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V-thought- A Knowledge Initiative by Vertebrand
Topics
Vol5 The Business of Agriculture
Vol4 Education Branding
Vol3 The world of Service Branding
Vol2 B2B Branding
Vol1 Branding Trends
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The Business of Agriculture
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03Vthought I Volume 5
From the Editors desk 04
Emerging trends in Indian Agri Business 06
Branding Agriculture - Creating brands rom commodities 09
Around the world - Stories o successul Agri Branding 12
Challenges in Branding Agri Businesses 14
Down to Earth - Young India turns to Agri Business 16
Expert Speak - Interview with Mr. Prabhakar Rao, Chairman, NSL Group 18
C o n t e n t s
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The very mention o Agri businessinvokes the memory o Farming; hardwork, some poignant memories andsome not so pleasant thoughts as well.
Our thoughts have also been ashioned
with the belie that India is an agrarian
economy and yet at the same time
the current state o aairs bears grim
testimony o the act that there is an
urgent need or rapid transormation.
Agriculture contributes to about 14.2%
o our GDP and yet provides livelihoodto close to 52% o the Indian working
population. This possibly leads to
agriculture being seen more as a social
phenomenon rather that just an industry
or a business.
Agriculture in India is largely dependant
on 2Gs.The rst is God or more
specically monsoon God. With the
monsoon playing truant this year, the
buzzword is certainly about how India
will cope. The cascading eect on other
sectors cannot be discounted and hence
every business entity in India is worried.
The 2nd G is Government. Agriculture
is perhaps one sector where every
aspect is controlled and infuenced by
the Government. There is a social angle
to this sector requiring government
intervention. However, while reorms in
every other sector have taken some shape, agriculture
has been lagging behind. Also the number o ministries
involved in the entire chain, compounded with manylegislations at both central and state level makes it
dicult or changes to be brought about. Industry-riendly
eorts o allowing private players to directly purchase
rom armers is probably a right step in that direction.
Yet, the APMC Act and the EC Act impose signicant
barriers and states are yet to make changes to them.
A billion mouths to eed with overfowing warehouses,
sharp rise in ood infation and more than 50% o domestic
spending on ood products does not bode well or aneconomy wanting to grow and become a super power.
Agri business is an indirect growth driver and i India
needs to propel itsel to being an economic super power,
several structural reorms are necessary in this sector.
Government spend towards agriculture is 80% towards
subsidies and 20% towards investment. Unless that
situation changes to more share or investment and less
or subsidy, problems will continue to plague this sector.
However there is a silver lining. While mega changes
have not taken place at expected levels, small innovations
are sweeping the sector. These are driving this sector to
become more ecient, more customer-centric and in all
boosting local economies.
We, at Vertebrand, have partnered many o our clients who
are part o the agri business. Our experience in working
with clients has been across the value chain. We are
actively partnering a Seed company in their marketing
initiatives and in the past have created and managed
successul brands or clients in the agro processing
FROMTHE EDITORSDESK
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business. The Vertebrand team has also been involved in
providing expertise on the retail and logistics aspect o the
agri value chain. Our collective experience o working withseveral clients in this sector has been the prime mover
behind this issue o Vthought.
This issue o Vthought traces certain key trends sweeping
this sector. With Indian economy opening up, there have
been marked changes in the consumption pattern,
especially o urban India. This in turn has given rise to the
marked changes in the way agri products are processed
and consumed. This issue traces the emerging trends in
agriculture and the challenges in branding o key sectors.There are some interesting stories o branding which have
taken place in the agri business sector across the world.
We are specially indebted to Mr. Prabhakar Rao, Chairman
o NSL Group and Managing Director o NUZIVEEDU
Seeds Ltd or his contribution to this issue. He talks about
the uture o this sector and how to bring back the past
glory o agriculture.
We do hope you enjoy what you read here. We look orward
to hearing rom you. Please write back with your eedback
and comments to [email protected].
To read and download the online edition o this Vthought,
visit www.vertebrand.com
Happy reading!
Aparna Lakshmi
Chie Editor
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Aquick update on where India standsin the world agricultural production:Ranksnumberoneintheproductionof
commodities like
- Mangoes, Papayas, Bananas, Spices,
Millets like Bajra, Ragi etc
Secondintheproductionof
- Silk
Thirdintheproductionof
- Tobacco, Coconut, Tomatoes
Sixthintheproductionof
- Coee
Indiahousestheworldslargestlivestock population and is number
one in the production o Cow milk and
Bualo milk.
The Green revolution has been the
starting point or Indian agriculture in
its quest or growth and automation.
However, the biggest game changer or
the sector happened in the 90s when
cropping patterns which hitherto were
determined by agronomic conditions,
moved to being determined by market
orces. This in turn, marked a shit
rom subsistence arming to that o
cash cropping. This has led to several
emerging trends which characterized the
last decade o the 20th century and rst
decade o this century.
The movement rom being just ood
crops to cash crops and then cropping
based out o market and consumer
demand has brought interesting trendsin this sector.
Movement rom Agriculture to Agri business
Agriculture or a long time has been associated only with
arming. For a long time, a strange belie has existed,that arming is not a business and armers can never be
businessmen. However this mind set is changing. With
the decline in cultivation and trade o traditional ood
crops and non ood / horticulture gaining prominence,
agriculture is no more about arming only. It has evolved to
Farming, Processing and Preserving beore it reaches the
rst level o intermediaries. The evolution o organized
retail has not just spruced the supply chain but has made
the entire chain agile and nimble. The increasing afuence
has led to changes in the consumption pattern o people.
This in turn adds enormous pressure on the sector tovalue-add their oering and adopt technology just like
any other industry. The trend is encouraging, yet there is
a signicant distance to be covered on the processing and
logistics ront to truly become an ecient sector.
Corporate involvement through Contract Farming
Indian Inc has been in the oreront in acquiring lands
or arming in Arican countries. The legal ramework in
India does not permit such direct participation. However
corporates have been investing in the sector actively
through contract arming. The changes brought tothe APMC Act by several states have also provided
an impetus or the adoption o contract arming.
One o the pioneers in this area has been PepsiCo when
it initiated contract arming or sourcing tomatoes in
Punjab. Contract arming has enabled armers to access
better seeds, adopt better arming techniques, improve
yield and also get an assured market and price. In turn
companies have beneted by getting consistent quality
o supplies. Contract arming today has grown leaps and
bounds with many giants turning to contract armingacross dierent crops ranging rom potatoes, basmati
rice, cotton, wheat, soyabean to name a ew. The biggest
challenge in Agri business was the access to capital
and the absence o recourse to armers when there was
EMERGING
TRENDS ININDIANAGRI BUSINESS
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crop ailure. Today the model has come o age. Financial
institutions like ICICI have partnered with Unilever and
other contractors in providing access to capital orcontract armers. Weather based insurance products have
also come into play to prevent loss due to crop ailure.
There is a fip side to contract arming as armers
are dependent on contractors and produce only non
local crops. Hence there is a danger o a lopsided crop
pattern. However given the need or rapid improvement
in productivity, contract arming is indeed a must or
the growth o the sector as well as or the rest o the
economy.
Inormation technology enabling a smart armer
Inormation & communication technology has enabled
the armers on two ronts - Risk reduction and Price
maximization. Weather updates and orecasts have
enabled armers to plan their sowing accordingly. The
critical inormation on the correct market price enables
armers to get the right price and not be completely
dependent on the intermediaries. Some solution providers
have also been able to provide guidance on uture pricing
based on global trends. This has taken the arming
community one step urther to critical decision making
on selling and thereby not alling victim to price all.
The pioneering and most prominent success story o
harnessing inormation technology to build a arming
community network at a large scale can be attributed to
the ITC e-choupal initiative. Today, this initiative is spread
across 15 states, touching the lives o over 4 million
armers. Much o the success o e-choupal can be
attributed to the act that it is not just a pure play IT
solution but was backed by strong physical inrastructure.
It cannot be denied that this initiative opened up the
arming community to adopt inormation technology or
a mutually beneting relationship.
Mobile telephony now touches the lives o more than
two thirds o India. With the advent o smart phones, the
next generation o technology adoption has come o ageand is in turn leading to smart arming. An initiative o
Thomson Reuter Group - Reuters Market Light (RML),
was rst piloted in Vidharba in 2007, as a proessional
content service or armers. For an annual subscription
ee o `800, armers receive daily weather updates as
well as personalized content. RML equips the armers
with market intelligence and keeps them updated on
prices o dierent markets to help them understand
broader current trends and uture projections. From a ew
thousand subscribers who received the service ree o
cost during a test-run in 2007, RML today reaches 250,000armers in 13 states, signalling a staggering growth driven
by greater rural consumer interest.
With the growth o value-added services, mobile phone
companies have also dived in to provide value added
services to the arming sector. Bharti Airtel, in June this
year added a new value added service geared toward
rural India. Called Behtar Zindagi; the interactive voice
response service was rolled out rst in Rajasthan.
At INR 30 per month, the operators Behtar Zindagi
service is ocused on arming and allied communities.
It allows customers to receive various data on their
mobile phones, including weather updates, market rates,
live stocks, agriculture, sheries, health, education and
nance. The service is powered by Handygo, an India -
based wireless services provider specializing in mobile
entertainment. Handygo has worked with various private
and government bodies to collate relevant inormation and
disseminate the data to armers.
The service is available 24/7, supports several dialects and
is available in Hindi and 17 other regional languages.
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Other corporate entities like TCS have
piloted mkrishi - a personalized and
integrated service in the local languageto armers on their mobile phones.
Farmers in remote areas will be able to
connect to their stakeholders, access
good quality agricultural inputs, nd
advice on arming practices, and get
inormation on market prices, weather,
and other essentials or improving yields.
While providing inormation on weather
and market prices tops the chart, there
have been other initiatives which are
utilitarian. There has been a glut in
services which allow armers to use
mobile phones to remotely monitor and
switch on irrigation pumps used or
watering crops in remote locations.
Rise o Organic Farming
The green revolution might have
propelled India to move towards sel
suciency, but there have been several
unavorable consequences which are
being experienced now. The emphasis
on increasing productivity has resulted
in deterioration o soil health. The
mounting ertilizer subsidy itsel is also a
case in point that all is not well with that
ormula or increasing productivity.
Organic arming has been an answer to
getting back to a process o cultivation
o agriculture naturally. It helps in
the reduction o synthetic ertilizers,
avoids building up o those substances
in the soil and in turn creates a
balanced ecological chain that ensures
sustainable, eco riendly and pollution
ree environment. Awareness has been increasing
about the ill eects o synthetic ertilizers and the bio
amplication o it, which in turn has translated intoincreasing demand or the organic products.
However, there are two essential derailers to the rapid
adoption o organic products. Given that armers in India
have very small land holdings, their ability to adopt the
usage o bio ertilizers and judicially use it to reap good
results has so ar been low. On the consumer ront, urban
consumers have high awareness o organic method o
cultivation and do aspire to buy organic products. But are
they willing to pay or that? Sadly, No. The demand side
is still weak. Consumers like to have organic ood but are
not willing to pay a premium or it.
It is hoped that in the near uture there will be much
more rapid adoption o organic arming. As agri retailing
becomes more entrenched with organized players coming
in, there is ample scope or improvement in the demand
or organic products. This in turn will acilitate technology
transer and will boost adoption o organic arming at a
much larger scale than what it is now.
The road ahead
As they say We live in interesting times. Indian agri
business culture has been seeped in the middle ages, with
lack o inormation and market being a key impediment
to its development. There have been small steps taken to
move to a transparent market mechanism. It is hoped that
this eort will only go up in the days to come. However
with monsoon vagaries continuing to haunt the Indian
armer, there is a paramount need to manage water.
The next wave o innovation needs to address the issue o
water management. Another area o interest will be that
o adopting bio technology. Barring Bt. Cotton, India has
not moved orward. While there are pros and cons to that
debate, it will be interesting to see some concrete action
on that ront.
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BRANDINGAGRI BUSINESSCreating brandsrom commodities
Arecent study has revealed that, there is a shit in theconsumption pattern rom cereals to value-addedcommodities owing to the change in dietary habits, socioeconomic and socio demographic actors. As consumers
income rises, demand becomes more discriminating,
i.e. wider variety and higher quality are sought. It is
believed that the share o value-added products in ood
consumption would reach 50% by 2015.
However, the majority o agri products in India are sold
to the market as commodities with very little value
addition. In the current situation, it is no longer sucient
or agri business to continue ocussing on productivityimprovement. It is important that agri businesses adopt
strategic planning models that address the development
o strong brands, a unique selling proposition, the
ormation o close relationships throughout the supply
chain and the development o market orientation.
Commodity Vs Brand
Kotler and Keller (2006) dene a commodity as a product
that is presumably so basic that it cannot be physically
dierentiated in the minds o the consumer. HoweverTheodore Levitt (1980) in his classic article titled,
Marketing Success Through Dierentiation - o Anything,
states There is no such thing as a commodity. All goods
and services are dierentiable.
At Vertebrand, we believe that A brand is dened as a
bundle o unctional benets and added emotional values
that some people value enough to buy into repeatedly.
A brand gives an identity to a commodity and desirability
to purchase. Not only does it help in quality assurance,
but also product repurchases have been allied with good
quality branded products thereby increasing loyalty among
the customers. In essence, a brand is the tool to create a
sustainable competitive advantage.
Why branding is important
Proper branding o products ensures that the armers/
producers receive prices o their products according to
their quality. Branding is an incentive to improve quality.
It also saeguards consumers against adulteration.
Branding narrows the gap between the producer price
and the consumer price. Branding creates a avourable
position in the consumers mind and hence the
willingness to pay a premium. Empirical studies indicateconsumers willingness to pay at least a 10% premium on
branded agri products over commodities. Branding is a
means to create a loyal consumer ollowing who is ready
to buy your product repeatedly, thereby giving an edge over
competition.
Branding Agri business
A brand is a mix o both unctional and emotional
attributes and hence it is necessary to look at the
business not just rom a pure product basis. Agri businessis no dierent rom other industries in the eorts required
to build a brand. Brand creation needs to necessarily
go through the ritual o Mapping consumer needs,
Market segmentation, Product dierentiation and Brand
communication. However, there is a signicant challenge
in this business. The nature and size o arm holdings
which are small and heterogeneous means that scale is
not possible and hence individual arm owners will not
have the wherewithal to create brands. Also product-
led innovation is dicult and again, will not achieveeconomies o scale easily. Creating an agri business is
raught with challenges, but there is a method to the
madness.
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Core product packaged well
In many agri products, the opportunity
or real product dierentiation is verylow. However, consumers have a very
strong need or saety given the threat
o adulteration and poor consistency in
the quality o produce. Brands typically
start o with oering a packaged product
which sae-guards consumers rom
adulteration and also meeting a certain
basic product quality. Typically, staples
like rice and pulses start o with this
route, promising customers a certainminimum assured quality. However, the
opportunity to charge price premium is
minimal over unbranded commodities.
In most situations, the brand owner
isnt the agri product producer but an
intermediary.
Augmented product oering
Evolution o ood processing technologies
along with Farm to Fork concept has nowgiven the opportunity to provide added
value to the core product, which can
be used as a signicant dierentiator.
A brand needs to give assurance o
certain quality and consistent product
innovations which new technologies in
ood processing enable. For example,
long grain rice or unpolished dal with
long shel lie are examples o oerings
which have ound signicant consumeracceptance.
Value added products or discerning consumer need
Organic arming and Specialty agri produce are some
o the ways to create a dierentiated product oeringand in turn create brands which command much higher
premium pricing. Typically, there is a partnership
between the armer and brand owner to create such
dierentiated products which are high up on the value
chain. In such cases, the rst mover has the biggest
advantage as they create a need or a certain category
o products in the consumers mind. Along with product
innovation, investment on brand building is essential to
sustain the branding eort. Otherwise, the advantage o
a dierentiated product is lost with competition crowdingin. For example, special rice or diabetics, ortied milk,
oil etc. all into this category. Over time, every agri brand
needs to nd a real dierentiator to stay in this space, or
else the advantage o pricing will be lost.
Retail Brands
Organized retail has been at the ore ront in adding
value to agri products. While branding the source (arm)
is not easy, branding at the point o sale has been a
way o creating brands. While store brands in manymanuacturing categories are considered inerior to
producer brands, in agri business store brands are seen
as that o superior quality. Almost 60% o organized retail
chain businesses are rom ood and related items. With
changes in the APMC Act & FDI in retail, the uture will
see a more direct relationship between arm and store.
Retail branding is then expected to pick up.
GI as a brand building tool
Geographical Indicator is an indication; it originates roma denite geographical territory, and it is used to identiy
agricultural, natural or manuactured goods. GI is similar
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to trademarks except that they point to the place o origin
and not to the owner o the goods. World over, GI has been
eectively used or agri products especially with relevanceto export markets.
GI is applicable or Agricultural/Horticulture products that
have qualities derived rom their place o production and
are infuenced by specic local actors, such as climate,
type o soil, altitude, etc. Some criteria which are essential
to meet GI registration are
Producearedistincteco-typeswithmanyappreciable
eatures.
Producehavebeenundercultivationforalongtime.Producewithstronglocalreorganizationand
commercial impact in the zone o their cultivation.
Noindividualororganizationhasclaimedownershipof
these crops.
Thelocalcommunitieshaverecognizedsuchcropsas
heritage crops.
While much o the evidence surrounding the dollar
benets derived rom GI branding is anecdotal, some
empirical research has shown that geographic origin
plays a key role in consumer decisions, including
willingness to pay a higher price or regionally branded
ood products. For example, researchers have ound that
geographic location is an important component o wine
pricing as well as ood products, such as bee and resh
produce.
While GI can be an eective tool or dierentiation,
an eective marketing program is a must to take the
message across to the consumer. This is challenging,especially or developing countries which have an inherent
imagery disadvantage. The producer boards which till now
Some of the GI registered
agri products
BasmatiRice
DarjeelingTea
AssamTea
NilgiriTea
GoaFeniMalabarPepper
KeralaCardamom
11Vthought I Volume 5
have ocused on productivity and product improvement,
need to reorient themselves towards building the brand.
Historically, the ocus o agri business has been to remain
protable by minimizing costs (improving productivity).
Today, an increasing number o agricultural producers
are examining how to increase prot through product
dierentiation. GI branding, in conjunction with an
eective marketing program, can help agricultural
producers and processors develop more protable
operations.
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AROUND
THE WORLD-SuccessulAgri businessbranding stories
Abrand gives an identity to acommodity and desirability topurchase. Not only does it help in qualityassurance, but also repurchases have
oten been allied with good qualitybranded products, thereby increasing
loyalty among the customers. Majorityo agri products in India are sold to
the market as commodities. Howeverincreasingly it is observed that there
is greater opportunity to make protsby selling branded produce. Branding
eorts in agri business in India owe theirgenesis to Basmati rice and since then
has been extended to Darjeeling tea andother products.
These eorts though, are minuscule
compared to the opportunity available.While the domestic market is raught
with its own unique challenges,branding is the need o the hour in the
export market. Branding is the way ordeveloping countries to be a orce o
reckoning in the global ood economy.Typically, agri produce branding has
been linked to the geographical regionswhere they are grown. Think o cheese
and wine rom France which carriesthe appellation dorigine contrle
certicate and the prestige that itenjoys. However, developing countries
like India are at a disadvantage. Productsrom developing countries are always
viewed with suspicion and a higherdiscount is expected by consumers in
the developed world. However globally,
there has been success demonstrated bydeveloping countries in creating strongagri brands
Brazil- Viva Tango
Brazil has one o the top rated agri branding programs.
Not only has Brazilian coee been promoted extensively,but also branding programs have been in existence- Brazilian ruit, Brazilian chicken and even Brazilian
Lobster tail! Brazil holds seven percent o the worldsagricultural commodity market and is the worlds third-
biggest exporter o agricultural products. Agricultureis the most globalized sector o the Brazilian economy,
accounting or 25 percent o GDP and 36 percent oexports. Brazil is the worlds leading exporter o: red meat
(24 percent o the total), chicken (39 percent o the total),sugar, alcohol, orange juice, coee and tobacco.
Part o BRAZILIANS success can also be attributed totheir acumen in market selection. Brazils ocus or exportis not the US or EU where they ace trade road blocks, but
the other developing countries. They understood that thegreatest potential or growth in ood and agricultural trade
is among developing countries due to the large populationand the rising income growth. Now Russia is the main
buyer o Brazilian pork while Egypt is the main importer oBrazilian resh bee and China is the biggest importer o
Brazilian soy beans.
Brazil has ollowed a strategy o diversication,
globalization and brand dierentiation, thereby reinventingBrazilian agricultural produce. The country today is seen
as a producer o many high-quality products.
Colombia- Rebranding a nation
A well thought-out branding program or agri producewill do a great deal in even building the country brand.
Perhaps the best example would be Colombia coee.Colombia or a long time was synonymous with crime and
narco terrorism until the Colombia coee program camealong.
Similar to BRAZILS branding eorts, Colombias coeegrowers ederation took the initiative and started buildinga brand or their product back in 1959. They created the
strategy that built recognition and distinction or 100percent Colombia coee. The aim was to emphasize
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coees origins, on the same lines as Bordeaux or wine.It was successul too. Although it only grows about a
quarter o Brazils coee harvest, it is Colombias coeethat has the reputation or quality.
Perhaps that has been the only positive thing about the
country and it has changed the overall impression o thenation itsel!
Experience, across the world, indicates that aggregation
and quality is a precursor to branding agri business.
BRASMAR -
Lobster tail turns gold
The story o Brazilian Lobster tail is a case in
point. Interbras is an export promotions board setup by the Brazilian government in 1976. One o its
most successul ventures has been to organize thecollective marketing and branding o lobster tails.
Interbras recognized the opportunity to increaseBrazils penetration o the large US market or lobster
tails. They set about organizing the shermen in sucha way, as to ensure reliable supplies and to develop
a strong brand identity. Interbras was initially able toconvince about 50 percent o the shermen to give
them exclusive rights to export their lobster tailsto the US. In return, Interbras gave them a better
margin than the shermen had been getting throughthe importers. Interbras oered a rm price to both
the shermen and to the brokers and in each casethat price was guaranteed or a three month period.
Moreover, whenever Interbras exceeded its targetmargin, surplus prots were channeled back to the
shermen.
Subsequently, Brazilian Seaood Marketing Associates
(Brasmar) was ormed. Brazilian lobsters were
packed in good quality cartons bearing the Brasmarlabel giving the product a single brand identity. Theproduct was promoted on its quality attributes and
so, was positioned as a direct competitor to SouthArican lobsters. A rigorous quality control systemwas instituted to ensure that the brand image was
sustained. Suppliers who consistently ailed to meetthe quality standards set by Interbras were ultimately
excluded rom the scheme.
As or the South Arican product, restaurateurs are
the principal buyers o Brazilian lobsters. Brasmarrecognized that in addition to reliability o quality, the
restaurants were concerned about portion control
and were thereore interested in buying a product ouniorm size. Interbras developed a grading systemwith 14 size categories instead o the 6 category
system used by others. This augmentation o theirproduct was well-received by buyers who could
then purchase a carton o lobsters, knowing that itcontained lobsters o uniorm size.
The success o Brasmar can be measured in anumber o ways. Perhaps the most important o these
is that 8590 percent o Brazils lobster shermennow collectively market through Brasmar and the
organization is able to claim that their marketingsystem brought US$6 million more into the country
than did the system it largely displaced.
Source: FAO corporate documentation repository
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Geographical indicator is a great tool or branding agriproduce. Till recently, about 31 agriculture products
including Darjeeling tea and Alphonso mango have gotGI registration. Currently, the action related to GI appears
concentrated on the registration o GI goods and has notmade any headway in adoption o strategies or branding
and promotion o GI products as well as their marketingand distribution in both domestic and export markets. It
needs to be noted that GI coupled with eective marketingcan mean greater prots to the local producers.
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CHALLENGES INBRANDINGAGRI BUSINESSES
Why is it in a country like Indiawhich produces huge quantitieso agricultural products, there exists avoluminous gap between proportion o
branded and unbranded products? In
a market where commodities like rice,
pulses, ruits and vegetables are bought
by visually and physically assessing the
quality, establishing a brand is a colossal
challenge.
The act o the matter is that export
opportunities have contributedsignicantly to the eld o agri-branding.
For example, the overseas market or
basmati rice gave an impetus to the rice
producers and marketers in India to sell
branded basmati rice. On the domestic
ront, the basmati and non basmati rice
varieties are made available in various
branded package variants suitable to
consumer preerences. Similar is the
case with pulses which is in nascentstages.
Although commodities like Basmati Rice
and Darjeeling Tea are well known and
have a huge market overseas, the need
o the hour is to look beyond to branding
o such commodities with signicant
export value and look at developing
brands in the domestic ront
So what prevents the wide prevalence o
branding? Currently the branding eorts
in India or agri products are driven by
the ood processing and organized retail industry only.
While organized retail has been growing, its contribution
is still in single digits. Hence, vast majority o Indiacontinues to buy only unbranded agri produce.
Key Challenges which impede branding
Value-Seeking Indian Consumer
The value conscious Indian consumer is always on the
lookout or the lowest price. The perception that branded
products are costly is deeply rooted in the Indian psyche.
To many consumers, a branded product still means a
product with an attractive label rather than an assuranceo quality.
The great Indian retailer
India has been a land o Shopkeepers. Indian retailers
enjoy high trust quotient by virtue o their superior service
and relationship with their customers. This in turn means
consumers trust the retailers choice implicitly and hence
do not eel the need or branded products. However, this
trend has been changing with increasing awareness about
various products. Retail consolidation has also been aprime mover in the picking up o branding eorts in agri
produce.
Scalability Challenge
A brand needs to stand or something to someone. The
heterogeneity o the Indian population in turn means
extensive localization and hence becomes unviable or
making investment towards building a brand across a
large geography. Only players with deep pockets have the
capabilities to invest and build a brand. Since the verynature o agri business is oriented towards supplying
to the local community at large, branding eorts are
sporadic.
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Market Structure
The system o aggregation or arm produce (Mandi)
by itsel is against branding. This method strives toconsolidate without any allusion to the source and hence
wipes out any opportunity or dierentiation at the rst
point o sale. It does not incentivize armers to provide a
much superior produce and charge premium accordingly.
This in turn goes against the grain o branding.
Poor Farmer Awareness
The average holding in India is way too small or any
armer to make eorts towards branding. Although dairy
has seen the co-operative movement being successulin creating great brands like AMUL, there have been no
concrete eorts in other spheres o agri products. The
arming community in India is still caught up on eorts to
sell and does not have the awareness o the relative merit
o branding.
The Way Ahead
It is only a matter o time beore the challenges are
overcome. What are the ways to overcome this branding
conundrum?
Quality First
Cheap&bestpossiblyexistsonlyintheIndianlexicon.
However, increasingly people are realising that both
cannot always exist together. Continuous eort needs
to be put on highlighting the superior quality o branded
produce.o Visual dierentiation is a key method o highlighting
quality. For example, when branded sugar came into
vogue, very clear communication about how the sugar
is whiter and uniorm in crystal size was highlighted.
Dont undermine value - seeking
Indianconsumerscannotbedivorcedfromseeking
value. Use any scope o dierentiation to highlight
superior value to customers.
o For example, long or rounded grains can be
highlighted to prove that less quantity is required or
cooking.
Dont scare consumers
Oneofthestrategiesadoptedmanytimesbybrandsis
to scare consumers about adulteration in unbranded
commodities. That is not a good way to build a good agri
brand. It might give temporary results. However, it does
not add any value to the brand in question.
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DOWN TO
EARTH -Young Indiaorays intoagri business
Agri business today employs about52% o the Indian population.However, there has been large scale ruralto urban migration. People take up agri
business not by volition but more because
it has been their amily tradition or
because that is the only proession they
can take up.
Recently, the wind o change has been
blowing in this direction with a chunk
o educated proessionals taking up
agri business with gusto. Thanks to
the economic slowdown and all-out o
countries, educated youth are realizing
the importance and prospects o agri
business and are exploring new avenues
in this eld. Agri business is one sector
that will stay or long - till the survival
o mankind. Young entrepreneurs
are realizing this act. Even when the
economy is shattered, people need ood
to eat.
Any business, i it has to attract new
people, needs to provide intellectual
stimulation and nancial rewards.
Its the same in agri business as well.
Floriculture and Horticulture have been
at the oreront o attracting new-age
entrepreneurs.
Down to earth - What do youngsters
bring to the table?The risk appetite o these new-age
entrepreneurs is denitely more - hence
the ability to experiment with crops which have a high
export potential has been a trend. We have witnessed the
eorts made by a 28 year old entrepreneur Mr. Rahul Galawho has successully cultivated the Iraqi Bari Dates in
Gujarat, which have a very lucrative market abroad.
Todays youth are also willing to adopt technology.
A complete wave o computerization has taken place in
some arms, and technology is used to such an extent that
a click on the computer will irrigate and ertilise the entire
land as per requirements!
Emergence o a new service engagement with the
young entrepreneurs, has given rise to a completely new
service industry o supporting the arming initiative with
Know how. A successul revenue model which works on
providing a one-stop solution on key arming inormation
has created a new service business stream.
Getting the youth to the earth - the need of the hour
India has 60% o its population below the age o 30.
A robust economic growth is achieved only i this youth
population is gainully employed and agri business doesprovide the impetus. Initiatives have already been rolled
out by various governments. For example in Kashmir,
foriculture by youth is actively promoted as a means to
combat even terrorism. A sustained eort o this nature
needs to be done across the country.
Educating the youth-The agri education system needs a
bigger impetus to reach out to more youth and educate
them on practices leading to better revenue generation.
This is absolutely critical to gainully engage the youth and
bring them back to working on the ground.
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EXPERT SPEAK-Mr. Prabhakar Rao, ManagingDirector, Nuziveedu Seeds Ltd.,speaks on the challengesand uture o Agribusiness
Mr. M. Prabhakar Rao is the
Visionary Chairman o the NSLGroup and the Managing Director
o Nuziveedu Seeds Limited.
Hailing rom an agricultural amily,
Mr. M. Prabhakar Rao is a post
graduate in agriculture and has
nurtured Nuziveedu Seeds to
become the countrys largest seed
manuacturer and the dominant
player o Bt. Cotton seeds. Today,
Nuziveedu seeds is recognized as a
leading Bio-Agri company o India.Apart rom seeds, the group has
also diversied into several sectors
like Renewable Power, Textiles,
Integrated Sugar Factories and IT
Inrastructure.
In this exclusive interview, he talks
to Vertebrand about the boon and
bane o the agri sector.
The contribution o agriculture to GDP
has been steadily declining. The general
impression seems to be that the uture
growth prospects or this sector are
weak. On the other side there are a
billion mouths to be ed. What is your
opinion on the uture growth prospects
o this sector?
The Contribution o Agriculture to GDPis certainly declining. This is natural
when other areas like manuacturing
& services start to grow and hence
contribute more to the GDP. However,
The role o government in this industry is very important.
Yet the general eeling is that reorms are signicantly
pending in the sector. What are the signicant reorms
you think need immediate priority and attention?
Iagree that Government intervention and role is very highin this sector and there is an urgent call or reorms.On the policy ront, we urgently need a well thought-out
policy on genetically modied crops. There needs to beadequate sae-guards, but in the larger interest o the
people, we need to adopt GM crops soon.
We need signicant changes on the policy or subsidies
or agri inputs. It is paramount that the benet needs
to reach the armers directly. Currently, this is being
partly implemented and we need a whole-hearted
implementation going orward.
Beyond raming policies, there is a larger government role
in building rural inrastructure. With Indian agriculture
being dependent on monsoon, we need better irrigation
acilities. Point to note is that we already have a low
cropping intensity (i.e. area under cultivation as against
available area). Hence, it is important that priority is given
to improve the availability o water supply.
absolute growth in this sector cannot be compromised.
In a country where about 60% o the population is engaged
in agriculture and related occupation, it is importantthat society inequalities do not crop up and growth is
maintained in this sector.
I strongly believe that 4% growth is possible i we ensure
that productivity is enhanced rom the current levels
and that is possible by virtue o bringing in technological
innovations, extensive education to the armers and
developing a strong linkage between armers and markets
Yes, Agriculture can continue to make a healthy
contribution to GDP and can grow at modest levels,
provided right measures are taken.
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Inormation technology has been a game changer in
many sectors. What do you think will be the role o IT in
transorming agri business?
IT is now an essential part o any business. A key area will
be the availability o real-time inormation. Inormation
about market prices and trends to armers will certainlyenhance their decision making capabilities. At a larger
level, inormation on global commodity trends and
innovations across the world will positively transorm the
industry. There is no doubt that inormation will play a key
role in connecting the armers to the world.
Apart rom BT cotton there seems to be no urther roll
out o GM seeds. Do you see any uture or GM seeds
getting into India?
I believe that adopting GM traits in all crops will improveproductivity, reduce losses and also improve the quality
o output, thereby making agriculture protable.
However this is an area which needs the consensus o all
stakeholders. As told in an earlier question there is a need
or a well thought-out policy.
To start with, we need robust and transparent regulatory
mechanisms to roll out GM crops. This must be ollowed
by extensive education programs to general public on the
saety o GM oods. There is no doubt that India needs GM
crops.
In your line o business i.e. Seed industry, what do you
see as the signicant challenge in the coming years?
Currently, the agri sector is plagued with issues o low
productivity due to poor agronomic practices in the
context o constant arable land and increasing demand or
grain and bre. Hence, it has become imperative or the
industry and government to enhance yield per unit o land.
To accomplish that, there needs to be signicant
investments in R&D and technology. We also have too
many regulatory challenges. A number o legislations
are involved right rom Seed Act; PPV & FR Act; EPA;
Essential Commodities Act; State Cotton Control Acts;
Biodiversity Act etc. to name a ew. There needs to be
concrete eort by the government to rationalize the
controls. Unless it is done, R&D and its adoption will be
stifed. The uncertainty in GM ood crops is a dampener.
19Vthought I Volume 5
Warehousing acilities and Connectivity to Market need to
be signicantly improved. Government should champion
PPP model in this area.
Government needs to incentivize R&D to bring out
innovative products.
With rising afuence o consumers, a signicant change
in the dietary pattern is experienced. What is your
prediction o the consumption which is expected? In act,
price rise o dals has been attributed to the increasing
consumption o protein rich ood by Indians. Do you see
any such uture trends in ood consumption in India?
It is true that the rising income o the population has led
to changes in the dietary pattern o people. The increasein demand or ne rice, vegetable/ruits, eggs and meat
clearly indicates this trend. In act, ruits & vegetableshave registered signicant growth not just in India but
in all developing countries with the demand growthoutpacing the production growth.
Along with the increasing consumption o eggs and
chicken, the demand or maize grain has also increased.
Thereby, an increase in demand or maize hybrid seedis seen. As a seed manuacturer, we need to takeconsonance o such trends.
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There is a lot o buzz about Organic
arming. Do you think it will be a
sustainable movement and what will beits uture in India?
I dont think we are ready or organicarming on a large scale. Our task is cut
out - We have one o the lowest levels oagricultural productivity and that should
be improved to match at least the globalaverage. Once we attain that standard, we
may look at high-value agriculture. Fornow, it is not a priority area.
I multi brand retail FDI becomes a
reality, how will the ace o Indian agri
business change?
Allowing Foreign Direct Investment
in multi brand retail will benet thearmers. In act, both the armers and
retailers may benet by avoiding themiddle men. Lets wait & watch.
Indian corporate sector has made signicant acquisition
o arms in Arican countries. Do you see this
corporatization o arming ever happening in India?Many corporates have initiated arming related activities in
Arica. One has to wait or some more time to understandtheir success. I have no doubt that Arica is going to be the
ood bowl or the world in the uture. The basic dierencebetween Arica and India is the availability o large tracts
o land in Arica, which is not so in India. Within thenatural limits o our agriculture (like dependence on
rain), we can grow only to a limited extent and hence amdoubtul about this.
There seems to be a trend o many youngsters returning
to arming. What will be your advice to the budding
entrepreneurs in the agri business space?
Till recently, the rural young have been shying away
rom agriculture. I am not aware i there is a large trendo youngsters turning back to agriculture rather than
turning their back on agriculture. However I it is true thatyoungsters are returning to this sector, it is the best thing
that can happen to Indian Agriculture and I wish them thevery best!
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THE EDITORIAL TEAM
Aparna Lakshmi (Chief Editor)Aparna Lakshmi is the Head o CorporateCommunication and Knowledge Management at
Vertebrand. Her sectoral interests includes oods andconsumer goods.
Syed HaqueSyed Haque is an Associate Vice President atVertebrand and leads the Research and StrategyDevelopment domain. In addition to businessstrategy and consumer research, Syed is also aspecialist in supply chain management.
Richa ChhabraRicha Chhabra is an associate and part o thebusiness development team at Vertebrand. Herinterests lie in tracking consumer patterns andbehavioral trends.
Karthik SunkaraKarthik Sunkara is an associate and part o the mainbusiness development team at Vertebrand. His areao interest is digital marketing.
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ABOUT VERTEBRAND
Vertebrand is Indias premier Brand Equity Management partnership. We take
turnkey accountability or managing brand equity o products and services on an
outsourced basis and help entrepreneurs take ideas rom mind-to-market.
Occupying the hitherto-vacant space between Management Consultancies on the
one hand and typical Communication and Design rms on the other, Vertebrand
adopts a 360 perspective towards enhancing the business-stakeholder connect,
across all touch-points.
Vertebrand oers a comprehensive array o services spanning the science o
building & managing Brand equity. We have handled dozens o prestigious
assignments across sectors, assisting clients in New Product launches,
Channel Structuring & building, Internal Brand Alignment of employees,
Brand Architecture & Positioning, Corporate Identity Creation as well as Brand
Valuations.
Our expertise spans several industry verticals rom Foods to Fertilizers, Consumer
Goods to Chemicals, Automobiles to Apparel, et al.
Our scientic & proprietary consulting tools are deployed by a team o over 35
consultants with deep-domain Sales & Marketing experience across various
industry sectors.
Vertebrand is todays Indias largest single-window brand-building partnership.
Headquartered in Bangalore, the company has ull-service oces across Delhi,
Mumbai, Chennai & Kolkata.
Most recently, Vertebrand was chosen as the global alliance partner and the
exclusive Asia-Pacic licensee o Equancy International(www.equancy.com ),a premier Digital & Strategic Marketing global consultancy with a network
spanning Paris, New York & Shanghai. Vertebrand & Equancy collaborate actively
in knowledge-sharing & cross-border assignment-handling.
For more details, do visit us at www.vertebrand.com
For business enquiries, contact us at: [email protected]
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Vertebrand Management Consulting Pvt Ltd, No. 119, 1st Cross, 2nd Main, HAL 3rd Stage, Indiranagar, Bengaluru - 560 075, India.T+ 91 80 2521 0277-79 F +91 80 2521 0280 www.vertebrand.com
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