When Oliver Mirza came to India in early 2008 as head of the India vertical of German food company Dr. Oetker, the idea was to sell products which the world’s biggest frozen pizza maker was globally known for—home baking, western desserts and food service.
So Mirza, loaded with tons of global insight, experimented with frozen pizza in Mumbai and enthusiastically launched muesli. But the idea bombed. Reason: home baking division was not a huge market, the concept of frozen pizza was far too early for the consumers and chilled dessert market was at a nascent stage in India.
“So we went for an acquisition to buy a small platform which you can mould and build,” recalls the managing director and CEO, adding that Dr. Oetker bought Delhi-based Fun Foods, makers of packaged food products such as Mayonnaise and sandwich spreads, in December 2008.
The move seems to have paid off handsomely. From just Rs 28 crore in 2008, Dr. Oetker posted revenues of Rs 120 crore last year. But what’s more heartening for the largest mayonnaise player in India is the jump in the retail sales: from Rs 14 crore in 2008 to Rs 100 crore in 2015—a jump of over seven times. And the Dr.essing on the cake came in August this year when it posted its highest-ever monthly sales of Rs 14 crore.
“Now we plan to be Rs 500-crore brand by 2020,” he says. Is Mirza jumping the gun? Figures don’t suggest so. The mayonnaise market in India, which was estimated to be at Rs 225 crore in 2014 by consumer market research firm Canadean, is at an inflection point in the country and likely to touch Rs 1,000 crore by 2020.
What’s pushing the growth are rapid urbanisation, increasing disposable incomes and growth of modern retail outlets, all leading to consumers experimenting with Western cuisine.
Euromonitor, in its last year report's on “Sauces, Dr.essings and Condiments in India,” pointed out how busy lifestyles prompted time crunched consumers such as working men and women in urban India to look to easy solutions such as cuisine specific ready mixes with detailed instructions on how to cook them on the product packaging.
Aiding this trend is the growth of the middle-income consumer base, growing disposable incomes and growing numbers of nuclear families.
In addition, high aspirations for food helped sauces, Dr.essings and condiments to grow in 2015, the report said.
While ketchup is the most popular table sauce in India and it demonstrated strong value growth of 13 per cent in 2015, Mayonnaise is the fastest-growing table sauce with a value growth of 23per cent in 2015 in India. According to industry sources, eggless mayonnaise sales contribute around 80 per cent of the overall mayonnaise volume in India.
What also gives Mirza immense confidence in betting big on mayonnaise is a global fact: mayonnaise is bigger than ketchup across the globe. In US, mayonnaise is $2 billion and ketchup is just $800 million, claims Mirza. Look at the UK, Germany and France, mayonnaise is bigger than ketchup.
“The same story will play out in India as well,” he prophecies, adding that versatility of mayo over other sauces gives it an edge. “We are the biggest mayonnaise player in India,” he says.
Agrees marketing experts. Ashita Aggarwal, head of marketing at SP Jain Institute of Management & Research, contends that as a versatile ingredient, mayo can be added to all kinds of food, including salads, fast food items, rolls and frappes. “This gives flexibility to experiment,” she says.
What’s also aiding its growth, she points out, is the changing customer profile. The mayo consumer is a new age mother who is career oriented, does not feel guilty about using smart solutions to make food tasty and seeks variety for her kids. “Mayo as an ingredient hence comes as a mother’s friend,” she says, adding that the entire condiment category, including mayo, will find a more prominent place in Indian households as Indians get more exposed to Western food. Mirza, for his part, knows that mere exposure to Western food won’t ensure success in India. And he can vouch for it from his share of learning.
“Whatever we do internationally, nothing works in India,” he says, pointing out his first biggest lesson. Globally, largest-selling flavour for Dr. Oetker is vanilla, whether it’s cake mixes or milk shake powder. Chocolate is not so important and vanilla has real pieces of vanilla, in the product, says Mirza.
But in India, in 2008, among the allvariants of milk shake mixes in its product portfolio, the worst seller was vanilla. “I presumed that vanilla is performing badly because there are no real pieces of vanilla in the milkshake powder,” says Mirza, adding that he decided to put pieces of vanilla in the mixes. But, to his utter surprise, sales fell even further as people perceived pieces of vanilla to dust.
Moral of the story: In India, people think differently, so you need to focus on needs and essentials. “You cannot come with international concepts,” says Mirza, who calls himself a German-Indian hybrid. Mirza’s father was an Indian who moved to Germany in 1950s.
Dr.awing from the above lesson, India is the only country where Dr. Oetker has introduced vegetarian mayonnaise and has only one egg variant. While globally, mayonnaise has over 80 per cent fat and has cholesterol, in India the brand has come up with a 20per cent fat variant and zero cholesterol, claims Mirza.
“It’s important to understand India with its local needs,” he says, adding that mayonnaise in India is creamy unlike in the US and the UK where it’s starchy.
Though Dr. Oetker has been adapting to the taste of the Indian consumers, experts feel that it needs to be wary about is spreading itself too thin.
Mayo has shorter shelf life than ketchup and needs to be refrigerated once opened. “Therefore, people may have to throw the unused Mayo earlier than ketchup,” says Aggarwal of SP Jain Institute of Management & Research. Also, once in the refrigerator, it may get pushed back and forgotten by the non-regular users. This may become a bottleneck in purchase patterns and people may demand smaller SKUs which may affect sales and revenues, she adds.
Another challenge for the German brand could be to tackle the perception of mayo being a ‘junk’ food due to its fat content. Mirza, for his part, is not bothered. “The Dr. in Dr. Oetker will take care of the health,” he signs off.