Does the market want branded grains? (Attractiveness of the opportunity)

    1. Market sizing to identify customers who are willing to buy branded grans

    2. Price sensitivity check to identify the price point at which the brand could be positioned

  2. Can MeGrain launch it? ( Feasibility of the opportunity)

    1. Does MeGrain have the financial capability to invest in branding related activities?

    2. Does MeGrain have the operational expertise to sell a branded product?

2. How will you analyze the size of this opportunity?

Candidate should take the following steps:
  • Identify the grain consumption in the target market

  • Identify/Brainstorm the filter that he can apply to assess the readiness of customers to purchase branded grains

On asking the questions, the following data can be provided.
  • Number of households in MeGrain’s target market – 10million

  • Average annual consumption of grains per household – 2 quintals

  • In the consumer surveys, it was found that most of the customers purchasing branded products and enquiring about the branded grains make their purchase at the supermarkets.

  • The survey also found that the customers are value-conscious and hence not willing to pay more than a 10% premium for branded products.

  • % of households purchasing the grains from supermarkets – 50%

  • What are the brands currently operating in the Grains market – there is no grain brand in the grain market in India yet.

The candidate should be inferring the following things:

  • In the 4 regions that MeGrain operate in they gave 50% market share

  • Half of the customers are buying grains from supermarkets where they are consuming branded variety of other FMCG products. If MeGrain, which has half the market is able to convert a sizable chunk of supermarket grain buyers to buy their branded grains, it is a big enough market opportunity

  • Customers are price sensitive, being branded does not mean we can charge a huge premium. MeGrain needs to keep that in mind while investing in activities related to product branding.

3. What areas MeGrain will have to invest in order to make their own grain brand successful?

This is a brainstorming question. A good candidate should cover most of the following points.

A co-operative that sells non-branded grains to retailers to launch their own brand is going to be a significant transition for MeGrain. Some areas they need to invest in are:

  • Creating appropriate brand identity ( appropriate to MeGrain’s price and quality positioning)

  • Customer education ( to educate them on the advantages of branded products)

  • Product packaging ( to ensure superior packaging, appropriate branding on the packaging, etc.)

  • Product marketing ( marketing on mass media to inform the customer about the branded product launch, in-store marketing in supermarkets)

Share Exhibit 1 with the candidate.

4. Which grain/s branded variety can MeGrain launch without losing on profits?

Upon asking, the candidate should be provided with the following information:

MeGrain foresees that in initial couple of years, branding will increase the cost per quintal of grain by $11.

The candidate should analyze that the average price of Rice and Wheat is $100 or less. Even if MeGrain gets maximum premium on price, they can achieve the price of $110/quintal. If the cost of branding is $11/quintal, launching branded Rice and Wheat will not be profitable.

For Maze, the average price last year was $120/quintal. If MeGrain gets a 10% premium on pricing due to branded products, it can command the price of around $132/quintal. At this price, they can still afford to spend $11/quintal on branded product-related expenses without losing money in the process.

So, MeGrain should start with launching branded Maze.

5. What is your advice to the MeGrain management?

Our advice would be to launch the branded grains, starting with Maze.

  • A significant portion of Indian consumers are adopting branded FMCG products, so there is surely a market need

  • The operational overhead and branded product premium will take care of each other, initially in the case of Maze. Hence, we will not lose money in the process

As a next step, we suggest that MeGrain analyses its capability to do capital investment in this project.

They should also explore the feasibility of sampling branded products in mom and pop stores to get an idea of the adoption of that market segment, so as to increase the target market for branded product.

Exhibits

Exhibit 1

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100+
Times solved
Intermediate
Difficulty
Do you have questions on this case? Ask our community!

Exhibits

Exhibit 1