FoodWorld: Pioneering Organized Food Retailing in India|Business Strategy|Case Study|Case Studies

FoodWorld: Pioneering Organized Food Retailing in India

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Case Details:

Case Code : BSTR051
Case Length : 14 Pages
Period : 1990 - 2003
Organization : RPG Group
Pub Date : 2003
Teaching Note :Not Available
Countries : India
Industry : Food Retailing

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"As India opened up post-1990, the availability of products increased dramatically. Indians and Indian families were exposed to new products and tastes, as they started traveling more and processed food started becoming a larger part of the monthly household purchase. We clearly saw an opportunity in retailing. One has to understand that the size of the grocery market in India is huge. A rough estimate would give us something like Rs 4 trillion ." 1

"We are clearly the market makers. We have created an industry, along with huge employment opportunities for a lot of people."

- Raghu Pillai, CEO, RPG-Retail.


In July 2001, along with renowned jam brands such as Kissan and Sil, a new brand was prominently being displayed on the shelves of India's leading food retailer, FoodWorld (FW), owned by the R P Goenka (RPG) group of companies.

The jam was sold under the brand name 'FoodWorld' and was priced much lower than the other brands. Within a month of their launch, FoodWorld jams accounted for 17% of FW's sales in that category. This development marked one of the first major instances of the conflict between 'private store brands' and 'FMCG company brands' in India. While the phenomenon was rather common in countries such as the US and the UK, FW became the first retailing chain to challenge the might of leading FMCG companies in the country. Beginning with jam, honey, phenyl and herbal sanitizers, FW soon extended its branding initiatives to other products as well. These products could be placed under three main categories - commodities, processed food items, and non-food items.

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FW had launched (or intended to launch) products like dry groceries, toilet cleaners, beverages, dish washing powders, detergents, powder, ketchup, sauces, tea, coffee, bakery products, breakfast cereals, shampoos and many more items in the future under the FW brand. While private brands offered the benefit of higher margins, they also brought with them the burden of brand management, something in which FW did not have to invest in, while selling products manufactured by other companies.

Considering the impact of this move on the confidence of other manufacturers, analysts felt that leading manufacturers might suspect that FW was promoting its own brands at the cost of their brands. However, FW officials stressed that all the products it launched were in segments where there were gaps in its product portfolio, either in terms of price, supply or quality. These developments highlighted the fact that in the early 21st century, organized food retailing in India was catching up with other Western countries. The 'posh' shopping experience associated with FW outlets was far more appealing than the small, unappealing stores at which Indian households shopped for since decades. How FW became the first venture to successfully cover many parts of the country is essentially a story of good timing, business insight and strong strategic support from the promoters.

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1] In February 2003, Rs 48 equaled 1 US $.


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