Successful Bakery Retailing – Case of Monginis in Kolkata
Successful Bakery Retailing – Case of Monginis in KolkataPresent affiliation of AuthorDr. Atish Chattopadhyay, Professor of Marketing, SPJIMR, India, email: firstname.lastname@example.orgIntroductionThe bakery industry in India can be categorized into the three broad segments of bread,biscuits and cake. Only 40% of the 3m tonnes bakery products industry in India is in theorganized sector, while the balance comprises of unorganized, small-scale localmanufacturers (Samant 2002).With changing consumer tastes and with the entry of multinationals post liberalization,the average Indian is expanding his palate from just bread, cake and biscuits to moresophisticated pizzas and burgers. The consumers are increasingly going for neweroptions with respect to bakery products. Recently, there has been a steady inflow ofMNC’s and other organized players in this sector, leading to increased competition. Also,the Indian market is witnessing the proliferation of bakery café chains in the form ofBarista, Café Coffee Day etc. and marketers are trying to come up with new formats as isevident in the western countries. With the expected inflow of large organized players inthe bakery industry, the sector is poised to witness increased competitionIt is, therefore necessary to study the existing marketing strategies of successful bakeryretailers and identify the success factors for future growth. The scope of the presentstudy is to explore the above with respect to ‘Monginis’ in the city of Kolkata.MethodologyTypical marketing mix of the firm was studied through case study method. The casestudy was developed based on business reports and direct informal interviews with toplevel managers/owners of the firms. The interviews were primarily aimed to understandthe key decision maker’s perception of the market, which is their understanding of the
target segment and the marketing mix to cater to their target audience. Also, theinterviews attempted to understand the background and the future challenges for thefirms. Also, the existing market offerings of the firms were studied by way of shop visits,collection of product catalogs, price lists and promotional materials like advertisementsetc.Interviews were conducted for the vertical slice of the organization starting with theowner/manager and moving down to the shops/franchisees. The unit was visited andinterviews of the owner and key executives involved in the management of the firm wereconducted. Interviews were also conducted for those responsible for managing the day today operations. The shop sales personnel were also interviewed for the purpose.The interviews were unstructured and lasted from one to three hours. Typical questionswere asked which include the following broad topics.1. Target customer group.2. Marketing mix3. Understanding of the present competitive scenario and future challenges.The responses were later augmented with data from several other sources. Meetingsinvolving key marketing people, shops sales force were also observed. Insights gleanedfrom these observations often stimulated new lines of inquiry for future interviews. Inaddition, data and documents from public sources helped to clarify issues raised in theinterviews. These multiple approaches helped to ensure reliability and validity of thefindings (Jick, 1979).While developing the case study insight was generated regarding how the firm actuallydeveloped its marketing mix. This was facilitated by interviewing a variety ofstakeholders and by spending time with them on the job. At the conclusion of most of theinterviews and shop visits, the preliminary findings were shared. This added to theunderstanding of the marketing mix of these firms and further refinement of the findings.
The first draft of this case study was also discussed with the key people of the firm likethe owner / managers. Throughout the research the practitioners gave deep insight intothe way the marketing mix was developed and the reasons for the same. The table belowshows the number of people interviewed.Distribution of People Interviewed Name Firm Personnel Franchisees/Shop Personnel Monginis 07 05Case of Monginis in KolkataFolklore has it that the Brothers ‘Monginis’ landed in the mysterious Hind with a rarecraft. They were Italians and masters at baking and could create the most scrumptious ofdelicacies, for which Naples and Rome were justly renowned all over Europe. Anestablishment was opened by the brothers in 1882 at a spot, where the Mumbai landmark,The Akbarally’s Departmental Store stands today. Besides making the usual bakeryproducts the brothers specialized in the making of cakes, pastries, gateaux andchocolates.Their establishment was called ‘Monginis’, and thus begun a brand, that today straddlesthe whole of India from Kolkata to Mumbai, from Pune to Hyderabad and Goa. Throughmany transformations, bakery, restaurants and dance hall, Monginis retained its uniqueflavour as a provider of good times and carried on with business as usual through theturmoil of two World Wars and the passage to independent India. It was around 1960 thatMonginis was acquired by the Khorakiwala family and recast into its current mould asthe ‘Common Man’s Bakery’.Around 1980, Arnab Basu joined his childhood friend Taizoon Khorakiwala as ProjectManager for a new bakery venture in the Middle East. He returned to Kolkata to set uphis own venture with the help of the Khorakiwala family of Monginis Foods, Mumbai.The Monginis brand name at that point of time was unknown in Kolkata. With the setting
up of the Bakery in 1991 and the opening of the 1st shop in 1992, Monginis took overKolkata and ‘snacking’ was never the same again (Refer to Annexure I).Switz Foods Private Limited (SFPL) was incorporated at Kolkata, to manufacture andmarket bakery products under the brand name Monginis by way of a licensingarrangement. It was allotted 12 cottas of land by the West Bengal State IndustrialCorporation in East Kolkata, on the Eastern Metropolitan Bypass. The bakerycommenced commercial production by the end of 1991, manufacturing savories, pastries,cakes, birthday gateaux, cookies breads and other bakery items. From its modestbeginnings, Monginis today is the undisputed market leader of Kolkata and boasts of thefollowing:• Increase of direct employment from 15 persons to 250 employees.• Indirect employment of 1000 persons through its franchised shop and transport system.• Increase of floor area at its manufacturing facility from 4000 sq ft, to 20,000 sq ft spread over three floors. Adding one more manufacturing facility, Dream Bake Pvt. Ltd. for its packed bakery products.• Doubling of turnover almost each year starting from INR 5.328 million in 1992-93 to approximately INR 150 million in 2003 for its craft foods. If one takes into the account the turnover of its packed products range (manufactured in a different facility), its turnover would be around 300 million annually and the same has grown at a good rate.• More than 100 exclusive franchised shops in Kolkata and its suburbs by 2005.In its endeavor to bring to Kolkata the best quality available in craft bakery, it hadcontinuously upgraded by importing ‘state of the art’ machineries like ovens, mixers, bundividers, moulds, chocolate melting and tempering machines, cooling systems etc fromSwitzerland, Holland, Denmark, Sweden and Italy. The Company has recently introducedinternational quality chocolates and a range of cold recipes, for the first time in Kolkata.
One of the key reasons for the success of Monginis in Kolkata is its highly effectivefranchisee management. Today the brand boasts of more than 100 franchisee outlets.These are present at almost all important junctions of Kolkata and contribute to around250 million of sales per year. Successful line extension into packed cakes sold throughindependent retailers has also contributed immensely to the performance of Monginis.ProductsMonginis had primarily targeted the middle and upper middle class of Kolkata. It offeredfreshness, ambience and quality products at affordable prices. The market gaps thatexisted at that point in the market were filled by its offerings. When all other bakers inKolkata were concentrating more on the sweet variety of bakery products, Monginisoffered a range of salty snacks which immediate caught the fancy of the new generationof Kolkatans. Monginis products were of good quality and at an affordable price. Also,the ambience at the Monginis outlets played a key role with an air conditionedenvironment and re-heating arrangements using microwave ovens. Soon, Jalajog, whichwas the market leader at that moment in the segment, was unsettled by Monginis (Sarkar1993).New product introductions have played a crucial role in the growth of the brand. Its‘chicken salad roll’ was a big hit with those on the move in Kolkata. It also introducedproducts like ‘chicken wrap’, ‘vegetable manchurian’, ‘chicken internet’ etc. which werebakery products adapted to the local taste and preferences. Meeting the customerexpectations over such long period of time has developed a brand name for Monginis.The company also capitalized on the traditional festive occasions of the Bengalis. Amajor breakthrough in had happened during the occasion of Poila Boishak (Bengali NewYear), Halkhata (Bengali New Years Day on which traders start their new account) in theyear 2001-2002. In the year 2001, the brand had orders worth INR 0.5 million for PoilaBoishak. For the same occasion, orders had gone to INR 1.5 million, about which the
company management feels satisfied. This was achieved by arranging for special giftboxes for such occasions and was advertised through banners, posters, leaflets etc.Monginis used to sell packed cakes from its franchised shops from the very beginningwhich gradually gained good acceptability. Also Monginis made excellent use ofoccasions to produce large quantities of fruit cakes, plum cakes, etc. during Christmasand New Year which were packed attractively and distributed through independentretailers apart from their franchised shops. This also popularized the Monginis brandname. The success of Monginis with its range of craft bakery products and also the risingdemand for packed cakes sold through independent retailers prompted it to set up anindustrial bakery in the name of Dream Bakes Pvt. Ltd. (DBPL), which commencedproduction in June, 2000.The packed cake market may be divided into two categories: Single cake and Bar cake.The singles cake market in Kolkata was largely unorganized. The unorganized sectorconsisted of smaller players primarily bread manufacturers. These producers utilized theheat in the oven after the completion of bread production as baking of cakes requirelower temperature as compared to breads. As this involved no additional fuel cost, theseproducers could price their cakes much lower. However, the bar cake market wasdominated by Britannia (a large scale organized player) and the rest of the marketconsisted of unorganized manufacturers.In the absence of organized players, there was very little standardization, especially incase of singles cakes. Also there was no established brand in this segment of the market.Monginis took advantage of this, and provided standardized and quality products at anaffordable price of INR 3.00, onwards. Its automated production unit capable tosupporting volume production enabled it to achieve economies of scale. Monginis singlecakes were an instant hit.
The initial strategy of Monginis to focus more on singles cakes instead of bar cakes was awell thought out strategy. There was no branded player in single cake segment, whereasit would have to face Britannia (who’s ‘Good Day’ is very popular), in case they wouldhave focused more on bar cake.DistributionFranchisee ManagementThe success of Monginis may largely be attributed to its franchisee management skills -starting from selection to servicing and ensuring profitability of franchisee. Monginis hasutilized its franchisees effectively as part of its marketing strategy. It is not only an outletbut a brand shop. The shop speaks of Monginis quality and creates its brand image. It isalso a mode of its advertisement. The neon signs and the electrical board acts asadvertisement for the company. Monginis is the only bakery chain in Kolkata whichdoes not have any owned showroom and all their outlets are franchised.The cycle of managing its franchisees starts from the selection of the shop. The companylooks into the location of the shop as the first criteria for selecting the shop since it isconsidered as a prime factor for driving sales. It insists on a minimum carpet area of 200square feet and a frontage of 10 feet. It stresses upon the area and frontage norm in orderto create an amicable ambience for the customers. The company believes that customerscome to the store not just to buy bakery products, what matters is the overall experienceduring the buying process. To be a market leader, the stores need to provide thecustomers with that experience. A friendly atmosphere where the customer can enjoytheir snacks is prime consideration for the company.The overall investment of a Monginis franchisee is approximately INR 0.5 million, whichincludes a security deposit of INR 0.2 million on, which an interest of 10% per annum ispaid by the company. The remaining around INR 0.3 million is the estimated cost ofdecoration. The company has a standardized format regarding the décor, principal colors,
infrastructure like display counter, air conditioners, refrigerators and microwave oven forits franchised shops.The company pays an average commission of 14% on the goods sold. The companyprovides the design for the interior decoration and it is up to the outlet owners either toemploy their own work force or take the help from the company sources. The outlet isalso allowed to keep soft drinks and ice creams of companies having tie ups withMonginis.There is a constant monitoring of the outlets every month. For which there isstandardized format for evaluation of the shop on varied parameters. The parameters forevaluation are given below:1. Comparison of average daily sales.(same months of present and past year)2. Ambience.3. Product display.4. Profile behavior, knowledge of the store service personnel.5. Customer handling6. Availability of items and beverages.7. Overall attitude of the shop.The parameters are judged on a three-point scale i.e. ‘average’ (0-4), ‘good’ (5-7) and‘excellent’ (8-10).The payment of bills is done on every alternative day by the franchisees as sales aremostly by cash. As such this allows a clean flow of cash throughout the year.As discussed earlier, managing perishability and ensuring delivery of fresh products tothe customers is a key challenge for a bakery, especially for a craft bakery selling throughmultiple retail points. As such, the key challenge is to supply the shops fresh products ona timely basis, which requires a structured and efficient distribution system. The systemneeds to be reliable and responsive to the needs of the franchisees.
The distribution system of Monginis catering to the franchised shops is such that theoutlets must have product replenishments at least once and twice if the outlet sells well.Monginis provides for delivery twice daily to its franchised shops. The second deliveryensures that the shops remain well stocked throughout the day. The first delivery starts at6.30 a.m. and ends at 8.30 a.m. and the second delivery is done in the afternoon and thisprocess is followed daily. The afternoon distribution enables it to collect empty crates andreturn the unsold stocks.Monginis assures its franchised outlets 100% return of unsold stocks. As such, itdeveloped a forecasting system to ensure right amount of production and low amount ofreturns. The company feels that stock returns in the range of 3.5% to 5% is acceptable,since below 3.5% would indicate that the outlet is selling stale products and anythingabove 5% would result in additional loss to the company. Furthermore, the company hasnever given any sales target to the franchised shops. A monitoring system is in place tocheck that the outlets do not order for quantities that they cannot sell.The production department at Monginis produces based on the projected sales asforecasted. This helps in attaining lower level of return from the outlets. The productiondepartment works in three shifts a day i.e. general shift, afternoon shift and night shift.Night shift bridges the demand supply gap in the orders received from the outlets.The flow chart below shows the distribution process followed by Monginis with respectto its franchised shops.
Distribution process of Monginis for its franchised shops MANUFACTURING UNIT OUTSOURCED (M&M and TWICE A DAY Other transporters) FRANCHISEES CUSTOMERSThe company has outsourced the outbound logistics the responsibility has been given toMahindra & Mahindra and other local transporters. The number of vehicle employed forthese purposes are 28 matador vans and 4 covered containers. The outbound logistics hasbeen outsourced to minimize the transportation costs and to avoid the problems ofmaintaining a fleet of vehicles and the work force associated with it.The terms and conditions for the transporters are given below:1. They need to report at the factory by 6.00-a.m. daily.2. If they are late in reporting, half of the rent for that day is deducted and if they do not turn up that day the full amount is deducted.
3. They are given a holiday per week, but during hectic schedule they have to report daily.4. The transporters are paid at the end of the month, calculated on the per day hire rate.Packed CakesThe success of Monginis in managing its franchisees was the key to its foray into packedcakes and setting up a separate manufacturing facility as discussed earlier. Monginisrealized that servicing a network of franchised shops and distributing to independentretailers requires different systems and processes. As such Monginis concentrated ondeveloping competencies in managing a distribution channel for its packed cakes.Monginis took steps to bring channel partners closer. It helped in reducing the undercutting in the competitive market by a clear monitoring mechanism on the wholesalers. Itdid not pressurize the distributors to achieve any high targets which reducedundercutting. The distributor is given a margin of 8%. Further they are required to make asecurity deposit of INR 0.1 million for which the company pays the prevailing rate ofbank interest. The settlements for damaged goods are made at the end of the month.The criteria to be met by a Monginis distributor are a minimum warehouse pays of 500square feet. Since a deposit of INR 0.1 million is maintained with the company, they aregiven a credit for one week. In case no security deposit is maintained by the distributor,then cash payment need to be made on delivery.Monginis follows a three-tier distribution system for its packed cakes. The distributordistributes it to the linesmen, who in turn service the retailers. The linesmen in generalservice the retailers thrice a week. Also credit is extended to the retailers and hencesubstantial cash investment is required by the distributors.
To restrict undercutting the company does not allow its distributors to supply to a largenumber of wholesalers. This restriction is imposed on the distributors to minimizeundercutting. Furthermore, the company prints area code into the packages of its productsand random checking is undertaken in several retail points to monitor and checkundercutting.Monginis as in case of its franchised network does not use any vehicle owned by thecompany for the purpose of transportation. Instead they outsourced their transportationlogistics to Mahindra & Mahindra. The conditions for the same are given below:1. Supplying vehicles of specific size at the right time.2. Delivering as per time schedule. In case of breakdown, the service provider provides for other vehicles to reach the destination on time.3. There is a penalty clause, according to which if Monginis cannot load the van within the stipulated time of 3hrs then a penalty of INR 3000.00 is levied. On the other hand if the service provider fails to reach the destination on time then it has to pay a similar fine.4. The cost incurred by Monginis for this is around 15% higher as compared to other transporters.Monginis justifies the extra cost for the following reasons:• Generally the industry gives it to the individual transporters. These transporters carry the goods along with several other goods with least care for the goods. So, the quantum of damaged and destroyed goods is high. But in case of Mahindra & Mahindra a single vehicle takes the goods with high degree of care.• The transporters wait till their vehicles are fully loaded (truck load) with goods. Hence, there can be chances for stock out in the market.• The transporters generally take a lot of different type of goods to the market. So the chance of the food products getting exposed to different odors cannot be ruled out.
For any bakery product, odor is a crucial criterion. The outsourcing of logistics from Mahindra & Mahindra takes care of this crucial factor.Return ManagementPacked cakes have a shelf life ranging from 15 days to 60 days. Beyond which theproduct becomes stale. The perishability factor calls for strict return managementstandards. Monginis takes several measures to ensure freshness of stocks and lower levelof returns. It discourages overstocking by both distributors and retailers, who are oftendumped with stocks. This implies that the distributor and the retailer keep such amount ofstock, which may be sold during the course of the shelf life of the product. This reducesthe risk of return considerably as the quantity of the unsold stock becomes low. Thecompany replenishes stock at frequent intervals to keep the stock available at all times atthe retail points.Monginis’ policy of frequent replenishment has resulted in faster stock rotation for theretailers and the distributors, which also means improved profitability for the channelmembers. Monginis ensures regular supplies to the distributors, who in turn service theretailers through the linesmen. These linesmen are required to make at least three visitsto a shop in a week’s time. Monginis takes full care of the products so that the bacteriacount is very low during the course of its entire shelf life. However, if the productbecomes stale its taken back from the retailers and destroyed. This ensures retailers arenot inclined to sell products which are outdated. These steps have resulted in buildingconfidence both with the customers as well as the channel members.Pricing
Monginis targets to price its products in such a manner so as to target the customers inthe middle and upper middle income groups. However, it has created a shop ambiencewhich attracts the upper income group as well. The pricing is based on the targetcustomer’s willingness to pay for the product rather than a markup based on the costs.Monginis first decides the target price for the product and then works on the costs. Assuch even though it intends to have a contribution of 50% on an average on its products,yet there are items like the ‘lemon tart’, ‘donut’ etc. whose contribution is less than 25%.Even though the profitability on these items is low, Monginis sells the same in order tocreate an image of a quality baker. Monginis has undoubtedly created a strong valueproposition of its offerings and it’s perceived to be a good value for money brand, whichit leveraged during its foray into retail distribution of packed cakes.Monginis used the pricing strategy to its advantage in its extension into packed cakes asmentioned earlier. The strategy of Monginis to price its singles cake ‘Kup Keyk’ at INR3.00 a piece and also in a pack of two priced at INR 5.00, called ‘Double Kup’ gave it asizeable edge over its unorganized competitors. The unorganized bread manufacturerspriced their cakes at INR 2.00; whereas the Monginis ‘Double Kup’ in the twin packeffectively happen to be INR 2.50 per piece. Customers were more than willing to paythe additional 50 paisa for the taste, packaging and above all the Monginis brand name.This pricing strategy of Monginis enabled it to firmly establish itself in the market withsignificant retail penetration and positive customer response.Monginis gradually launched other variety of single cakes like ‘Kup Keyk Chocolate’,‘Fruit Kup’, etc. These items were priced higher and were more profitable products.Monginis used the low priced ‘Kup Keyk’ and the ‘Double Kup’ to build traffic andcreate a value proposition, the other higher priced varieties was used to improveprofitability.Once its single cakes achieved good market both in terms of retail penetration andcustomer acceptance, it focused on the bar cakes where Britannia’s ‘Good Day’ was themarket leader in Kolkata. Monginis launched a variety of bar cakes, the sliced varieties
‘Tango’ at INR 10.00 and ‘Sambo’ at INR 12.00 per piece. It also launched an un-slicedbar cake. The ‘Tango’ priced at INR 10.00 created a very good impact and it startedgaining good acceptance in the market. The extent of its success can be gauged from thefact that the market leader in the bar cake segment, Britannia was forced to react andlaunch a bar cake priced at INR 10.00. One may conclude that Monginis used pricingstrategy as a major tool for gaining market acceptance.PromotionMonginis believed in supplying quality foods to the customers. It intended to createbrand awareness and loyalty by performance rather than by advertisement. It wasjudicious in allocation of its advertisement expenditure. Hence its advertisement expensesare very low. The management also felt that the amount could be spent on developingquality products and reaching the same to the customers at a lower price.Funds were a major constraint at the point when it commenced the business in Kolkata.Hence, the available funds were utilized for the development of infrastructure anddeveloping a product line. It used the concept of mobile advertisement effectively. Thecarry packs with which, customer came out of the retail outlets were printed with thebrand name resulting in increased brand awareness.Presently the Monginis is going for some promotional schemes and advertisements. Thischange of thought is mainly to achieve greater penetration and expand the market.Monginis till date relied on its franchised shops for its advertisements. It effectively usedthe frontage of the store by installing prominent signage. Also it used POP materials likeposters which were hung inside the franchised shops. These posters displayed thedifferent products of Monginis.Monginis started the ‘celebration club’, in October 2001 to increase customer loyalty.Almost 2000 families of Kolkata are a part of it. The families are wished, or
congratulated on certain important occasions of their life, like birthdays, anniversariesetc. Any family can be a member of the celebration club and there are no registrationfees. All they need to do is to purchase a celebration cake from a Monginis shop, withwhich they are given a gift.Also Monginis had effectively utilized the localized festivals like ‘Phoila Baiskh’, theBengali New Years day to promote its products as mentioned earlier. It has also usedother traditional Bengali festivals like ‘Jamai Sasthi’, a festival where the son-in-law istreated by the mother-in-law.It has also promoted its products during popular occasions like the football World Cupduring which it organized a competition. It launched a promotional scheme during‘Valentines Day’ on which couples were given two boxes of chocolates, a cassette andtickets for a concert organized by Monginis.Like in case of its franchised shops, Monginis relied more on POPs like banners andposters for the promotion of its packed cakes sold through independent retailers. Here aswell, it utilized the packing boxes or cartons for in-shop promotion. Also, it utilized itsvehicles like autos, used for retail distribution locally, by painting them with the brandname and logo which acted as very good mobile advertisement. Also, it used outdooradvertisements like hoardings etc.It utilized trade promotion very effectively in the distribution of its packed cakes to theindependent retailers. It offered two extra ‘Kup Keyks’ to both wholesalers and retailerswith each carton containing 36 cakes. Similarly it offered five extra ‘Double Kups’ foreach carton containing 24 cakes. While it ensured return of unsold stocks from theretailers, it did not allow for the same from the wholesalers in case the carton was broken.This effectively meant that wholesalers could not sell loose packs to customers and had tosell only in bulk cartons. Thus it used the trade promotion the effectively managechannel conflict by not allowing the wholesalers to undercut the retailers.
For its franchised shops, Monginis had tie ups with Pepsi and Rollicks ice cream. Thefranchised shops would offer cakes, soft drinks and ice creams to the customers. Thisenables the outlets to gain more revenue and profitability by selling these ice creams andsoft drinks. Also, when Pepsi promotes its products during events, then Monginishappened to be their choice of bakery.Road AheadManagement of human resources and continuous skill up-gradation of the people throughtraining is an important element for the success of any bakery, especially craft bakery.The craft bakeries unlike the industrial bakeries are more dependent on the workers in theshop floor. Machinery needed for production is limited to mixing of dough for basicmaterial. Shop floor workers do the topping, icing and the decoration of the items. Since,aesthetic value of products in craft bakery holds the key to purchase, the productioninfrastructure and environment needs to be more worker friendly. Monginis employsmore than 200 people in its Kasba factory. Till date it has been successful in retainingand motivating its employees.Monginis in Kolkata has also been very prudent when it comes to extensions byleveraging its acceptance amongst the customers. Its extension into packed cakes anddistributing it through independent retailers has been reasonably successful.Monginis has not taken its ‘numero uno’ position as granted and is on a continuous lookfor further improvement.• It plans to implement a Quick Response System by which they will be able to know the requirements of each and every retailer with the click of a button.• The main advantage of the system would be that the lead time for delivery to retailers would be reduced to 3 hours and the freshness of the stocks would be as good as bake-off.
• Monginis is recently in the process of implementing ERP in their factory.• They plan to make installation of cold counters or refrigerators mandatory for all franchised shops. They would enable it to sell more of superior quality fresh cream based products.ConclusionA brand like Monginis which is successful and associated with popular variety of quickregular and affordable snacks need to continuously benchmark itself with the globalstandards to stay ahead in a competitive environment – especially in the face of globalcompetition. In the developed countries, growth of plant bakeries led to the decline ofmany small operations in the 1950s and 1960s. Similarly, adoption of in-store bakeries(ISBs) by supermarkets led to their expansion in the 1980s and 1990s which had an effecton both craft bakeries as well as plant bakeries (Key Note 2001). Monginis may need togo for technological up-gradation like ‘store baked’ process using frozen dough. Theymay need to upgrade their stores as in-store bakeries (ISBs) to preempt the competition.‘Produce and have’ outlets may become the new norm in the Indian urban markets - a gaplarge organized players may like to capitalize on. One may compare the situation withthat of early 1990s when Jalajoga was the market leader and then gradually lost itsleadership with the arrival of competitors like Monginis (Sarkar 1993). Shopinfrastructure like air-conditioning, re-heating of snacks using microwave oven becamethe minimum acceptable standard. Today an erstwhile leader like Jalajoga is beinggradually pushed out of Kolkata market.The success of Monginis in Kolkata till now may be attributed to the combination offactors where each of the marketing mix elements, product, price, place and promotionhas played a distinctive role in the success of the brand. With the opening of theeconomy, one may expect large organized players and even global players to tap theIndian bakery market. How Monginis reorients itself to face the forthcoming competitionis the challenge which might hold the key to its future.
References :Jick, Todd (1979): “Mixing Qualitative and Quantitative Methods: Triangulation inAction” Administrative Science Quarterly vol.24, pp.602-611.Key Note (2001): Market Report, Bread & Bakery Products, Barker Lynsey (ed), 16th ed,.Samant Prajakta: “Baking Profits”, Times Food Processing Journal, February – March,2002.Sarkar Manjira, “When Calcutta takes the cake” The Economic Times Calcutta, SaturdayAugust 21, 1993.
Annexure IBrief Profile of the Bakery chains of Kolkata 1. Jalajoga: Founded in 1955. Targeted the middle class offering quality products at an affordable price and was the market leader till early 1990s. Lost its leadership by the middle of 1990s and is presently having 80 retail shops of which 34 are in Kolkata. Its annual turnover is approximately INR 40 million. Extended its brand to ice cream, soda and recently noodles. 2. Kathleen: Started in late 1970s, emerged as a premium bakery brand by mid 1980s. Was associated with celebration cakes. Presently having 80 outlets of which 59 are in Kolkata. Sales have remained stagnant at around INR 25 million annually since 1997 even though the number of outlets has grown from 36 to 80 during this period. Extended its brand to ice cream in 1995 which had to be eventually withdrawn. 3. Kookie Jar: Started in 1988 is synonymous with exquisite craftsmanship and taste and is positioned as a luxury brand. Had one single showroom till a labor unrest and strike in 1997, when they were forced to open two franchised shops. Achieved a sale of around INR 60 million with only three shops in Kolkata. Recently have dropped their franchisees and made the products available in the supermarket chain C3. 4. Bakers Square: Started in 1997 during the closure of Kookie Jar producing similar products being a ‘Me-too’ brand. Has eight shops in Kolkata and a turnover of approximately INR 18 million annually, exploring institutional sales by supplying to hotels, clubs etc. 5. Upper Crust: Started in 1992, positioned itself as a premium brand with eleven shops located at up- market localities of Kolkata. Sales have remained stagnant at around INR 23 million. Recently supplying to organized retailers. 6. Sugar & Spice: Started in 1989 and had a turnover of INR 3 million only till 1998. Post 1998, emphasized on franchisee management and growth outside Kolkata by targeting the popular segment replicating Monginis. Presently having 58 outlets in Kolkata and a turnover of INR 150 million including its operations outside Kolkata. 7. Monginis: Started in 1992 with a single shop. Has grown from a turnover of INR 5.3 million in 1992-93 to approximately INR 150 million by 2003 with 79 shops in Kolkata. Has firmly established
itself as the market leader catering to the popular segment. Its line extension into packed cakes manufactured in separate facilities is contributing around INR 150 million taking total turnover of the brand to approximately INR 300 million. More than 100 exclusive franchised shops in Kolkata by 2005.Source: Published annual report and interviews