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The brand that Bagri built

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Oats and muesli marketer Bagrry's hopes to ride high on the new health fad in fibre-rich foods

Shyam Bagri, Chairman and Managing Director, Bagrry’s India
Shyam Bagri, Chairman and Managing Director, Bagrry’s India

Debadata Das

A big bowl of crispy golden cornflakes in a sea of milk, with dry fruits, strawberries and mangoes thrown in to add just that little extra zing of freshness! The image of a perfect, healthy breakfast?

How many times have you come across such advertisements on television channels, of cornflake brands proclaiming the advantages of that big bowlful at the start of a long, hard day at work or school?

But here's the bitter truth - cornflakes are probably as bad as bread, biscuits, pasta or even ready-to-eat noodles that are made of refined wheat flour! Shocked?

Well, cornflakes are made of refined grains of very high glycemic index, which means their consumptioncauses a sudden flux in the body's metabolism that could be harmful.

Other disadvantages are that cornflakes are not made of whole grain, don't have dietary fibre and have a relatively low iron count.

Well, but there's no need to worry as healthier alternatives such as oats, bran and muesli that are made of whole grains are readily available in the country today.

In fact, Bagrry's India Ltd, a Delhi-based company, is trying to do just that - make these healthy breakfast supplements more easily available to the health-conscious consumers today. "

Owing to today's fast-paced life, intake of a fibre-rich diet has considerably reduced because eating habits include refined food such as maida-based breads, biscuits, sandwich and burgers, polished rice and pulses.

Such a diet increases the risk of various lifestyle ailments, which is fast gripping today's generation. Therefore the demand forfibre-rich health foods has gone up manifold," explains Shyam Bagri, Chairman and Managing Director, Bagrry's India Ltd.

"Infact, our product re-introduces those essential elements that have now been extractedfrom our dietary habits through our offerings of oats, mueslis and brans," he adds. "

Since a good healthy diet is of prime importance today we take special care in all aspects of product manufacturing beginningwith the selection of the right ingredients to identifying source countries for each ingredient.

Actually, we import oats since good quality oats are not available in India. Only the most preferred worldwide growers and processors are selected on stringent quality criteria.

The commitment to quality continues throughout the processing and packaging phase of production to ensure that only the best reach the consumer," explains Bagri.

Bagrry's current portfolio consists of white oats, oat bran and wheat bran, oat porridge, oat meal, wheat germ, special oat wheat cereal, and muesli variants such as crunchy muesli, fruit muesli, high-fibre lowcalorie muesli, and Swiss style muesli.

Having started out as a flour company in 1986, a large part of Bagrry's current business still consists of flour production, withflour mills in Delhi, Uttar Pradesh and Rajasthan. The company boasts of a clientele that includes Nestle, Britannia, Glaxo Smithkline, ITC, Heinz and Domino's.

"Moving to high-fibre breakfast cereal manufacturing and marketing was a very natural transition for us, as wheat forms the key ingredient. Our first product was wheat bran, as wheat was readily available from our milling business. After that we slowly transitioned into oats, as it required a separate method of processing and then muesli. For the latter two, we set up a new processing unit in Himachal Pradesh as both come under the excisable bracket," elaborates Bagri.

Since the launch of its breakfast products, the company has come a long way. "Over the years we have established a relationship based on trust with our customers. This is why we will never market cornflakes under our brand name," he says.

Bagri emphasises that communicating with customers forms the first step of building a relationship with them. "And the best form of communication for us is the word of- mouth way, when someone consumes our products and recommends it to his/her acquaintance, friends or relatives," says the Chairman.

Other forms of communication that Bagrry's does are mainly the point-ofpurchase promotions where it gives away complimentary products on the purchase of certain items. Trained executives educate customers at retail points about the health benefits of the products and the manner in which to consume them.

Also, seminars for doctors are organised. "In fact, in several hospitals across the country, doctors increasingly prefer to recommend such highfibre whole wheat products for breakfast to their patients over other more commonly used edibles," elaborates Bagri.

The company also intends to go on air with its communication campaigns eventually. "We are expanding. We are in the process of adding more variants to our muesli portfolio. We are getting into new categories as well. The plan is to foray into the health bar and popcorn segments.

Though the health bar market is very small right now, it is bound to develop fast," he explains. Though the company has not decided on a brand name for the new products, it will finalise the details before the launch of both products in the next three months.

Bagrry's, which till now garnered almost 60 per cent of its revenues from the breakfast supplements section, is deepening penetration into the northern markets, one of its key focus areas for the future. In fact, with increase in demand for the products, the company intends to also set up two new manufacturing facilities for the purpose, one in tax-haven Himachal Pradesh and the other in New Delhi.

While the unit in the Capital will have a capacity of one tonne per day, the Himachal Pradesh unit that will be functional by July will have a capacity of five tonnes per day.

The company is pumping in an approximate investment of Rs 5 crore into the two facilities. Baggry's is growing at 55-60 per cent a year. Last year it sold breakfast cereals worth Rs 24 crore and targets a sale of Rs 40 crore in '07-08.

The group turnover this fiscal will be Rs 125crore, up from Rs 100 crore last year. Says an analyst tracking the foods sector: "The breakfast cereal market is a growing market in India. In fact, with Western influence and an increase in health consciousness, this market is bound to pick up.

So its always good news for people like Bagrry's who market such products." Exports are also an exciting area for the company. Currently it supplies to countries such as Nepal and Bhutan. It is now more exploring options in several West Asian markets.

However, the exports scene is likely to pick up steam only after the duties have been brought down to reasonable limits. Not everything in the company's future plans is hunky dory though. "The biggest hurdles we face today are the exorbitant duties and taxes we have to pay at each and every step. Since good quality oats are not available in the country we have to import them, which amounts to heavy import duties.

Then there is 16 per cent excise duty and half per cent VAT, over and above the octroi charges we have to pay to supply our products to places in Maharashtra and other States, thereby bringing the total amount of taxes and duties we have to pay to almost 36 per cent. We have been absorbing these amounts so far and not been burdening the consumers with them. Something like oats that has high nutritional value still has to got hrough such high tax barriers," he points out. P>

(This article was published in the Business Line print edition dated July 5, 2007)
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