A synthetic startup

A synthetic startup


A. Mahendran, the former Managing Director of Godrej Consumer Products, calls his new venture in the FMCG space a synthetic startup. Global Consumer Products Pvt. Ltd.,(GCPPL) his new venture, has launched its first brand – Luvit – in the chocolates and confectionary space. He calls it a synthetic startup simply because he believes it had three elements of a large company – adequacy of capital, top-notch team and systems and processes – from day one

Arumugham Mahendran is a well-known name in FMCG circles. From brand marketers to feet-on-street distributors, everyone knows him thanks to his achievements in the past and deep understanding of the consumer goods space. After all, he’s credited with building two major household brands – Good knight and HIT – which were category creators in the insecticides space.

Prior to founding GBFPL, Mahendran was Managing Director of Godrej Consumer Products, where he was credited with launching several brands in the Indian market and completed eight acquisitions between 2009 and 2011. In the last three years of his leadership, the company’s share price rose by 238 per cent, and the company grew at a CAGR of 26 per cent with revenues of Rs. 7,100 crores.

Mahendran believes that brand building is the single most crucial element of winning in FMCG. “Some people seem to believe it is distribution, but I believe it is the brand. If your brand doesn’t attract the consumer, there won’t be off take and the distribution network will reject you,

It is this track record that attracted two global investors – Goldman Sachs and Mitsui Global Investment to invest Rs 315 crore into GBFPL. The company was setup with the goal of building a FMCG platform starting with the confectionary category, and next the food and beverage segment.

In this story, Mahendran gives us a glimpse into his key learnings from the past and vision behind setting up this new venture.

The early days

The first year of operations at GBFPL was dedicated to setting up the infrastructure, innovation funnel, supply chain and distribution. This meant attracting a high quality team, setting up the distribution partners and such. Mahendran says, “In one year, I believe, we’ve done a very good job of setting up, what I believe is the foundation of any good FMCG business. We’ve attracted talent from all walks of life and setup a very good team.” (The company has hired from various FMCG majors including Perfetti, Hindustan Unilever, Britannia, Ferraro and Cadbury Kraft).

The company recently launched the ‘Luvit’ brand of chocolates and confectionaries and is gearing up for the next phase – that of brand building.

Mahendran believes that brand building is the single most crucial element of winning in FMCG. “Some people seem to believe it is distribution, but I believe it is the brand. If your brand doesn’t attract the consumer, there won’t be off take and the distribution network will reject you,” he explains. He should know. After all, Mahendran has spent several decades in the consumer space, including a few years in the chocolates segment, when the Hershey’s brand had a partnership with Godrej Group.

Mahendran also draws his lessons from another brand close to his heart – the mineral water brand, Cherios. His wife built this brand and that journey, which he watched from close quarters, led him to several learnings about the beverage segment.

The FMCG leader is also convinced that brand building is an art, not a science. “It certainly cannot be taught at business schools; like art, it has to be learnt on the job.” While Brand Luvit, is using analytics and social media tools, in addition to market insights from AC Neilson (a global marketing research firm), Mahendran is bringing in all his experience to the table to shape up the brand.

Brand Luvit

In the early days, this new chocolate brand will target the young in 25 cities across the south. It has roped in South Indian movie actor Siddharth as its brand ambassador. Bright packaging, with positioning of “to LiveIt. OwnIt. LuvIt” is core to its advertising and brand activation campaigns. The company has appointed a network of over 80 distributors and has launched in Andhra Pradesh, Telangana, Tamil Nadu, Kerala, Karnataka and Puducherry markets.

From a pricing perspective, the chocolates are available in 9 variants and 14 SKUs, and are priced from Rs. 5 to Rs. 45. The sub brands are christened Dairy Rich, ChocWich, Caramelicious, Crazypops and Chocopops.

The press release of the launch gives a simple, two-word explanation to the choice of brand ambassador. “Siddharth, the ‘chocolate boy’ of the South is our brand ambassador”, it reads. Mahendran is convinced that such simple yet attention-to-detail ridden approach is crucial to break through the clutter in this segment.

The Brand man

It is impossible to have a conversation with Mahendran when he doesn’t rattle off brand names. In our chat, he spoke about brands he’s been closely associated with, Good Knight, Hit and the various brands in the Godrej stable. He’s been a careful student of the various MNC brands coming into India. “I believe a number of multi-national come in to India with an already adult brand. The brand architecture is already set in a Western market and they try to bring it here. However, I do think it is important, at least in India, to build and nurture brands from scratch. It is like a child and you let it grow. It is not possible to expect quick results, and this, I believe a number of foreign brands expect when they enter the country. Winning market share takes time,” he explains.

The next category

After the confectionary space, GBFPL plans to enter the food and beverage segment. “We’ll probably begin with fruit juices and water,” says Mahendran without revealing too much. After that, there is personal and household care, a segment he’s very familiar with, but he’s tight-lipped to reveal further plans. Mahendran is also investing reasonably in product differentiation. “As in any segment, this is extremely crucial. It is important to have our R&D and innovation funnel working well.”

Mahendran believes his biggest learning from the past is the need for capital adequacy to build a solid company in the FMCG sector. “There are three aspects that are crucial – systems & processes, adequacy of capital and a top-notch team. These three elements are what makes Global a synthetic startup,” he explains. The point Mahendran is trying to make is that, it is fairly difficult to build a typical startup in this segment where one of these three elements is lacking. “You cannot spend all your effort building the product and not have money to invest in distribution,” he explains.

On a parting note, he adds, “One area that I need to pick up is the social media world”. As an FMCG leader, Mahendran has probably seen it all; but the frantic pace at which the social web is shaping up consumer behavior is probably something he has not witnessed first-hand.

Mahendran knows it and he’s ready to fire on all cylinders. One thing is for sure: he’s Luvin’ it.

SNAPSHOT : Global Beverages & Foods Pvt. Limited

Founder: FMCG veteran A. Mahendran

USP: A synthetic startup with adequate capital to compete in the FMCG space. Starting off with the Luvit brand of chocolate for the Southern India market

Investors: Rs. 315 crore from Goldman Sachs and Mitsui Global

What next?

The food and beverage segment, fruit juices and water.

Prem Sivakumaran is co-founder & CEO of Growth Mechanics, a leadership and entrepreneurship-focused business content company in India. Growth Mechanics publishes The Smart CEO, a publication focused on enabling peer-to-peer knowledge exchange among C-level executives and board members. The platform reaches over 1.2 lakh CXOs across its website, app, print publication & CEO Round Tables, and has featured on the cover India’s leading business leaders/founders from Infosys, Mindtree, Tata Sons, ICICI Bank, Biocon, Yes Bank and several others. In addition of Smart CEO, Growth Mechanics also organises the Startup50 Conference & Awards, an annual event to recognize India’s top 50 startups every year. Startup50 Alumni include Freshdesk, Oyo Rooms, Urban Ladder, Capital Float, Paperboat Beverages, among others. Growth Mechanics’ primary business model revolves around linking CXOs and Brands around engaging content and has worked with India’s leading companies including Mahindra Group, Godrej & Boyce, BASF, Airtel, Tata Docomo, Fiat, IDA Ireland, Yes Bank, Prestige Estates, Frederique Constant, Indian Terrain

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