Dear Foodservice Operator: Are you certain India is a good fit for your company?

Guest blog by Tesla Martinez

As many multinationals foodservice leaders search for their next explosive opportunity abroad, it seems many corporations have been operating with horse blinders. They focus on the allure of India’s population; however, they block their peripheral vision of more qualified opportunities in the world.

 

Although India’s population of 1.2 billion people might look lucrative for businesses at a first glance, many struggle to gain significant traction and some have had to close up shop altogether. Both outcomes are very costly. Before selecting India, corporations should conduct due diligence with credible cross-country comparable data to understand the local landscape, as well as local consumer preferences. One multinational company that is successful in adapting to these challenges in the region is Yum! Brands International, which announced plans to ramp up current efforts in India.

Yum Brands' experience and success illuminate the path smaller multinationals need to take to find their way in India. India is one of the largest consumer foodservice generators in the world; however, this fact is due, in large part, to the population size and the number of independent food operators in the country.

A more detailed analysis reveals that (a) household disposable income distribution in India is very low when compared to other nations; and (b) the independent operators appeal to local tastes. Since the most likely consequence is that consumer foodservice multinationals misinterpret the consumer foodservice industry revenue data as showing a country ripe with opportunity, they eagerly jump to enter the market without price point adjustments or fail to tailor menus to appeal to local tastes.

Food preferences in India can range from region to region. For example, coconut-based gravy is popular in the southern region while lentil-based gravy can be attractive in the northern region. Furthermore, religious beliefs can lead to dietary constraints and/or preferences, including in some cases a regulated a time to eat. Although India’s population is large and the demographics disclose a growing younger population, the dining-out culture is still very weak. A world-leading foodservice manufacturer recently informed me that they assumed they needed to be in India. This, in my opinion, is a very expensive assumption not properly grounded on data. 

After conducting a proper market research study for them, Terra Nova Insights identified more than a dozen markets more aligned with their vision and objectives. First stops for this company became China, Japan and South Korea. Yum! Brands International has been wildly successful in China. With over 4,000 units, its China division, Yum! Brands China, is the No. 1 fast-food operator in China. The company is now regarded as a pioneer in unknown territory and known for creating western foodservice frenzies.

On the heels of the incredible success in China, Yum! Brands International plans to concentrate on India as it’s next major growth engine. However, the company is not jumping in blindly. Yum! Brands International’s tactics are guided by research and insight into the Indian foodservice market. The company has already identified price points to resonate with local economic conditions and developed a new Streetwise menu, which includes meals priced between Rs25 and Rs100 (U.S. $0.55 to $ 2.20). The company also adapted its Pizza Hut menus to include local ingredients and flavors, which include vegetarian items, pizzas topped with paneer and a few chicken and pork-based dishes. With the further expansion of Yum! Brands International into India over the next five years, India might now have a better shot at being a “good fit” for foodservice manufactures and suppliers in the region.

Their strategies are sure to shed light on those multinationals waiting in the sidelines. This is the perfect downtime opportunity for these multinationals to take a step back and produce a stellar marketing research strategy tailored to the local consumer and aimed at competing in the market. In the meantime, there are many countries in the world ripe with low-hanging fruits and a far better fit. For a complete list of international brand planning questions, please visit Terra Nova Insights LLC under the website's services section.

Tesla Martinez is the president of Terra Nova Insights LLC. The firm supports international growth strategy for a wide array of consumer foodservice multinationals. For more information, email tmartinez@terranovainsights.com. Please join Tesla in her webinar, "International Business Skills for Communications Executives," on Thursday, Aug. 2. You can participate at http://dld.bz/bAnnx and use the discount code "TeslaMartinez" to receive 50 percent off future purchases. Food & Drink magazine is pleased to present the points of view of many different industry stakeholders. If you would like to contribute your own guest blog to our site, please contact the editor at john.krukowski@phoenixmediacorp.com.

 

 

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