How did Naturals defeat giants such as Kwality Walls, Amul, etc, in the Indian market?

Image Credits: Curly Tales

How did Naturals defeat giants such as Kwality Walls, Amul, etc, in the Indian market?

Naturals was founded by Ragunandan Kamath in 1984. He was the son of a fruit seller. Since he was well versed with fruits, he decided that he should venture into fruit ice creams. He also realized that in the name of fruits, brands were using artificial preservatives such as synthetic flavors, lab chemicals, etc.

He started initially with just a 200 sq km shop and 4 employees. He didn't have a massive budget.

His goal was simple. He wanted people to have ice cream with no artificial chemicals but should have real fruits. He wanted to give people quality natural ice creams.

What he decided to do before starting with ice cream was a game changer. He decided to use Strategic Consumer Business Engineering. In business theory, it is called the Anchor Innovate Adoption Model.

What does this mean? It's a strategy where you introduce a product to the customers of the place where you are starting, like. For eg: He knew that Mumbaikars loved Pav Bhaji. He started with only that initially. When the customers started thronging for the dish, he slowly introduced Ice Cream. By the time he introduced ice cream, people already knew about the brand, so the sales skyrocketed to 1000 cups in just the first weekend. Over here, Pav Bhaji played the Anchor role, whereas the ice cream played the Innovation role.

Something happened in 1991 session budget, which was not such good news for Indian brands.

Ex Prime Minister Dr Manmohan Singh had liberalized the Indian economy. There were major changes to the Indian economy. International brands could come and sell their products in the Indian market.

Due to this, the market was open to foreign brands because of which there was stiff competition for the Indian brands in the market now.

Baskin Robbins was the first ice cream brand to launch in India. It was an American brand. They introduced 31 unique flavors of ice creams in the market.

In the same year, India's biggest FMCG company, Hindustan Unilever, merged with Kwality to create Kwality Walls.

Amul stepped into the race of producing ice cream in the year 1997. Amul already had a household name because they were into milk supply for many years.

All these brands except Naturals had massive budgets and distribution systems.

Ragunandan Kamanth knew that he had already had something that other brands didn't.

Since most of the brands were based abroad, they didn't have much knowledge about the kind of flavors to cater to India. And more so, they were selling frozen dessert and not ice cream. If you replace milk with vegetable oil, then ice cream will stay for longer. But the texture and taste will completely change.

Since brands such as Kwality Walls, Amul, etc, were catering to the entire of India, they would have to spend on logistics, preservatives, etc. Top of that, they would have to bring the costs down because they were targeting the lower income groups.

Whereas Naturals was the elite groups. He was targeting 1 location at a time, so because of that, he didn't need to spend much on logistics, etc. For him, quality mattered more than quantity. And because his goal was to sell ice cream without preservatives, there was no question he would add chemicals.

A second point to be made here is that in the 1990s, if you would ask your parents to eat a Sitafal ice cream vs. an ice cream that has a weird name. What will they choose, Sitafal ice cream, right?

Sitafal ice cream was the first ever fruit ice cream introduced in Naturals.

Later, he introduced ice cream such as Mango, strawberries, etc.

He also used a brilliant strategy later on. He knew that people would get bored if he had the same ice creams every time they came. He introduced unique ice creams such as Kajar Ka Halwa ice cream so that customers come running daily before it's out of stock. This helped him scale his business to new heights.

Amul implemented the Hub Spokes Model, which they used for milk. The Hub is a central processing plant where the products are tested, processed, packaged, and moved out to regional distribution centers called the Spoke. From the Spoke/store, we purchase and take it home

Because of these factors, Naturals was not harmed in a great way and is flourishing in a great manner.

Naturals have many stores in India currently. Their growth was slow and steady. They used a method where they could predict sales and stock up accordingly. For eg: If they knew Sitafal ice cream was about to go out of stock in 1 store. They would immediately supply only that to the store. They had great coordination between their stores.

The growth of Naturals is remarkable. Without a hefty budget, they could make it a 300 Crore business. I was inspired by their story.

So what do we get to learn from this?

You need to start slow and steady. You should have a vision in mind only then you will achieve it. It doesn't matter if you are starting with a small budget or a huge budget, how you direct it is more important. If you run behind what your counterparts are doing, it isn't guaranteed if you will succeed or not. Believe in your strategy and make decisions. If he hadn't made his own decisions, he wouldn't have been able to create a 300 Crore business empire.