Over a multiyear effort, Sathguru advised an Indian start-up (later acquired by an Indian business group), access relevant technologies, establish a manufacturing facility and develop a comprehensive business plan to emerge as India’s first export-oriented soluble coffee business. A strategic roadmap and technology-led competitive advantage was critical to opening new avenues for growth for Indian food processing ventures.
Context: Indian venture with aspiration to foray into coffee sector with focus on exports
Our client, a greenfield Indian food processing company, was keen on venturing into coffee sector with primary focus on higher-margin exports. The Indian coffee exports at that stage were mainly in the form of coffee beans which were low in value. Sathguru developed overall strategy and supported the venture through the process of establishing business footprint and gaining competitive advantage to penetrate the global coffee market.
Scope
Scope of Sathguru’s engagement included:
- Market research, value chain analysis and opportunity assessment: Assessing global market opportunity in the coffee business, competitive landscape, composition by product category and growth avenues
- Key contours of the business plan: Recommending product portfolio, potential markets and manufacturing technologies
- Operational handholding: Providing technical and managerial support for business incubation
Approach
The coffee exports segment in India was dominated by large players who typically owned large estates and exported minimally processed coffee beans. As this segment was highly competitive and capital intensive, Sathguru’s approach was to identify a technology-oriented niche opportunity that maximizes return on investment.
To achieve this, Sathguru:
a) Conducted detailed market research and value chain analysis:
- Analyzed value addition at different stages of the coffee value chain
- Mapped and projected key growth trends of different coffee products and identified products with export potential
- Assessed global consumer trends, emerging expectations and implications for the business plan
- Analyzed the competitive landscape and assessed the competitors’ value proposition
b) Ascertained latest technologies and infrastructure for coffee production and identified technology providers (the basis for subsequent support on technology access facilitation)
c) Developed a strategic business plan/project report for accessing the identified markets, gaining technology-led competitive advantage and positioning for growth
Recommendations
Based on the assessment of the Indian market and global opportunities, Sathguru made the following recommendations:
- Avoid the highly competitive and capital-intensive coffee beans export and explore high value-added niche segment of instant coffee
- Build state-of-the-art infrastructure with technology that was futuristic to maintain the niche and gain competitive advantage
- Initially focus on US markets and follow a staggered approach to other markets
We combined our strategic recommendations with a pragmatic project report/business plan with an estimation of capital outlay, business projections and assessment of risk and return on capital. Sathguru also supported the implementation of the business plan with technology scouting and critical partnerships for technology access.
Impact
The client was a pioneer in establishing the country’s first export-oriented soluble coffee plant. Armed with a well-conceived strategic plan, the Client was successful in setting a trend in the value-added coffee segment overall Indian food processing landscape. This not only helped the client but also helped the coffee industry to establish an identity for Indian coffee in global markets and move up the value chain.