Keggfarms (India)Which Came First, the Kuroiler or the KEGG?

Keggfarms (India)Which Came First, theKuroiler or the KEGG?SwathyRaviKantVirinchiHariKrishna

1KeggfarmsFounded in 1967 by Vinod Kapur with the vision to build a profitable company that would bring Income & nutrition to Indias poor, rural villagers.It engineered a chicken that adapted to rural Indian conditions to produce twice as much meat and five times more eggs than existing varieties.By 2006, (3 years after Kurolier & KEEGS) the company had cracked less than 3.5% of the poultry HouseHolds2The hiccups The company revenue in 2005 was Rs.160 million, and the social change Kapur dreamed of was decades away with this growth!Imitations, both Kurloire and KEEGS had a bogus market almost equivalent to size of KeggfarmsThe Imitations was not only effecting the companys revenue but also exploiting the poor Households living on themThe issue is to improve all the above 3 aspects and realize the immense opportunity the Indian market provides3The situationThere is an opportunity with the 30 million households in the interiors of India which raise chicken in their backyard for eggs & meatThe urban market which had immense demand and capacity to buy did not have access to the produce due to poor infrastructure connecting the villages to citiesIt is a case of a hugely untapped market divided to two aspects: providing breeders with chicken variety they need (U R) and providing the urban customers the product (R U)

4Market demandThe traditional eggs and meat were preferred over the Broiler and Vencobb chicken and eggs as they offer more taste, health benefits & shelf lifeNECC (acc to website) sites a growth rate of 5% for eggs and 11.2% for meat consumptionThe market Tasty egg by KEGGS has generated immense demand at a price double than reg eggs, from 1400 cartons/day(2006) to 2000 cartons/day (2007) still not enough to meet the huge demand of 3.5 million eggs in Delhi alone

5The rural breederA traditional rural breeder raises 5 to 15 chickens in the backyard for eggs and meat which survive on savaged seeds, insects, scarpHence this chicken has been Naturally selected to have colorful plumage, agility, disease resistanceThe eggs have a certain tan on the shell and the meat is tastier then regular2 major dilemmas the raiser faces are: 1) when to convert the mature birds to meat 2) how many chicks to buy as u cannot know the sex of chicks until its several weeks old

6KeggFarms solutions/Productsthe Kuroiler, an acronym derived from the words Keggfarms, curry, and broiler. had the following characteristics: It was multicolored for camouflage and because Indian consumers believed that white chickens were intrinsically inferior. It thrived on household waste, scraps, bugs, insects, seeds, vegetation, and pulverized sea shells and therefore did not compete with the poor, rural villagers for expensive grain or require any special feeding. It required no special animal husbandry methods, protection, medicines, or sheltering that could not be cheaply provided by using scrap materials readily available to poor, rural villagers. It was big, aggressive, and wily enough to fend for itself in the open backyard environment. It was genetically resistant to disease.7AdvantagesThe Kuroiler by comparison with conventional rural chickens, was meatier and more productive.Normal Hens attained 2.5 kg within 12 months, began laying eggs at five to six months of age, and then laid150200 eggs during their 12 to 16 month egg-laying period, initially more than 20 eggs per month.The Kuroiler rooster reached 4 kg in 12 months and a weight of at least 1 kg at around three months,at which weight it could be sold for meat if the owner chose. Kuroiler meat was vastly more tasty than both conventional backyard chicken meat and industrial supermarket broiler meat.8Kuroiler FFGa meat chicken that simply grew fasterthese chickens required less feed per kg weight attained. Also, chickens sell at a much higher premium over normal broilers.In 2009, plan is to sell 15.8 million Kuroilers and 11.7 million FFGs.KEGGSTastier, branded eggsPresently sold in NCR, a huge success

Both KuroilerFFG & KEGGS are vastly premium products generate extra margins to the company.9The Innovative supply chain

10Channel MemberDescriptionUnits and costDealer, 500 Kegg Farm dealersBuy 1 day old chicks and breed for a week, the lot size id 1000 chicks, the delivery dates and lots sizes are pre arrangedAround 2000-5000 chicks are purchased at Rs.7.5-8 and sold atRs.9 may even sell to vendors/villagers directly Mother units, 1500 MUs were set upThe chicks from deals stay hear for 3 weeks, a MU can be setups anywhere based on capablityMU buys 500-1000 chicks fro Rs.9 and sell to Vendors at Rs.20. additional cost of Rs.6-8 for feeding, mortality etc.Chicken Vendors 1500 vendorsAffiliated-independent groups of 10 mem each, use bicycles to reach to Households can also breed chicken themsevlesGroup buy a lot of 100 chicks for Rs.20/chickRural Households around 700,000 rural households raise KuroilersA 5 months old hens starts laying eggs for almost 12 months about 150 eggs, after which the meat can be soldTypically have 10 mature birds, acquire for Rs.30/chick. Could sells eggs & meat directly in market or to dealer for Rs.2.40/egg and Rs.70/kg of meat

11The Problems re-definedThe case isnt about marketing per say, the major setback is the funding required for a budding entrepreneur to do social justice and hence has low margins. Its a Entrepreneur Financial case on the macroscopic level.The immediate problems are the imitations and empowering/educating the rural poor/ reaching out more to them and hence grow accordingly.Which requires identifying the entire market in an organized manner and developing distribution infrastructure (which again requires investment)

12What now!The company immediately needs to separate the two aspects of the business (2 SBUs) 1) high margin businesses (Kuroiler FFG& KEGGS) 2) the rural empowerment businesses (Kuroiler meat)Since Kapur personally does not want to be financially liable for expansion funding the company can liquated and venture investors for its fast moving high margin SBU and try to develop one more variety for commercial purposes like Fast foods& restaurants under KeggFarms name to generate revenue for company, brand and invertors.Manage cash flows form this to the rural SBU to empower the vendors and households.

13The problem of imitation in Kuroiler cannot be dealt with immediately without incurring huge costs as well, company need not worry far too much as the market is just getting acquitted to such a product, generating awareness, creating a brand, empowerment is a long way down, and will take huge time efforts and investments to establish.For this, KeggFarms must strategically make tie-ups with NGOs, NECC, and other Govt agencies to achieve the long term mission of the firm to bring Income & nutrition to Indias poor, rural villagers .14Another commercial way of doing itGo the Suguna way:Suguna Poultry is one of the major players in the fragmented poultry industry in India. Suguna is a classic case of commodity branding.Suguna Poultry started its operations in 1984.Suguna came into a difficult market with a difficult idea. Branding chicken! But through heavy investment in the media, Suguna was able to create a mind space for itself .Suguna was promoting itself on quality and tenderness.Suguna has sold live birds and eggs worth Rs 2020 crore in 2007 without owning a single poultry farm. That makes their business model interesting. The company pioneered contract farming in the poultry industry in India. The company source their produce through 12000 contract farmers across different states.Suguna owns the day -old-chickens , feed and feed medicine and the contract farmer is responsible for the day to day management of the farm. The farmer gets the assured income while the company takes care of the risk . In that way Suguna can channel its valuable resources to marketing and distribution.15Then the company entered into another lucrative market of selling branded egg. Each year India produces around 47 billion eggs worth Rs 10,000 crore.Suguna has four egg brands and sells over one million eggs a month. Suguna launched these value added egg which is fortified with vitamins. This is done by feeding the laying hen with specialized nutrient feed.I am a regular customer of Suguna eggs.The brands areSuguna ProSuguna ActiveSuguna HeartSuguna ShakthiSuguna is a commercial brand as such different form Keggframs but is successful in fulfilling the social market in its own way.16

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