Over a five-year period, Sathguru assisted an Indian chocolatier to develop a differentiated product portfolio to consolidate its position as an innovator and leader in cocoa derivatives and cocoa products. Sathguru handheld this client in the food processing segment through the complete incubation process from product conceptualization and technology access to business strategy and market penetration roadmap.
Context: Creating market entry and growth roadmap in fiercely competitive international and domestic chocolate market
Our client, a greenfield Indian food processing company, was aspiring to foray into international and domestic chocolate markets. The Indian chocolate industry at that time was dominated by contract manufacturers for large multinationals and was fiercely competitive with little scope for new entrants. The client sought Sathguru’s advice to develop a strategy and operational roadmap to gain competitive positioning and penetrate this highly competitive market.
Scope
The scope of Sathguru’s engagement included:
- Market research and opportunity assessment: Identifying and assessing different market segments and their drivers both in India and international markets. Assessing overall opportunity merit, geographic composition, potential for enhanced profitability and drivers of competitive advantage.
- Strategic roadmap: Conceptualizing a differentiated business strategy for competitive positioning and market penetration in cocoa processing sector.
- Portfolio planning: Developing differentiated product portfolio and accessing relevant technologies.
- Business plan: Developing a comprehensive business plan and project report including assessing level of investment entailed, financial viability and return on investment.
- Operational handholding: Handholding the venture through the business incubation lifecycle and key milestone of technology access and strategic partnerships.
Approach
Sathguru’s approach was to create a differentiated strategy for this process processing company by focusing on value added cocoa products that were not pursued by the established players
To achieve this, Sathguru:
- Identified high value cocoa derivatives that could be developed in India and had potential in Indian and global markets
- Conducted detailed assessment of technology packages available for processing and developing cocoa derivatives.
- Conducted global market and industry assessment to:
- Identify and analyze major competitors operating in this market segment
- Map research and industry trends
- Analyze and identify the markets/customer segments across the globe for exporting cocoa derivatives and intermediaries to be used as ingredients in final food products
Recommendations
To implement an innovation driven model that ensures development of advanced products and growth in new markets, Sathguru recommended the following as key elements of the business plan and market entry strategy:
- Pursue manufacturing of value-added cocoa derivatives instead of low value contract manufacturing of chocolates.
- Establish a product development center, equipped with capabilities and resources capable of undertaking research activities.
- Procure (licensing or acquire IP or access technologies through strategic partnerships) latest technologies that would enable production of cocoa derivatives of international standards.
- Follow a staggered business expansion strategy for sustained growth in new markets.
Impact
Sathguru’s holistic advisory services, including technology, marketing and financial recommendations ensured competitive positioning and rapid penetration of client’s products in Indian markets. The business plan we developed paved the way for profitability that was substantially higher than Indian industry benchmarks in this segment of food processing. The strategy also pioneered exports of cocoa derivatives from India besides the export of cocoa beans only.