Tuesday, July 28, 2020

A lot happened to Coffee


I was taking an 8.30am flight that morning when News channels at the Chennai Airport flashed that Mr. VG Siddhartha had gone missing the previous night at Mangalore. He had asked his driver to stop the car and walked along the now infamous bridge along Nethravathi River near Ullala town only to never return. His dead body was found two days later along the coast and was cremated the same day at his native town, Chikmagalur. Those unfortunate three days, I happened to be in Bangalore on work. I was restless right from the moment I heard the news, the two days of suspense and finally watching the last rites on a TV App on my mobile even as my Cab was passing by Coffee Day Square on Vittal Mallya Road. I was breathless for a few hours even after reaching my hotel room that night. Sometimes, I still get nightmares.



Although I was never too close to “Chairman” as we called him, I had the rare opportunity to work closely with him between 2009 – 2011 when I was General Manager – Business Development at Café Coffee Day setting up 140 new cafés within the confines of retail precincts including Airports, Metros, Hypermarkets, Supermarkets, Apparel Department Stores, Cinemas, College and University Campuses and so on. We would meet twice a month or so to go through the potential sites that were on offer and he would share his wise views whether to proceed or not, given his global experience in the Coffee business. 




He always wanted to make Café Coffee Day one of the most loved homegrown Indian consumer brands. Legend has it that the farmer’s son was fascinated how Coffee was brewed, served and enjoyed at cafés in Europe, the US and the world over when he would travel on work in the 90’s across continents. Initially, CCD as it is known lovingly was stated off as an Internet Parlor on Bangalore’s Iconic Brigade Road. However, VGS as he was addressed affectionately decided to sell Coffee for a fee and offer the Internet for free even as he would sip his coffee slowly and see the future of coffee cafés all over India. 


The company started off expanding in Bangalore, Chennai and Hyderabad and quickly moved to Bombay and Delhi. There would be constant comparisons in the early part of the new Millennium between CCD and Barista, though CCD evolved & grew sooner than Barista and others, thanks to a very strong team that focused their strengths on F&B, Café Operations, Marketing and of course, a very well laid HR Foundation. That every cup of Coffee should be consistent was a goal that each one of us tried to achieve to the best of their abilities. 


Mr. Siddhartha gave a different “meaning” to Coffee in a predominantly tea drinking country. After all, during its hey days, CCD was serving over 2 lakh cups of Coffee through Cafés and Vending machines installed at Offices, Colleges, Canteens and so on. “Coffee?” became a buzzword in India. For friends to catch up, for asking a Date, for an informal job interview and so on. In fact, I would wonder if there is any Start-Up in India which has never had at least one of their many discussions at a CCD nearby. VGS made Coffee the unofficial beverage of Indians who are on the move – from Airports to Colleges, Malls to Multiplexes and beyond. Today, if Coffee is a popular drink across the span of the country and is a preferred ice breaker, the credit solely goes to Café Coffee Day and the visionary Late Shri. VG Siddhartha. In fact, in my current role at Levista Coffee, one of the audacious mission statements I have been crafting is how to replace the first beverage of the day, being Tea to Coffee across millions of Indian households. Among the erudite and the educated, this would be a relatively easier task because VGS & CCD have already built much familiarity to this fascinating hot beverage across the predominantly Tea consumers even within Tier 2/3/4 towns in India. 


Over the past 12 months, so many people have asked me why he committed suicide – such a successful Entrepreneur who build a fledgling empire, with one bean at a time. Almost. And my reply has always been the same. Neither I nor anyone else was standing next to him when he fell off the bridge. No one other than him would know what was running in his mind on that fateful evening of 29th July 2019 or the few days and weeks ahead of that. Was it political? Business? Debts? Societal Pressure? No one knows and will ever know. 


Law has taken its due course, so have scrutiny by the authorities. But this is all post-mortem. The world lost another soul to suicide. As we always say, one is driven to this malaise called suicide. It’s sometimes a meticulously planned one. Like my maternal uncle did in 2014. Like many of us are pushed to the decision in a whim. Most of us, including me don’t’ end up doing it for some reason or the other, With VGS, we just don’t know. However, a lot happened to Coffee since 1997. Coffee as a product, CCD as a brand and VGS as an Entrepreneur will always have a page in the Indian Consumer & Retail book. So much to learn from this episode. May his Atma attain the Lord’s Feet and I pray to my cherished Deity that his soul attain Mukti. Om Shanthi.

Here are my Obit , RemembranceHomage articles I wrote last year. 

Sunday, July 19, 2020

WFH – Boon to Retailers & Brands

Many companies have advised their employees to plan WFH until end of this Calendar year. This means a good / happy news as well as a significant job loss for millions. That more people will lose lives and livelihood for the grave mistakes of themselves and the Governments across the world is a reality that we are staring at. However, the eternal optimist that I am, I can already see green shoots in certain segments of the consumer business. Some of you may recall that during my Webinar sessions in the months of April & May, I had referred to certain categories which is only bound to increase if not at least sustain its current business opportunity. Most of the daily household items have seen consistent growth even during the extended lockdown while Food related FMCG have shown tremendous growth. Categories such as Coffee, Tea, Sugar, Flours & Pulses have seen a spurt in sales for many brands while Retailers, albeit with a shortened operating time than before, are not complaining, thanks to consistent footfalls and increased bill values. 

However, what has taken many Retailers, Distributors and the entire supply chain by surprise is the huge surge in work-furniture for home and Electronics + Consumer Durables. We ourselves went shopping last week only to find that Godrej Interiors had completely run out of stock for 4 weeks, Home Town had absolutely no sight of when stocks would be replenished, over 40 customers merely waiting to enter Home Stop and hitherto B2B players such as Featherlite living up to the unprecedented opportunity and serving customers with their backend capabilities being spruced up. Traditional Furniture Retailers are not lagging behind either. Actually, I see many of the neighborhood shops doing brisk business with the highest demand for compact desktop / laptop chairs under Rs. 4,000 a piece followed by chairs that suit or double up for other purposes. I have also been hearing a few of my Architect-friends getting calls from their Business Clients to set-up / renovate their homes to be able to work. 


The other category which has been doing extremely brisk business is Cosnumer Durables, Home appliances and personal electronics. While Amazon & Flipkart haven’t resumed their deliveries fully across geographies, consumers are literally seen shuttling from one shop to another for want of peripherals such as computer mouse, headphones, Mobile Phones with 4GB RAM (to be able to take up Apps such as Skype & Zoom) under sub-Rs. 10,000 and most importantly, Laptops. I guess desktops as a category is passé – one, it occupies too much space and it’s immobile within the house as well as across users, which gives a push for laptops. 

In my own personal case, I had to wait for over 6 weeks to get myself a new MacBook Air, an upgrade after using the previous Air for 5 years. Thanks to good friends, I was able to lay my hands on one out of the two pieces that landed in Chennai after the recent lockdown. The folks at Apple India as well as Apple Retailers say with a grin that most models of MacBook / iPad are out of stock and there is no immediate visibility of their arrival into the stores.


With the State Governments finally budging for schools to conduct Online classes – the High Court of Tamil Nadu has especially allowed private Schools to collect 40% of the Annual Tuition Fee for the present academic year – Online Classes are getting more and more real. The state run “Kalvi Tv” in TN shall also showcase online lessons while every other State Government is looking at similar measures to ensure continuity of education. This further means more requirement of laptops, earphones and so on. That there is no shortage of Electricity at urban and semi-urban homes is a big advantage.

Smart Entrepreneurs, Individuals and Businesses have lapped up this opportunity. A second-degree associate of mine who was retrenched by his employer, a Hardware Engineer with 10+ years of experience has taken up direct sale of Laptops to Corporates making a neat 4-5% commission on the purchase value. He claims his income, although a temporary one is lesser than what he used to make in his previous job while he reconciles that he is unsure how long this would go on – his parallel entrepreneurship and the Corona lockdown. Whichever way, make hay while the sun shines is the way forward I guess. 

Meanwhile, traditional retailers in both these categories are indeed an aggrieved lot. For Example, the Founder of a family business which is in to Electronics for the past 2 decades has been adamant on downsizing his margins for want of volumes. He claims that this one-off discounting model on gadgets such as Iron boxes, Personal Shaving Equipment (for men) and other household items such as mixer grinders and refrigerators will hurt the business once the challenges are over, especially around Deepavali 2020. What he doesn’t realize is whether he would be operational until then, running 20+ stores across the state, employing over 300 people and a joint family of 4 siblings and their wards. 


In another instance, a proprietary furniture dealer near my home refused to entertain any sort of reduction on Chairs claiming that these items were already on high demand and that he sees no reasons why they should be sold at lower prices. That there are literally 100s of furniture shops around is something the gentleman should realize soon. Maybe, he wouldn’t. 

I am actually planning to write a book which would go by the name “Corona Millionaires” which could be release in 24 months or so. No, I am not referring to the likes of billionaire Shri. Mukesh Ambani and his ilk. I am referring to common people like you and me – who found this crisis as the biggest business opportunity of their lives. May be a Netflix original too. It could rake in more money than what many Entrepreneurs would make during this crisis.

Thursday, July 9, 2020

Is Kirana Retail dead? David vs. Goliath

For the first half of my life, I grew up in Tamil Nadu Housing Board Quarters in Chennai which had odd 800 tenements. Lloyds Colony at Royapettah, close to the Marina Beach came up in the 1960s when Late Shri. Bhaktavatsalam was the Home Minister of former Chief Minister K. Kamaraj's cabinet who’s primary motive was to provide affordable rented houses for the EWS, LIG & MIG of the state. The houses were owned by the Government of Tamil Nadu and houses were allotted to users on a rotational basis. Within the entire housing complex, there was a one commercial complex, a school, a community center for weddings & events, a park, a milk vending booth, a library, two playgrounds and about 400 trees. Yes, you read that right – 1970s. And the complex had a few shops allotted for various vocations such as carpentry, automotive, Public Distribution Scheme centers (for Ration products) and most memorably a Kirana Shop (Provisions Shop). That the shop owner was our immediate neighbour and a family well wisher was an advantage for me as I used to visit the shop as a child quite often to pick up some thing or the other and the Uncle would give me a toffee or two once in a while.

I remember vividly collecting newspaper copies of “The Hindu” which had a full page Advertisement in the early 90s when Pepsi launched in town and one could get a sample 100ml RGB against the paper clipping and we exchanged several of these at this particular shop which functioned in the name and style of “Murugan Stores”. Guess, the seeds of Retail and Consumer Business was sowed in my heart in an early age, unknowlingly. Or by design. And hence my nemonic, "Retailer by Profession and Choice".


So, when Subhiksha Retail stores started expanding in the late 90s along with a bunch of new age airconditioned super markets in the “Mecca of Retail” that is Chennai including my alma mater and first job at RPG run Foodworld, conches were blown that this was the death knell for small and marginal kirana shops. Around the new Millenium, larger corporates such as Tatas, Birlas, Rahejas among others entered in to business of Organised Retail and we saw formats such as Supermarkets at Neighbourhoods, standalone Hypermarkets as well as those in basements of Malls and so on, Big Bazaar being the most popular such chain across India over the past 15 years and is India's largest Hypermarket chain. Once again, naysayers blew the conch that this would be the death knell for Kiranas. 

Then came the likes of Big Basket followed by small dotcom companies such as PepperTap, Grofers (including Oyethere.com founded by Your’s truly in 2015 and made strides) where the conch was blown yet again against the Kirans. 

Yet, amidst all this hullaboo, the Kiranas are standing rock solid with their determination, continued efforts to modernize & upgrade and of course, sustain their business with changing times by adapting to the new normal. 

Covid-19 is yet another opportunity for the Kiranas who form the backbone of India’s FMCG retail industry. With over 13 million Kirana shops across India, the Industry employs over 50 million people directly and indirectly including shop management, logistics such as first mile (from factory), middle mile (to Distributor points) and last mile (delivery of goods to Retailers / Consumers). Other than this, the Organised Retail Industry is estimated to employ a million or so staff members. The Share of Kiranas in Grocery & Household / FMCG Retail is approx. 90% which over the past 100+ days during Lockdown has increased to, perhaps say 98% since most Organised Retail stores were shut and E-Comm players remained non-operational or marginally. 


I have been saying this for over 15 years – in this battle, Kiranas are the Goliath. 

It’s almost impossible to get them off this equation – not because they outnumber organized retailers on a ratio of 9:1, rather because of the proximity that they enjoy with the end Consumers and the longstanding relationship they've meticulously built. 

According to a recent study by E&Y, over 40% of Kiranas have imbibed the Digital route including collecting online payments through Google Pay or PayTM as well as delivering through e-comm apps. Agility and Adaptability are the two main traits that these small business owners display, which is also the bane of larger companies and corporates who's employees work for a salary while the small entrepreneurs work for a living and especially to earn for the next meal. Makes a lot of difference in their approach, isn’t it.