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launching a coconut based drink in the market

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  1. 1. 1. Introduction<br />The total beverage industry in India is estimated to grow at 17% this year. In Indian soft drink market, the two names which have marked their heavy presence are Coco Cola and Pepsi. The market for these carbonated soft drinks in India stands at Rs 7,200 crore in 2007 which has plummeted by about 5% for the second consecutive year in 2007 as Indian consumers are increasingly opting for healthier beverages such as fruit juices and fruit-based drinks, and even bottled water. Thus, the carbonated drinks category is facing the heat of the rising competition from categories falling under the health umbrella. With people turning more health conscious, the non-carbonated beverage segment has become one of the fastest growing and most exciting businesses at the moment<br />2. Rationale behind the project<br />Coconut water has been known for its natural health benefits that it offers to human kind. The water of tender coconut, technically the liquid endosperm, is the most nutritious wholesome beverage that the nature has provided for the people of the tropics to fight the sultry heat. It has caloric value of 17.4 per 100gm.<br />" It is unctuous, sweet, increasing semen, promoting digestion and clearing the urinary path," says Ayurveda on tender coconut water (TWC).<br />But, to come up with coconut water drink in packaged form and to cater regions all across India definitely requires answering some essential questions. Some of them are like what is the current coconut production in India? What are the regions which are actively into the production of coconut and have high productivity? What is the availability of coconut water in other than coconut producing regions? What is the demand for coconut water in India? Why people would prefer packaged coconut water if it gets available?<br />Today, India is one of the leading producers of coconut in the world (ranks third) producing 13 million tonnes per annum. Kerala, Tamil Nadu, Karnataka, Andhra Pradesh are the highest producing states contributing 90% of coconut production in India which can be seen from the table (for year 2006-07) shown below. Area under cultivation in India is around 1.93 million Hectare where Kerala has the highest cultivation area of 0.898 million Hectare. In India, productivity for coconut has been increasing since past decade. In 2006 -07, productivity increased from 7608 to 8165 coconuts per hectare. <br />Table 1: Statewise production and productivity of coconut<br />StatesProductivity(nuts/ hectare)Production (mn nuts/annum)Kerala70466326Tamil Nadu131334867Karnataka31391210Andhra Pradesh8577892West Bengal 323.5Orissa 274.6Maharashtra914548273.4Assam 204.9<br />Source: www.indiastat.com<br />From the table, it can also be seen that Maharashtra has the highest productivity for coconut. Therefore, in future, it might come up as the largest producer of coconut if more area is brought under cultivation. Hence, one can say that there is a huge potential in India as far as production of coconut is concerned which is directly linked to the potential of coconut market.<br />Today, health has become a major issue for everyone in this world. And, therefore, people are more inclined towards those foods or drink products which can keep them fit and healthy. Therefore, there is huge potential for the demand in India for packaged coconut water as though, coconut water provides large health benefits with cooling and refreshing effect but it is not easily available in all parts of the country in hygienic form. Some of the medicinal properties of tender coconut water reported are like it is naturally low in carbohydrates, 99% fat free, low in sugar and contains organic compounds possessing healthy growth promoting properties. It is also a natural an isotonic beverage so it can be considered as the better alternative for the existing soft drink market.<br />Coconut water has a prior advantage over many other nutritional products which can be seen from the following:<br />Coconut Water is more nutritious than whole milk - Less fat and NO cholesterol.<br />Coconut Water is healthier than Orange Juice - Much lower calories.<br />Coconut Water is better than processed baby milk - It contains lauric acid, which is present in human mother's milk.<br />Despite the above mentioned benefits of coconut water, people are not able to drink it because of its unavailability as well as its bulky nature. Therefore, it is clear that coming up with packaged tender coconut water in the market will definitely grab lot of customers and consumers. These consumers and customers are those who need refreshing effect with additional health benefits which other existing health drinks do not provide. There are some local manufacturers of packaged tender coconut water but their existence is limited to small pockets. Therefore, from the preceding discussion, we as promoters have a first mover advantage in the market as we are targeting people across all regions in India. <br />3. DEFINING INDUSTRY <br />Since we are coming up with a new product “packaged coconut water” at the national level, therefore, it is important to identify the industry. Customers’ and consumers’ behaviours help to correctly define one’s industry. Therefore, we conducted survey to identify the industry where our product will have an existence. The sample size was around 100 people out of which 96% people drink coconut water. Convenience sampling was used because of the time constraint.<br />From the figure 1, it can be seen around half of the people in the sample perceive coconut water as health drink and around 45% people perceive it as refreshing drink. From the survey, it has also been seen that people mainly prefer coconut water when they are thirsty, tired or when they want some health drink.<br />Figure 1: Perception of consumers about coconut water<br />othersThirst quencherRefreshing drinkHealth drinkno responseWhat do you consider coconut water?100806040200Percent<br />Thus, from the survey results, it can be clearly seen that the product “Cocofresh” should have an existence in Health and refreshing industry which we, here, are considering it to be fruit juice industry as fruit juices are also perceived in the same way. Here, one might argue why not (Carbonated) soft drink industry? The reason why we are not placing our product in the same is that people do not consider carbonated drinks as health drinks, but thirst quenchers. Since we are positioning our product as health and refreshing drink so fruit juice industry suits the best which is also backed up by the survey so conducted.<br />4. PESTLE ANALYSIS:<br />The Pestle Analysis identifies the political, economical, social, technological, legal and ecological influences on an organization. <br />4.1 Political factors<br /> Various political factors affect the fruit juice industry. With the change of government the policies regulating the industry might change. As the taxation policy keeps changing, it has a significant effect on fruit juice industry. The government plans of encouraging foreign direct investments would affect our industry highly as organised fruit juice industry has only 3 % share as of now in the market but with FDIs it could increase significantly by coming of bigger players. <br />4.2 Economic factors<br /> Our company would rely on trucks to move our raw materials to the processing plant and distribute our finished product so, fuel is also an important subject, so the company is subject to the fuel price fluctuation, and to possible fuel crisis. Since, ours is an agro based industry so we would be exposed to the risks of high prices due to crop failure, non availability of raw material because of pest attack etc. Other economic factors affecting fruit juice industry are often linked to variability in real growth, inflation, interest rates, governmental actions and other factors. Factors like money supply, energy availability and cost, business cycles, etc. would also affect our company. <br />4.3 Socio-cultural factors<br /> We are more than a billion strong nation and the youngest country as well. We are also home to the great Indian middle class. The major growth drivers in fruit juice market are increase in health consciousness among consumers, increase in disposable incomes and more sophisticated cocktail culture. There is more money circulating in the economy. With life becoming more hectic and tiring, consumer preferences are witnessing a visible shift towards healthy foods. Even the younger generation has started shifting from fizz to fresh and healthy. As people are becoming more and more educated, they are taking the healthy route.<br />4.4 Technological factors<br />Fruit juices have become big business throughout much of the developed and developing world with the increasing health conscious proportion of population. In this ever growing industry technology plays a major role in maintaining the quality and cost efficiency to generate higher profits. Better technology can increase the shelf life of our product. Technology refers to both production process as well as machinery. <br />4.5 Legal factors<br />Processed fruit juices are regulated under the Food and Drugs Act and Regulations as a food product and the Consumer Packaging and Labelling Act. The Food and Drugs Act creates identity standards, provides a basis for labelling requirements and establishes the safety parameters for soft drinks. As food safety requirements become more advanced across the beverage industry, tracking and traceability capabilities are a prerequisite. <br />4.6 Ecological factors<br /> One environmental issue that food processing companies face is waste remaining from packaging. However, the problem often lies in feasibility of collection, separation and purification of the consumers’ disposed bottles or drinks packets. Environmental issues have gained importance because of regulatory requirements. It is not possible to sell a new packaging material without covering all the environmental issues. With the increasing use of plastic bottles for non alcoholic drinks, recycling and return concepts become an absolute necessity. The reduction of materials in packing cartons can potentially provide both financial and environmental benefits. Since 1977 even the soft drink industry has reduced the amount of plastic used in its PET bottles by almost 30%. Packaging materials used by the industry, including cardboard, plastics, and aluminium, are either recyclable or re-usable. Bottle deposit laws and other regulations to ensure recycling and re-use of packaging are a significant regulatory concern to the soft drink industry. We propose to provide our product in tetrapacks so that lesser damage is done to the environment in comparison to PET bottles.<br />5. Industry Analysis<br />We would be operating in the fruit juice industry alongside established players like Tropicana of Pepsico, Real of Dabur and Maaza of Coca Cola. It basically contains fruit juice and synthetically constituted producst.  The former is based on natural fruit pulp or juice while the other is synthetic products containing fruit flavours <br />The pure fruit juices are the preferred drink among the fruit drinks. Production of fruits in India is of the order of 48.5 million tonnes and as the Table 2 shows that the demand for packaged fruit juices has been constantly increasing at a steady rate. The demand for fruit juices in the fiscal year 2008-09 was Rs. 6.85 billion. It is expected to be Rs. 10.9 billion in the fiscal year 2014-15. <br />Table 2: Demand for Fruit Juices in India: Past & FutureYearRs (billions)1995-961.622000-012.482001-023.552002-033.952003-044.352004-054.802005-065.302006-075.802007-086.302008-096.852009-107.402014-15 10.90<br /><ul><li> (Source: Intecos-CIER)</li></ul>As shown in Table 3, the cumulative annual growth rate (CAGR) for fruit juices segment is expected to be 8% in the period 2009-10 to 2014-15.<br />Table 3: Market Growth Rate of Fruit Juices in IndiaPeriodCAGR1990-91 to 96-9740.30%1996-97 to 2001-0216.10%2001-02 to 2006-0710.30%2006-07 to 2009-109.00%2009-10 to 2014-158.00%<br /> (Source: Intecos-CIER)<br />Our product is a differentiated one. No other company has launched a coconut water based drink on a national level. Though there are around 5 companies producing packaged coconut water in south India but its products are exported. So, we hope to get the first mover advantage with our product in the country. We are currently offering just one product, i.e. packaged coconut water.<br />6. MARKET SHARES OF DIFFERENT CATEGORIES<br />There are mainly three categories of fruit juices products-Ready to Serve Fruit Beverages, Fruit Nectar and Fruit Juices. These categories are defined based on the fruit pulp content in them. The fruit pulp content in ready to serve fruit beverages is less than 20% while in the fruit nectar; fruit pulp content is 20-85%. In fruit juices the pulp content is greater than 85%. The prices of fruit juices are the highest while those of the fruit beverages are the lowest. As shown in Table 4, the market share of fruit beverages is highest (66%) while that of nectar is lowest (7%). <br />Table 4: Category Wise Market Share of Fruit Juices Products in IndiaCategoryMarket ShareFruit Beverages66%Fruit Nectar7%Fruit Juices27%<br /><ul><li> (Source: Intecos-CIER)</li></ul>7. MARKET SHARE OF DIFFERENT PLAYERS<br />The major players involved in fruit juices business are Dabur, Pepsi, Mother Dairy, Parle, Godrej and others. Figure 2 shows that Dabur with its brand “Real” holds the largest market share of 57%. It is followed by Pepsi with its brand “Tropicana” which holds a market share of 30%. Mother Dairy with its brand “Safal” holds a market share of 4% while others hold a market share of 9%. The others category includes Onjus, Freshgold, Leh Berry etc.<br /><ul><li> Figure 2: Market Share of Different Brands of Fruit Juices
  2. 2. Products in India
  3. 3.
  4. 4. (Source: Intecos-CIER)</li></ul>8. INDUSTRY CONCENTRATION RATIO<br />In the selected industry for our product many players are in action. But this industry is subdivided into fruit juice and fruit based drinks industries as is seen earlier. So when market shares of these players are seen they are sometimes depicted in the context of the fruit juice industry as a whole and somewhere as in the sub divisions. Moreover, the sales figures of all the competitors are not available through internet. Therefore, it is difficult to calculate industry concentration ratio and Herfindahl- Hishchman Index for our defined industry. <br />9. PORTER’S FIVE FORCES <br />9.1 Bargaining power of Suppliers<br />For this we need to procure green tender nuts in huge quantities. The peninsular part of our country is blessed with a long coastline. This is a fertile ground for coconut cultivation. Kerala is the largest producer of coconut in the country and we hope to leverage on this account. Coconut Board has been looking to enhance the consumption of coconut in the country. We would be liasioning with it to ensure an assured supply of the desired quality of coconuts. It would act as an intermediary for procurement either from co-operatives or dealers or individual farmers. We would not want to depend on a single source of supply of nuts because that would reduce our bargaining power and also increase our risk. Besides, there are other small local players also who are into the same business as us. Hence, it becomes all the more important for us to have a steady supply of nuts at the right cost. <br />9.2 The threat of substitute products<br />Substitute products are those competitors that are not in the industry under study. According to Michael Porter, the existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand). This includes-<br /><ul><li>Buyer’s propensity to substitute
  5. 5. relative price performance of substitutes
  6. 6. buyers’ switching costs
  7. 7. perceived level of product differentiation</li></ul>For our health and refreshing drink industry such products include soft drinks, lassi/ buttermilk, coffee and tea. These substitutes are increasingly popular with the trend to be a more health conscious consumer or price sensitive consumers. There are progressively more flavours in the buttermilk that appeal to different consumers’ tastes. Buttermilk and flavoured milk are not as popular as aerated drinks and fruit juices but to a group of consumers which can be our target consumers, they appear healthier than soft drinks. In addition, coffee and tea are competitive substitutes because they provide refreshing feeling. The consumers who purchase coconut drink as a refreshing drink may substitute coffee if they want to have the same feeling in a cheaper cost. The tea and coffee industry is growing at 11.8%. Especially blend coffees are also becoming more popular with the increasing number of coffee houses that offer many different flavours to appeal to an elite class of consumers.<br />9.3 Bargaining power of Buyers<br />The buyers of our coconut drink would be mainly large grocers, retail chains, discount stores, restaurants and Gymnasiums. From here the product would be resold to consumer. The bargaining power of the buyers is very evident and strong. Large grocers and discount stores buy large volumes of the health drinks, allowing them to buy at lower prices. Restaurants have less bargaining power because they do not order a large volume. However, with the number of people who drink soft drinks is declining, therefore, the bargaining power of buyers might decrease due to increasing demand for health drinks.<br />9.4 Rivalry among existing competitors <br />Currently, very few players are operating in coconut water based health drink manufacturing business in India. Most of these are regional brands and are not having much market share. The coconut packaged drink concept is most popular in Brazil, Australia, etc but in India its market is still untapped. Its main competition is from the non-carbonated beverages which are composed of fruit drinks, nectar and juices. While the fruit drink segment is estimated at Rs 250-300 crore (branded and packaged), the juice market is valued at Rs 150 crore and the nectar is a small category of about Rs 35-50 crore. The popular brands vying for a share in the sector are Parle's Frooti, Godrej's Jumpin, Coca Cola's Maaza, Pepsi's Tropicana, and Dabur's Real. <br />Frooti from Parle Agro is the largest distributed fruit drink with 85 % market share in India. It reaches more than 10 lakh retail outlets in up to class C towns through more than 1,500 distributors and wholesalers directly and indirectly. It is India's first real fruit drink in Tetra pack and is available in three delicious varieties - mango, orange and pineapple. <br />Dabur's flagship brand Real fruit juice is a market leader in the packaged fruit juice category. Real was launched in 1996 and the brand has carved out a niche for itself by claiming to be the only fruit juice in packaged form that is 100 % preservative free. Real with a market share of 55 % offers to its consumers the largest range of 9 juices that comprise orange, mango, pineapple, mixed fruit, grape, guava, tomato, litchi and cranberry. Dabur also launched many variant of Real juice like, Real junior, Real Activ etc.<br />Pepsi also have its major brand Tropicana in fruit juice category, which has registered double digit growth and has outpaced the growth of the packaged fruit juices market in India. India is a very important market for Tropicana and is among the top 10 biggest markets for the brand. It is available in a wide range of orange, apple, grape and cranberry flavours and a cocktail in Ruby-red. It also came up with a new variant named twister in different combination of flavours.<br />Maaza another well known and highly consumed fruit beverage brand in India was launched in 1976. In 1993, Maaza was acquired by Coca Cola India. Maaza currently, dominates the fruit drinks industry. It faces a direct competition with the Slice brand of Pepsi.<br />Currently the market share of coconut drink is negligiable in the Industry. It had to face a heavy competition in the industry if want to have a significant market share as there are a lot of established and heavily consumed brands of fruit juices, fruit drinks and health drinks in India. These brands presents a whole range of good quality juices keeping in mind the health concerns of the consumers.<br />9.5 Threat of New Entrants: <br />In the soft drink industry the entry of new competitors depends on the barriers to entry that are present, and also the reaction from existing competitors that the entrant can expect. The soft drink Industry is highly competitive because of the presence of some major players like Coco Cola, Pepsi, Dabur etc. There exists a high entry barrier to new entrants as the existing brands have strong brand loyalty from customers and therefore entrants are forced to spend a lot to overcome existing customer loyalties. The access to distribution channels is another high barrier to entry because the most successful soft drink companies are aggressively spending on their distribution channels and buying full ownership of bottling plants. Like, Both Coke and PepsiCo have franchisee agreements with their existing bottlers and these agreements prohibit bottlers from taking on new competing brands for similar products which make it very difficult for a firm entering to find bottler’s willing to distribute their product. Switching costs is also a barrier to entry this business. The switching cost of customers is very low in this industry which poses another entry barrier to new entrants. <br />The soft drink industry is fully saturated and the growth is small which further make it difficult for new entrants to start competing against the existing firms and establish their presence in the Industry. Another barrier to entry is the high capital investment which a new entrant had to put for production, distribution and advertising etc. for competing against the established brands/ industry leaders. New entrants cannot compete in price without economies of scale. These high capital requirements and market saturation make it extremely difficult for companies to enter the soft drink industry and therefore new entrants are not considered as a strong competitive force to the industry. The exit barrier is also high as the huge investment done on the facility by the new entrant make it difficult to exit from the industry.<br />10. POSITIONING DIAGRAM AND STRATEGIC GROUP IDENTIFICATION <br />Figure 3<br />High availability<br />FrootiMaazaSliceRealTropicanaCocofreshHigh PriceLow PriceSG 2SG 3Low availability<br />SG 1Cocofresh<br />1<br />As is evident from the diagram, our product is placed in the same strategic group as other packaged fruit juices like Tropicana and Real. From our consumer survey, we have identified two ( x & y) variables, namely availability and price of the product. Availability would largely depend on the strength of distribution network and price as in price that the consumer will have to pay for the product. Strategic Group I is dominated by large players like Tropicana, Real, Maaza and Frooty which owing to their strong distribution network have a remarkable presence in the country. They are characterized by pan India coverage and all are in the similar price range which is also incidentally higher when compared to the prices of other players in the industry. Strategic Group III is characterized by small, local players in the industry with very limited coverage in terms of area. Also, their prices are lower when compared to similar branded products. They are unorganized players like juice vendors. In the local arena, total availability of such products may be quite high but when we talk about an individual player in a local space, availability becomes extremely limited. Area of operation is mostly restricted to a small part of a city or town. Also, since they sell unbranded and loose stuff, they keep their prices low so that they can gain in volume. Hence, it ranks low on both accounts, namely availability and price. Coming to Strategic Group II, we have small players operating in a slightly larger area like a state. In terms of availability and price, they rank higher than the players in Strategic Group III and lower than Strategic Group I. Coco Jal, Tender Coco and Tender Fresh, which caters to the employees of IT firms in Bangalore fall in this group.<br />We propose to have a pan India coverage and hence we would be drawing up an extensive distribution network to ensure availability of our product. Also, we are pricing our product competitively, i.e. 200 ml pack priced at Rs. 15 and 1 lt pack at Rs. 85. Our product would thus be placed in Strategic Group I. We are positioning it as a healthy and refreshing drink.<br />11. MOBILITY BARRIERS AMONG STRATEGIC GROUPS:<br />The strategic groups identified by us in our industry are highly differentiated from each other on account of the two main variables price and availability of the respective products. It will be very difficult for one strategic group to enter into the domain of another strategic group as there are many mobility barriers present in the industry. The main mobility barriers that restrict any strategic group to move from its positions are:<br />11.1 Brand name: It is the major strength of any player on account of which it can be place well in the industry. All the well known big brands fall under one strategic group which are so much differentiated from other strategic groups that it becomes almost impossible for players from any other strategic group to move to that particular well known brand strategic group. Like, in our case it would be very difficult for the strategic group II & III which comprises some local juice manufactures and the street vendors to enter into the strategic group I which comprises all the branded juices like Tropicana, Real, Frooti etc. because strategic group I has a strong brand influence in the industry.<br />11.2 Distribution network: Another major barrier which restricts any player from entering one strategic group to another is the strength of their distribution network. As we have considered availability of the product as a defining variable for identifying the position of the strategic groups therefore the distribution strength of any player plays a major role in distinguishing it from rest of the players and identifying its positioning in the strategic group. In our case, it would be very difficult for local vendors to expand their distribution network and thus they would never be able to enter the strategic group I & II because of their distribution constraints.<br />11.3 Scale of operation: It is also a major factor which helps in identifying position of any player in the industry. As the scale of operations expands the firm would be able to invest more on strengthening its product development, operation, distribution, marketing and advertisements. A small player would have its own niche and it won’t be possible for them to enter into the strategic group of the large players. Thus the scale of operations also puts a major barrier to any small scale player to enter into the domain of the large players in the industry. <br />12. PRODUCT POSITIONING DIAGRAM FROM CUSTOMER PERSPECTIVE VIS- A- VIS TWO MAJOR COMPETITORS<br />From our consumer survey, it is evident that consumers perceive nutrient value and availability as the major factors affecting fruit juice consumption. So we have taken these as our x and y variables in the following product positioning diagram.<br /> For our Cocofresh two major competitors would be Pepsico’s Tropicana and Parle Agro’s Frooti. Taking these alongside Cocofresh, the product positioning diagram has been drawn as in figure 4. Currently, coconut water is very high in nutrient value but low in availability. This has been shown with dotted lines. After coming of Cocofresh, the availability constraint would be removed and our product is placed at high nutrient value and high availability position. <br />Figure 4 <br />FreshCoCoconut WaterAfter FreshCo<br />FrootiTropicanaAvailabilityNutrient Value<br />13. VALUE CHAIN OF TROPICANA (A COMPETITOR)<br />Value chain of our competitor Tropicana envisages the following:<br />Superior technological knowhow: having been in business for over a century now, Pepsico has gathered enough gumption that has given Tropicana easy access to latest superior technology<br />High sourcing capacity: they have a well planned procurement system that assures regular and consistent supply of good quality raw material to the company at the required time and in right quantity.<br />Linkages upstream in the supply chain<br />Extensive distribution network: Tropicana has leveraged the existing distribution network of Pepsico which has had a strong foothold in the country for many years.<br />Business process transformation<br />Internationally tested and proven flavours: this ensures best quality of product being available to consumers.<br />Above the line and below the line promotion<br />Promoting as a health drink<br />Practise: reduce, reuse, recycle<br />Tropicana used i2 tool extensively, over a very short time period, to discover areas where it could reduce costs and increase efficiencies within several significant units of the company. i2 Supply Chain Strategist is a scenario-based strategic planning tool designed to enable an organization to analyze strategic alternatives and make more profitable strategic decisions regarding physical plant locations, processes and transportation lanes. Adoption of this technology has helped pepsico to determine the optimal combination, location and association of facilities and processes, allowing its managers to understand the total cost, profit and service trade-offs that exist between alternative network scenarios.<br />14. COMPETITIVE ADVANTAGE<br />The product “packaged coconut water” is going to be launched at National level for the first time. Although, the major competitors in the fruit juice industry have very strong distribution channel across the nation but they do not have any marketable uniqueness in their products. All the major competitors are just trying to gain sales volume over one another from the same products in the fruit juice industry. <br />Therefore, we have a first mover advantage to come up with a new product in an old market which would definitely lead to success. The success can be seen as there is huge demand for coconut water. This is also clear from the survey which we conducted, although coconut water is considered to be health and refreshing drink, still many people are not able to have the same because of its non-availability. From all the existing products in the fruit juice industry, coconut water is the best when it comes to health aspects and freshness. Therefore, our differentiated product is a competitive advantage over our competitors. Hence, differentiation will be our strategy for earning above – average returns in the industry. This industry structure would affect our conduct. The strategies that our firm would adopt would have a direct bearing on our performance in the market. We need to strategise keeping our resources in mind and changing needs of consumers. Constant innovation to keep our resources valuable, rare, inimitable and non-substitutable would be the key to our success.<br />15. VALUE CHAIN OF COCOFRESH<br />15.1 PROCUREMENT OF RAW MATERIALS AND LOCATION-<br />For procurement we had two options, either from Southern states or from Orissa. Our group decided to procure the raw material for Cocofresh from Orissa because in South a few competitors are already operational and have tie ups and farming contacts with farmers. So establishing ourselves in this region would be a risky proposition. Also there would be higher cost cutting in outbound logistics (transportation cost of finished product) if we locate our plant in Orissa. Our plant would be situated in Sakhigopal, a small place in Orissa. <br />Figure 5: Map of Orissa and location of Sakhigopal<br />The various factors taken into consideration while selecting this place are as follows:<br />15.1.1 Proximity to raw material suppliers <br />Orissa enjoys 450 km of coastal belt most suitable for Coconut plantation. This traditional area is predominant of tall varieties of coconut, which thrive for more than 100 years and start fruiting from 4th to 8th year depending on its maintenance. At present the coverage under coconut is 46690 ha with average annual production of 33 nuts per palm and total production of 2742 lakh nuts. Coconut is considered as the cash crop of more than 10 lakh people residing in the coastal belt. The areas in and around Sakhigopal are abundant in coconuts and potential procurement areas are Cuttack, Jajpur, Jagatsinghpur, Kendrapara, Puri, Khurda, Bhubaneswar and Pitapally. The maximum distance to any of these centres is less than 100 km only. <br />15.1.2 Proximity to domestic customers and export site<br />Northern and Western parts of India are seen as a potential customer base as coconut availability is low in these regions. These places would be closer to Orissa in comparison to other proposed locations in Tamil Nadu or Kerala. The location is also near to the port so that future plan of the export is also facilitated. <br />15.1.3 Costs<br />The location provides the advantage in terms of low inbound costs owing to its proximity to the major procurement centres. Owing to its rural location, labour costs are cheap. Outbound cost in terms of product distribution and marketing is expected to be low owing to the proximity to the domestic markets. Land cost will be low as Sakhigopal comes under Zone B and Government grants could be availed if proper location is chosen in this area. Water availability is not a problem and it comes cheap.<br />15.1.4 Infrastructure<br />Sakhigopal is connected to the state highway. The nearest airport is at Bhubaneswar (60 km) and the nearest seaport is at Paradip (100 Km.). Puri (20km) is the nearest railway station. Availability of power supply, telephone, mobile and internet connectivity are some of the infrastructural resources of the area.<br />15.1.5 Quality of Labour<br />Sakhigopal is a rural area and semi skilled labour required for manual operations is available cheaply. For the technical operations, technicians can be recruited from the ITI School at Puri.<br />15.1.6 Other facilities<br />Nearness to institutions like Orissa University of Agriculture and Technology at Bhubaneswar, demonstration cum seed production farms at Pitapally and Coconut Development Board State office at Bhubaneswar gives the location an edge. Proximity to these institutions would help in soliciting any technical advice as when required during the implementation of the project. The Pitapally farm personnel can be helpful if contract farming is undertaken for procurement. Proximity to potential promoters like the Agriculture Promotion & Investment Corporation of Orissa Limited and Industrial Promotion & Investment Corporation of Orissa Limited, both of which are situated in Bhubaneswar.<br />15.2 TECHNOLOGY<br />There are various technologies available for the processing and packaging of tender coconut water like flash pasteurization and the technology developed by the Coconut Board of India. The latter is an efficient technology highly promoted by the Board. For production of Cocofresh, we would buy this technology which is available at a cost of Rs. 3 lakh. <br />The raw materials like tender coconut and some other ingredients would be processed in a hygienic and aseptic environment by the employees and changed to the final output. In this, coconut water of 6-7 month stage would be first filtered through pressure filters and then mixed with the desired proportion of additives plus sugar and concentrated to the appropriate level. The autoclaved water is then cooled with a stream of water and packed in tetra packs.<br />15.3 MARKETING STRATEGIES<br />15.3.1 FIVE C’S ANALYSIS:<br />Company: our company is a new one and a new entrant in the market. We are launching a new product in an old market.<br />Consumers: our consumers are health conscious people and people who want an alternative to fizz to refresh them. We see a high potential market for our product.<br />Context: in the context of increasing health awareness, greater emphasis on consumption of natural products and a gradual shift from artificial and aerated drinks, growing disposable income and consumable surplus, our product would provide consumers a welcome relief from the conventional drinks available in the market. It would provide them a new taste, an altogether new experience of freshness and well being.<br />Collaborators: our suppliers of coconut and our distributors and retailers who would mainly be responsible for making our product available to consumers. They are an integral part of our supply chain as well as value chain.<br />Competitors: our competitors are mainly other fruit juice companies which are also vying for the consumers’ money and patronage. Mainly Tropicana of Pepsico and Real of Dabur are our competitors since they are seen as health drinks as well as refreshing drinks by consumers. Even other fruit based drinks like Frooty of Parle Agro, Maaza of Coca cola and Slice of Pepsico are our competitors since they also are perceived as refreshing drinks by consumers. A very positive point we have as of now is that there is no national player in the market who manufactures packaged drinking water. So, taking a narrow competition in this small sector, we really have no competitors.<br />15.3.2 STP ANALYSIS:<br />Segmentation: we would be operating in a broad market segment of SEC A and B <br />Targeting: as explained earlier, our target group of consumers would comprise people from SEC A and B, health conscious people, the youth who consider going natural as fashionable and also institutional buyers like airlines, railways, upmarket restaurants and hotels. We would also target doctors who would recommend our product to their clients. This would provide an immense opportunity to us to create a stronghold in the market and generate higher revenues and superior economic profitability.<br />Positioning: we are positioning our product as a health drink that is extremely nutritive and also highly refreshing.<br />15.3.3 MARKETING MIX:<br />Product: our product is unique. It is different from what we get from roadside coconut vendors since the shelf life of such products is very low. Our product has a shelf life of 9 months and hence making it available to a wide range of markets becomes easier since customers would rest assured of the quality of this product. We would also apply for accreditation by authorized food agencies like FPO and other quality control certifying agencies like HACCP,<br />Price: we would price our product competitively. We would initially launch the product in tetra packs of 200 ml and 1 lt capacity priced at Rs. 15 and Rs. 85 respectively. This is almost in line with our competitors’ pricing strategy. This would ensure greater returns to us and also project a high end quality image of the product in the eyes of consumers.<br />Place: our processing unit would be located in Orissa since the procurement would be done from nearby places. So, we would be saving on inbound transportation costs. We are launching the product throughout the country in one go, mainly targeting the northern, western and eastern market.<br />Promotion: we would take up heavy promotional campaign to build awareness about our product and to push it in the market. We would keep track of activities that our competitors would be doing so that we can strategise further. <br />We would incentivise our channel partners and create a push strategy to gain more shelf space. Heavy advertising and brand promotion activities would be taken up to increase visibility of our product. Since we are new players and unknown to consumers, we need to spend heavily on the above mentioned activities so that we can sustain competition from giants in the industry and eventually overtake them. We would also consider sponsoring T.V. shows, sports events and cultural nights so that our target consumers can be made more aware of our brand. We understand that building good relationship with our suppliers, channel partners and customers would be the formula for our success in the market.<br />We would be placing our product mainly in modern format retail stores, hypermarkets where new ideas are more readily accepted by consumers. Here we would have a greater chance of showcasing ourselves and increasing our visibility. Besides, these are places which are frequented by our target group of customers. We would like to ensure that the quality of our product is intact when it is in the market and hence we would like to sell it through stores that take good care of inventory, have good and adequate storage facilities. Also, we would be able to track not only our sales and turnover but also that of our competitors. This data would be available through the store manager because unlike traditional retailers, he would be engaged in systematic data management and record keeping.<br />16. SWOT ANALYSIS<br /> <br />

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