PRABHAT DAIRY A SWEET SOLUTION

Transcription

1 PRABHAT DAIRY A SWEET SOLUTION EDGE CONSULTING University of Alberta

2 ISSUE IDENTIFICATION How does Prabhat Dairy increase their branding and presence in the B2C Indian market?

3 SOLUTION THE PRABHAT SWEET SOLUTION

4 CURRENT SITUATION Local player in the Indian market 70 / 30 B2B versus B2C revenue. Only 20% of B2C capacity used KEY TAKE AWAY: B2B creates logistical and financial Pricing is lower challenges Products include condensed milk, polypack milk, ghee B2B has high logistical requirements

5 ANALYSIS Strengths: Weaknesses: - ISO certified - Low presence in the B2C - Established - No branding - Great relationships with supply chain - Missing marketing and distribution - Wealth of knowledge KEY TAKE AWAY: Opportunity in B2C SWOT Opportunities: Threats: - Distribution Models - Multinational companies in Tier 1 cities - Grow in B2C market - Local co-ops in Tier 2 and 3 cities - Value added products - Growing too fast in B2B - Yogurt

6 THE 5 FORCES New Entrants 6 / 10 Supplier Rivalry Buyer Power Power KEY TAKE AWAY: Competition 4 / is / 10 high in this 6 / 10 market Substitutes 2 / 10

7 THE 4 P S Brands: Prabhat Milk Magic Flava Mahashtra and nearby areas Large chain stores 15,000 Kirana stores Place Product Promotion KEY TAKE AWAY: Pilots in Tier 1 cities were very effective Price Kirana stores Mini stockists Large chain stores Polypack, condensed, flavoured milk Yoghurt Ghee Paneer Slightly below Amul 15% below MNC

8 ANALYSIS PRODUCT MARKET SIZE CAGR (%) RETAIL PRICE MARGIN (%) Milk 35, Ghee 5, N/A KEY Cheese TAKE AWAY: 997 High 22 market opportunity and Curd 5, margin in the sweet value added products Paneer N/A Yogurt N/A Flavored Milk 2, Ice Cream 2,

9 DAIRY IN INDIA: Products and Market CHEESE 33% Products MILK 33% YOGURT MILK CHEESE YOGURT 34% India has high demand growth = 10% Northern India consumes more milk City consumption of milk products is higher than rural Milk vs. value-added milk products Buffalo milk KEY TAKE AWAY: Consumption is higher is Tier 1 cities

10 DAIRY IN INDIA: Cooperatives Multinational companies (MNCs) Private domestic players KEY TAKE AWAY: Diverse competitive landscape

11 CUSTOMER EXPERIENCE Hear - A lot of good sweet products - Many options Think and Feel See - Prabhat + Flava + Milk Magic - Large chain stores - Kirana stores KEY TAKE AWAY: Customer loves sweet products - Award winning - Great quality Say and Do - Purchase mostly milk and some value-added products

12 FINANCIAL SUMMARY IPO capital 45 million Working capital Account Receivables (35 to 76 days) KEY High TAKE Inventory AWAY: holding B2C market costs (17 will days lower to 23 or days) eliminate these challenges Profit decreasing ( -6%)

13 FINANCIAL SUMMARY B2C *Values in USD Total Food and Beverage Market 4,782,089,552 5,499,402,985 KEY TAKE AWAY: Growing market Current Market Capture 3.653% 3.653% B2C Operations Percentage 30% 30% Revenue 44,970,000 52,410,448

14 CURRENT REVENUE FORECAST *Values in USD 90,000,000 80,000,000 70,000,000 60,000,000 KEY TAKE AWAY: Approx. 15% market growth year 50,000,000 over year 40,000,000 30,000,000 20,000,000 10,000,

15 THE SWEET SOLUTION REVENUE FORECAST *Values in USD 180,000, ,000, ,000,000 KEY TAKE AWAY: Approx. 95% market growth year over year 120,000, ,000,000 80,000,000 60,000,000 40,000,000 20,000,000 - B2C Forecast :50 B2C

16 ALTERNATIVES Option Distribution Cost Growth Competition 1. Enter international markets 2. Focus in Tier Cities 3. Focus on Tier 1 cities

17 ALTERNATIVE 1: International Markets PROS - Have supply chain knowledge - New markets CONS - New regulations - High capital requirements - Distribution challenges - Local competitors - Foreign markets

18 ALTERNATIVE 2: Focus on Tier 2 and 3 cities PROS - Already present in some Tier 2 and 3 cities CONS - Distribution network challenges are large - Large geographic spread - Marketing for small cities is hard

19 ALTERNATIVE 3: Focus on Tier 1 cities PROS - Growth potential - Cheaper pricing compared to competitors - Already established in Mumbai CONS - High competition - Will incur marketing costs

20 RECOMMENDATION PRABHAT SWEET SOLUTION Tier 1 cities Value Add Products Growth Marketing

21 IMPLEMENTATION Expand marketing in Mumbai Organize for growth Increase retail Silvassa Gandhinagar Jaipur New Delhi Year 0 Year 1 Year 2 Year 3

22 SHORT TERM Action Timeline Cost Key Performance Indicator(s) Expand marketing efforts in Mumbai 1 3 months 2 million Brand perception >80% Hire sales people Increase marketing team Hire ice cream developers 1 month 250K 100K 100K 50 salespeople 5 marketers 5 product developers Secure large chain and Kirana stores Apply Raftaar model to Silvassa Mini stockist model 2 6 months 10 large chains 10,000 stores 6 12 months 7.5 million Brand perception >50% 20 distributors 5 large chains 10,000 Kirana stores

23 MEDIUM TERM Action Timeline Cost Key Performance Indicator(s) Apply model to Gandhinagar months 7.75 million Brand perception >50% 20 distributors 5 large chains 10,000 Kirana stores

24 LONG TERM Action Timeline Cost Key Performance Indicator(s) Apply model to Jaipur and New Delhi months 15 million Brand perception >50% 50 distributors 10 large chains 20,000 Kirana stores

25 CUSTOMER PROFILES Abhishek the Chai Walla 15, male Works every day Loves to end the day with his favorite ice cream Priorities: cost, convenience Komal the Working Mother 35, female, educated, working 2 children Provides Flava milk and yogurt to the children as a treat because it is ISO certified Priorities: health, convenience, appeal to children

26 THE 4 P S Tier 1 Cities Large chain stores Kirana stores Kirana stores Mini stockists TV Ads Endorsements Packaging Place Promotion Product Price Flavored milk Yogurt Ice Cream Slightly below Amul 15% below MNC

27 FINANCIAL INVESTMENT IPO Capital 44,776,119 4 Year Investment 40,000,000

28 INVESTMENT BREAKDOWN ,000,000 3,000,000 3,000,000 3,000,000 3,000,000 2,000,000 4,750,000 6,000,000 6,000,000 6,000, ,000 Total Cost per year 5,250,000 7,750,000 9,000,000 9,000,000 9,000,000

29 FINANCIAL RESULT *Result in 10% Growth over and above existing rate 140,000, ,000, ,000,000 80,000,000 60,000,000 40,000,000 20,000, B2C Forecast 52,410,4 60,272,0 75,340,0 94,175,0 117,718,

30 PROFIT 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000-2, , ,020

31 OBSTACLES 11 Impact on Prabhat Regulations Market Penetration Competitors Probability

32 MITIGATION Obstacle Regulations Market Penetration Competitors Actions Mitigation - Keep communications with government open - Build in increased costs in pricing - Test markets in new cities - Periodic assessments for consumer awareness - Maintain Pricing strategy - Monitor competitor behavior - Reinforce relationships with suppliers - Continue R&D

33 TAKE AWAY Tier 1 Cities Sweet Products B2C = B2B

34 APPENDIX % of Market Food and beverage 60%534,000,000, ,100,000, ,215,000, Portion of Market 320,400,000, ,460,000, ,729,000, ,147,250, ,288,350, ,969,337, ,381,602, ,074,064,738, ,438,842, ,782,089,552 % of F&B Market Capture 3.653% 5,499,402,985 6,324,313,433 7,272,960, Current Forecast Rupees 11,705,000,000 13,460,750,000 15,479,862,500 17,801,841,875 20,472,118,156 8,363,904,515 9,618,490,192 23,542,935, ,074,376,262 Current Forecasted Revenues USD 174,701, ,906, ,042, ,699, ,554, ,387, B2C Forecast 44,970,000 52,410, ,272, ,312, ,709, ,666, ,416,130.80

35 APPENDIX GROWTH OPPORTUNITIES FUTURE Protein Shake Vitamin enriched milk products Branded flavored powdered milks

36 APPENDIX Political Economic Social Technology Legal Environmental Stable Different states have different systems High Growth Increasing disposable income Caste system Growing middle class Developed Equipment available Some regulation Little environmental regulation