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VIKALPA VOLUME 37 NO 2 APRIL - JUNE 2012 117

It was 10 in the morning of a hot day in May 2010. The heat wave of Delhi was

driving people mad with no signs of rain, and adding fuel to the fire was a

terrible traffic jam ahead. Taab Siddiqui had to catch hold of her team to assign

some work to them as she would be away for a couple of weeks from May 24, 2010

onwards. She had planned a trip to South Africa, after having a really hectic closing

of the financial year.

While moving towards the corporate office at Mahipalpur (Extension), perhaps the

most congested area of South Delhi near the airport, her car crossed the BRT corri-

dor near Chirag Delhi flyover and stopped at the traffic signal. While crossing the

signal, fiddling with her blackberry phone, she looked out of the window and started

wondering what the green colour meant to her as a business woman and to Delhi as

a city.

During that time in Delhi, the government was giving a lot of emphasis on protect-

ing the environment and saving the ecosystem by planting trees and adopting prac-

tices to create a green atmosphere. The major reasons were the forthcoming

Commonwealth Games and the increasing pollution in the city. Small hoardingswere installed across the city with slogans such as GREEN DELHI CLEAN DELHI,

GO GREEN etc. Marketers were trying to sell green marketing concepts, finding

innovative ways to show their concern for the environment.

But for Taab Siddiqui, green colour answered many of her critics queries there

were persistent mails from people who thought that her soft bread contained egg.

The fact was that egg was never used as an ingredient in the Harvest Gold bread and

to highlight the vegetarian character of its products, the company started printing a

green mark on the packing.

She had to reach the office by 11 am as she had invited Equus Red Cell, the Ad shop,

for launching their website. This was an important meeting for building the brand

image of the company. Moreover, she was planning to go national and hence to be on

par with the other competitors, internet presence and social networking were a must.

As her car drove into the parking area, she heaved a sigh of relief that she could

escape from the peak traffic and was still running ahead of her schedule; she could

thus afford to spend a couple of minutes with her staff as she had to inform them

about a new product. She walked in and called everybody in the Conference Room

to announce the breaking news, particularly to the male employees. I have a good

M A N A G E M E N T

C A S E Harvest Gold: Delhis No. 1 Bread

Noria Farooquidescribes a real-life situationfaced, a decision or action

taken by an individualmanager or by an organiza-tion at the strategic, func-tional or operational level

KEY WORDS

Indian Bakery Industry

Green Marketing

Procurement

Packaging

Quality Standards

Cost-cutting Measures


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118

piece of news to share with you; we are entering into a

challenging segment of semi-cooked rotisin certain parts

of Delhi to start with! Now all men should stop pester-

ing their mothers and wives to make garam rotis1 for

them, she jokingly warned them. The launching of this

product was quite close to her heart because she per-

sonally hated making rotisduring her earlier days. Af-

ter getting back from her tour, she had thought of giving

a green signal to this daring product of her company.

Piyush, the executive assistant to the lady, standing be-

hind her, was quite apprehensive about the product. Is

this rotibusiness really going to work? There can be other

ways of empowering the Delhi women. We all reach

home late and the least that we would want is a freshly

cooked meal with fresh chapatis, he thought.

It was honestly a challenging step of experimenting with

the sensitive Indian consumer, and that too men. Previ-

ous records showed that this venture was quite popular

in the West but in India it was still a question of value

system for every household. But that was what Harvest

Gold was known for: Challenging the Challenges. If

the company failed then what would happen? Perhaps

they would stop this venture and move ahead with some

learning as this would not be the first time they were

failing. A couple of years ago, they had tried selling

mineral water but that had not gone well with the peo-

ple. The business was not a success and they had topromptly shut it down. The problem lay in the logistics.

Another issue for the company was the implementation

of CNG norms2 along with its other contemporaries,

it was constantly bugged by the Delhi Government offi-

cials who wanted them to have CNG fitted trucks to

carry their products, and these companies had no choice

but to follow rules. Their concern was that, how on earth

would their products reach the breakfast tables of the

customers on time if the trucks had to stand in long

queues for CNG refueling, which was inevitable due to

limited CNG stations. What would happen to theDilliwallahs3who wanted to have only Harvest Gold?

Managing the current distribution system was really a

hard task for them. For that matter it was a crucial issue

even for other food companies like Mother Dairy and

Perfect Bread because their business too depended on

good logistics.

The most important issue for the company was expand-

ing in other parts of the country and managing the dis-

tribution of fresh bread in such a way that her customersgot the product at the right time and were not attracted

to the alternate options offered by the retailers. Now the

task ahead was to develop a business model for gaining

national presence it could be franchising or contract

manufacturing.

Harvesting gold in the Delhi market during the nine-

ties, but strapped by the investment ceiling of Rs 30 mil-

lion in the reserved sector of bread manufacturing,

Harvest Gold realized that the future lay in franchising

its brand and technology across the country.

Taab Siddiquis strong conviction for outstanding qual-

ity had brought laurels to the organization, which she

did not want to lose just by expanding the business. In

fact the organization faced a major challenge when it

started outsourcing the jobs. Their major objective was

to fulfill the need for a good quality product involving

low cost techniques that the customers could trust. (See

Appendix I for cost control methods). What differenti-

ated them from others was quality, and their endeav-

our was to follow it 365 days.

HARVEST GOLD: ORIGINS

Adil Hassan was a chemical engineer from IIT Delhi,

who switched to making bread with an investment of

Rs. 10 million. After his marriage with Taab Siddiqui,

an MBA from Aligarh Muslim University, in 1988, they

had shifted to Singapore but returned to India in 1992 to

make their living in Delhi. They hit upon the idea of

bread-making when they failed to find fresh and decent

bread in Delhi. So, they decided to make bread and therest, as they said, was history.

Adil Hassan and Taab Siddiqui commissioned their

plant as Harvest Gold Foods India Pvt. Ltd. and com-

menced production in June 1993, at its state-of-the-art

facility at Bhiwadi, Rajasthan (installed capacity: 75,000

loaves of 800 gm each a day) with a premium range of

Harvest Gold white bread in 400 gm (Price Rs 7 a loaf)

and 800 gm (Rs 13). The product was an instant hit with

1 Hot Indian breads made of wheat flour. Most Indian people prefer tohave them hot.

2 CNG(Compressed natural gas) is an alternative fuel and is widely ac-cepted by vehicle owners because of low cost and clean burningaspect.The government has made this option mandatory for trucksand autorickshaws, i.e., they have to get their vehicles CNG fitted.

3 People belonging to Delhi.

HARVEST GOLD: DELHIS NO. 1 BREAD


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a Rs. 400 million turnover in just five years. They fur-

ther diversified into related products like hamburger

buns, pizza base, etc.

Earlier there was a domination of two manufacturers

Modern and Britannia. Demand was high and supply

inadequate; hence whatever was produced was sold.

Bread was sold in wax papers. People used to stand inqueue for hours for delivery vans to get their loaves.

Such was the dominance of Britannia and Modern

breads. Other competitors like Taaza and Bakemans

were not so popular. Since the national players were Bri-

tannia and Modern (now limited to a few parts of the

country), every state had its own local brand. Short shelf-

life of bread made it difficult for big players to distrib-

ute bread at distant places. From 1995-96 up to 1998-99,

Britannia bread market share witnessed a fall due to the

stiff competition from Modern Foods. Still Britanniacould manage to regain its shape due to the takeover of

Modern Foods and the time spent in its restructuring.

Again that could not last long and Britannia faced some

problem in its distribution of bread. This particular cri-

sis was the reason behind Harvest Golds success as the

market leaders were fighting with their destinies.

Harvest Gold did not have any distributor for its bread

at that time; so, it approached the distributors of Britan-

nia and Modern. These distributors agreed to keep a

stock of Harvest Gold bread and sell it whenever therewas a demand for it. It also approached the Nirulas for

keeping its bread on their counters. But everything took

a turn when customer response turned out to be over-

whelming. Within a span of two years, there was no look-

ing back for them. Harvest Gold was 17 years old with a

turnover of more than Rs. 1.2 billion with one plant, one

city, and one product. Its only plant was in Bhiwadi from

where all its products were distributed. What was most

remarkable was the companys distribution system the

trucks were painted with Harvest Golds name and logo

a true example of mobile branding. This was a case ofa local player taking on a big brand and emerging as

the market leader within a span of just one to two years

of launch. Other than the normal white bread, it also

made sandwich bread, Bombay pav, burger bun, brown

bread, kulcha, pizza base, sweet bun and milk rusk,

daliya (Porridge) bread, garlic bread, and multi-grain

bread and sold its own atta (wheat flour). Their label

accounted for 80 per cent of the bread consumed in Delhi

and NCR and headed a Rs. 1.2 billion (and growing)

business that employed 800 people and supplied 2,50,000

loaves per day. Each 380 gm loaf was priced at Rs 11

and 800 gms at Rs 20 in Delhi. For other states, there

was an addition of Rs 1 or 2 per loaf.

INDUSTRY OVERVIEW

The Indian bakery market was valued at Rs. 32.95 bil-lion in the year 2008 and was expected to reach Rs. 43.08

billion by 2012. The market was split into rural (22.5 %)

and urban (77.5%). The two major bakery products,

bread and biscuits, held about 82 per cent of the market

share.4The per capita consumption of bread in India was

only around 1.5 kg to 1.75 kg in various zones.

The consumption pattern in the four zones of India was

27 per cent in the North, 32 per cent in the South, 23 per

cent in the East, and 18 per cent in the West.5

Size of the Indian Bread Industry

The four million tonne bread industry was growing at

the rate of 6 per cent and was expected to grow at the

same rate in the medium term. However, the organized

sector was growing at the rate of 8 per cent. In 2006-07,

the total production of the organized sector was esti-

mated at 1.8 million tonnes.6

The bread industry consisted of organized and unor-

ganized sectors, contributing around 45 per cent and 55

per cent of the total bread production respectively. The

organized sector consisted of around 1,800 small scale

bread manufactures around the country, besides 25

medium scale manufacturers and 2 large scale indus-

tries which were permitted to continue on the basis of

their installed capacity in 1976 when the Government

of India reserved bread industry for the small sector.7

The unorganized sector including the neighbourhood

bakeries, etc., consisted of an estimated 75,000 bread

bakers mostly located in the residential areas of cities

and towns. Thirty-five per cent of the total production

came from the small scale sector with about 1,500-1,800

units in operation.

4 Sourced from the website of business standard,http://www.business-standard.com/india/news/kitindian-bakery-market-in-2008/333773/=,May 28,2010

5 Sourced from the website of Ministry of Food Processing Industry,India http://mofpi.nic.in/images/file/volume 2.pdf=, May 28, 2010.

6 Ibid7 Ibid


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120

Operations

Procurement at Harvest Gold

The flour was procured by the Purchase Department at

Bhiwadi through the millers and suppliers who first sent

the flour samples to the Quality Control (Standards)

Department, where these samples were tested on vari-

ous quality parameters. If a sample met the required

specification, it was accepted. The rates were then de-

cided by the Purchase Department and finally the order

was placed. The company maintained the suppliers

profiles and the orders were placed only when required.

Price

The price of wheat flour (See Appendix 2) was deter-

mined on the basis of the price of wheat, atta, suji, and

bran prevailing in the market on a day-to-day basis.

Maida,atta,bran, and suji were made out of wheat in theratio of 55:15:25:5. At Harvest Gold, the formula used

for calculating wheat flour rate was:

Wheat flour = wheat rate/quintal (atta rate/kg.*rate/kg 0.15 + suji rate/kg. * 0.05 + bran

rate/kg. * 0.25)/55

The wheat flour was tested on various quality param-

eters before procurement. These parameters played a

very important role in deciding the products to be pre-

pared, e.g., bread-making required strong gluten, more

than 12 per cent protein, hard wheat, etc. Followingquality parameters were required to be satisfied:

Wheat Non-grade Data

Moisture content: The acceptable limit of moisture con-

tent was less than 12 per cent. This parameter was very

important for storing wheat in the godowns/silos. The

moisture content depended on the weather conditions

at the time of harvesting. Higher moisture content ad-

versely affected the keeping quality of wheat.

Protein content: This is an important parameter for

making different products of wheat. For making good

quality bread, chapati, and biscuits, the protein require-

ment was greater than 12, 10-12, and less than 11 per

cent respectively.

Sedimentation value: This parameter indicated gluten

strength. For making good quality bread, chapati and

biscuits, the requirements were strong, medium-strong,

and weak gluten respectively.

Hardness: This was an important parameter for prod-

uct development as soft, medium-hard, and hard wheat

was required for biscuits, chapatis, and bread respec-

tively.

Alkaline water retention capacity (AWRC): It was an

important parameter for evaluating the quality of bis-

cuit and had a negative correlation. A value of less than60 per cent was considered ideal for making good qual-

ity biscuits.

Flour Data

Extraction rate: Milling industry was interested in

higher extraction rate (flour recovery). An extraction rate

of 55 per cent was generally preferred.

Dough Properties

Alveo graph parameters: The alveo graph was usedmainly to evaluate bread-making potential of wheat

flour. The four alveo graph parameters were:

P Peak (mm)

L Elasticity (mm)

P/L Ratio of peak and elasticity

W Overall resistance

The flour with high L and low P was generally weak

whereas the flour with low L and high P was over-sta-

ble and thus neither of them was considered suitable

for good bread-making.

Quality Evaluation

Loaf volume and bread quality: For the evaluation of

bread quality, parameters like loaf volume, stickiness,

appearance, crust colour, crum colour, texture, taste, and

aroma were considered and among all these parameters,

loaf volume was considered the most important and was

given maximum weightage while evaluating bread qual-

ity. The quality of flour for bread-making was tested not

only in the labs but also on the floor, by making breadout of the various samples sent by the vendors. For gain-

ing national presence, the biggest challenge ahead for

them was to standardize the different flour quality avail-

able in different states of the country.

Biscuit quality:For evaluating the quality of biscuits,

spread factor was calculated by dividing the diameter

of the biscuit with its thickness. The quality was consid-

ered poor, average, good, very good, and excellent when



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the spread factors were 9 respectively. Like bread, there was scope of improve-

ment even in the quality of biscuits, which was required

for taking them to the international level. Soft wheat flour

with weak gluten strength and low protein content were

the basic quality requirements for making good quality

biscuits.

Quality Assurance

Quality had always been the central force for any busi-

ness proposition. Harvest Gold had adopted a strict

quality policy in its unit, which was well monitored by

the Quality Control & Assurance (QC&A) Department.

The quality was stringently checked at different levels

of production, which included:

Primary inspection of raw materials

Quality assurance during work-in-process Quality check of finished material.

Besides this, the Quality Assurance Department paid

meticulous attention to post-production handling and

packaging of their products to improve breads shelf-

life. Due to the companys adherence to the quality of

products, it was accredited by the prestigious ISO cer-

tificate. Raw material was procured from various ven-

dors who had to follow strict norms and adhere to

various standards of quality. The company did random

sampling of raw materials and checked samples in itsown R&D lab and stored in dry cool and sanitized stores

in its own facility.

Commercial bread-making was held to strict govern-

ment guidelines regarding food production. Further,

consumer preferences compelled bread producers to

maintain a high quality standard of appearance, texture,

and flavour. Therefore, quality checks were performed

at each step of the production process (Appendix 3).

Producers employed a variety of taste tests, chemical

analyses, and visual observation to ensure quality.8

Moisture content was particularly critical. A ratio of 12

to 14 per cent was ideal for the prevention of bacteria

growth. However, freshly baked breads had moisture

content as high as 40 per cent. Therefore it was impera-

tive that the bakery plants be kept scrupulously clean.

The use of fungicides and ultraviolet light were two

popular practices. Most of the commodities and raw

material had seasonal cycle of prices as they peaked and

fell in intervals. Hence they could book maximum

amount of their requirement when prices were low.9

PACKAGING AT HARVEST GOLD

Bread was generally a highly perishable item, having ashelf-life of a maximum of 72 hours in a tropical coun-

try like India. The government had made it mandatory

to stamp the date and time of manufacture and expiry

on the packet. Therefore, once the bread was baked and

packed, any baker would make it a point to see that it

reached the market at the earliest.10The people at Har-

vest Gold thought of grabbing the opportunity of intro-

ducing an innovative packaging mechanism for their

product. It thus pioneered in introducing transparent

sheets where consumer could have a look at the prod-

uct without opening the pack.At a time when the com-

petitors were using wax paper for packaging, Harvest

Gold started using a clear, cellophane wrap with a sig-

nature red base. Then, the expected happened tangy

dollops of plagiarism pervaded the bread market. Soon,

shop shelves were stocked with cellophane-wrapped

bread-brands with logos, packaging, and even names

having the same touch and feel as Harvest Gold. Taab

Siddiqui and her team were confident that they still did

not taste like their bread. But they felt the need to create

a brand in the minds of the consumers. By the end of1997, it became clear that to stand apart from the na-

tionwide bin of wannabes Honey Dew Gold (Delhi),

Taaza Gold (Faridabad), Golden Harvest (Calcutta),

Spenser-Gold (Goa), Everest Gold (Chandigarh), etc.

Harvest Gold would have to knead out a unique brand

strategy for generating consumer pull.

MARKETING

Some ad practitioners were of the view that wit must

come at a later stage, when the brand was already es-

tablished, and was seeking to build a connection with

the consumer. But in the case of Harvest Gold bread,

the company and the advertising agency, Equus Red

Cell, decided to go the funny route right from the start

with a tone and language the consumer would under-

9 Sourced from the website http://www.shumaonline.com/html=, May29, 2010.

10 Sourced from the website http://aibma.com/industry/html,=, May 29,2010.

8 Sourced from the website http://www.madehow.com/volume-2/bread.html=, May 29, 2010.


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122

stand, and capturing the issues they could relate to.

Swapan Seth, co-CEO at Equus, who had handled the

account since 1997, was of the view that selling a bread

brand on the basis of milk content or preparation tech-

niques would be boring and silly.

The campaign comprised weekly 80cc and 60cc print ads

that were similar in look and feel, and used a limerick toparody or comment on an everyday issue, be it Bill Gates

or the Delhi winter. The advertisement even made a dig

at itself: Bakwaas Advertising. First Class Bread.11Hu-

mour worked in this case because it used the lowest com-

mon denominator; so, it was almost like the voice of the

consumer (See Annexure).

Using humour for a brand even a low-cost, low-in-

volvement one was risky. But, at the heart of great

brands lay the ability to take risks and luck favours

only the brave. The brand had over 92 per cent share ofthe organized market for bread in Delhi, and was a cult

brand. Still, it took great courage and tremendous trust

in the agency on the part of the client to back a cam-

paign that took a risk.12

In 1998, on a Friday, when the premium white bread

manufacturer Harvest Gold Foods India Private limited

unwrapped the first of its year-long, Rs. 2.7 million ad-

vertising campaign, its aim was clear: the Delhi-based

brand was determined to become the toast of the coun-

trys bread basket. With the sales restricted to Delhi andits environs, growth in the nineties had risen by a hearty

65 to 70 per cent a year, and the sales were projected to

touch a buttery Rs. 500 million in 1997-98.13

Realizing that it was often the domestic help who was

duped into buying the cheaper Harvest Gold duplicates,

the company had to ensure that the consumers began

demanding Harvest Gold by name.

With the company hoping to earn a good part of its

bread-and-butter from Harvest Gold franchisees across

the country, the brand needed to establish a communi-

cation platform which would spread smoothly from lo-

cal to national coverage. The media buying was inge-

nious too. During that time, the brand was distributed

only in Delhi and its environs. Therefore, the Harvest

Gold advertisement appeared in a fixed position, on the

back page of Delhi Times, and only on Fridays when

the readership peaked for a full 52 weeks (See An-

nexure).

Keeping in mind the cost-effectiveness of the advertise-

ment, Suhel Seth, CEO, Equus believed that in any par-

ity-driven commodity, communication was a key discri-minator. Both the agency and the client wanted the bread

to come alive in a funny, exciting, smart, and sexy man-

ner. Behind their back, people used to comment on their

ads being very silly. Many, however, thought of taking

a clue from them and prepare funny ad content. They

would thus have ads such as Milk content ki14no infor-

mation, softness ka15no mention, I said Chaddo na, bread

khao.16Why create tension? But when you go to pick

up bread, ik gaalmust be saaf17and clear That Harvest

Gold is what you buy. Not just any bread, my dear.

Harvest Gold was totally focused on quality. It men-

tioned the product details on each of its bread packets

Harvest Gold Industries Private Limited proudly

present, HARVEST GOLD, a fine quality white bread

baked in a state-of-the-art plant with quality testing con-

forming to the American Institute of Baking standards.

Harvest Gold is brought to you in an international qual-

ity pack to ensure freshness and hygiene.(See Appen-

dix 4 for food safety and standards.) Even their customer

care number and email ID were mentioned on the pack-ets of their product to entertain feedback from the cus-

tomers.

DISTRIBUTION

The marketing system in the bread industry was based

on a strong retail-wholesale distribution network and

being a highly price-sensitive low-margin food product

with very short shelf-life (about four days on an aver-

age) and the resultant return of more than 10 per cent of

dispatches, the industry was witnessing a very competi-

tive environment with the result that inter aliathe con-

sumers choice and preferences played an important role

in the sales pattern of different brands of bread in the

market.18

11 Bakwaasis a hindi word which means worthless.12 Sourced from the website http://www.thehindubusinessline.in/cata-

lyst/2002/12/26/stories/2002122600040100.html,= april 19,201213 http://www.expressindia.com/news/fe/daily/19980223/05455374.html

14 Kihere means has15 Kaalso here means has16 Chaddo nabread khaomeans leave it and have bread.17 Ik gaalmust be saafmeans one thing should be clear.



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Harvest Golds success largely depended on its excel-

lent distribution system enabling fresh delivery of vari-

ous items. Its competitive advantage lay in owning the

distribution system and continuous upgrading with in-

novation and latest technologies. The best thing about

Harvest Gold was its small size which facilitated smooth

distribution of its products. However, for having natio-

nal presence, there was no option other than outsourcing

of the distribution.

The owners of Harvest Gold recalled the days when they

had to sell the breads on the traffic signals to generate

an awareness besides increasing sales. Those were the

toughest days of their lives not in monetary terms but

in terms of having a burning desire to become a suc-

cessful entrepreneur.

The couple had recently returned from an extensive

world tour where they had been looking for the latestprofessional practices in distribution of fast-moving con-

sumer goods with emphasis on bakeries. Many millions

of Rupees-worth of cost-saving opportunities and serv-

ice improvements were identified e.g., attractive

schemes for big retailers, capturing the shelves of mod-

ern trade channels, improving on management infor-

mation system, excellent demand forecasting and special

delivery vehicles on different occasions, sticking with

the policy of cash on delivery (COD) for big retailers

and three to four days credit policy for small retailers.

A long-term strategy was created that affected every-

thing in the supply chain from the profitability of indi-

vidual products, through breadroom operations, even

to examining running costs of individual delivery vehi-

cles. There was a firm opinion in the industry that dis-

tribution was a major driver of manufacturing efficiency

and once a person understood its role in fresh food he

could not afford to get it wrong.

Generally there are two peak slots when bread is dis-

tributed, morning and evening. Harvest Gold used todispatch hundreds of thousands of loaves daily to hun-

dreds of sales outlet. One was the morning sales slot,

i.e., Harvest gold dispatched hundreds of thousands of

loaves daily to several thousand sales outlets with each

outlet having two sales peaks one was the morning

sales slot from eight till ten and the other was the evening

customers slot from four till seven. Breads were quickly

and safely loaded defective breads used to immediately

get either exchanged or returned.

While holding MDPs and workshops, Harvest Gold

realized and identified various issues that could be ad-

dressed so as to make the strategy successful. They be-

gan by holding as well as participating in a couple ofsupply-chain workshops to identify problems and is-

sues, e.g.,

Stock item profitability

Fleet maintenance approach

Costs of transferring product between plants to con-

solidate orders

Cost to serve various customers and channels

Distribution channels such as retail, industrial, food

services

Profitability of different customer types.

Analysis of the different customer types and the rela-

tive distribution issues associated with each helped them

articulate the cost-to-serve improvement opportunities.

So, while the supply chain of other products could plan

in terms of weeks and months, a big baker had to think

in terms of hours and minutes. This task was com-

pounded by the large reverse logistics effort required

due to the fact that bread was generally sold to major

supermarkets on a sale or return basis and because it

was sold in crates that stacked on to dollies requiring

return to the bakery. Empty shelves meant lower sales;

so, grocery category managers always aimed to have

their shelves fully stocked during peak demand peri-

ods an interesting problem for merchandisers when

one remembered that bread demand was compressed

into these two daily time slots. So, supplying enough

bread to fill shelves was a critical tactic in the overall

strategy.19

Handling and LogisticsLogistics played a key role in the bread industry, as a

proper logistic support enabled the producer to trans-

port his products in the market at the right time. A pro-

ducer had to see that all the packs were stacked in solid

containers steel or plastic crates in order to avoid

compression of bread (reduction of volume) during

18 Sourced from the website http://www.fnbnews.com/article/detnews.asp?articleid=18007&sectionid=32, April 19, 2012.

19 Sourced from the website http://www.logisticsbureau.com.au/archive/Bread_Supply_Chain.htm =, April 22,2012.


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124

transportation.20

In case of bulk transport, Harvest Gold made use of

trucks and tempos, and in case of smaller deliveries to

the retail shops, the producer used smaller tempos and

bicycles. A producer also had to make sure that all vehi-

cles were thermal proof so that the bread could be main-

tained at a lower temperature. All the products weretransported preferably in the night or early morning in

order to avoid heat and humidity and also traffic delays.

Even after the product reached the retail outlets, the pro-

ducer had to educate the retailer to keep the bread away

from direct sunlight. Otherwise the bread would start

sweating and result in fungus formation, reduction in

weight due to loss of moisture, change in the texture,

etc.21

The Bhiwadi plant was the only plant and the product

was distributed from there. What was most remarkable

was the companys distribution system where the trucks

were painted with Harvest Golds name, thus also serv-

ing the purpose of mobile branding. The products were

loaded in these trucks and unloaded at various depots

in Delhi. From the depots, the products were carried by

the outsourced trucks to the various corners of the city

as per the demand of the customers. The retailers of the

suburbs in Delhi demanded 400 gms of the white bread

the most whereas the retailers in the posh localities like

Vasant Vihar, Vasant Kunj, Greater Kailash, DefenceColony, and demanded different variants of Harvest

Gold bread. The mode of revenue collection was cash

on delivery from the retailers by these outsourced truck-

men. In a very few instances, they gave the product on

credit and that too only for a couple of days.

The breads were packed in plastic crates each of which

was around 1-2 kgs; each person carried 3-4 such crates

on his shoulder. While unloading, the person freely re-

moved the load which on impact with the ground caused

serious cracks after several falls. One crate full of breadsweighed around 6-7 kgs; four crates weighed around

24-28 kgs and would cost around Rs 200. Breakages were

common at the edges.

Around 50,000-60,000 crates were circulated everyday

in the market in a cycle. Breads needed to be delivered

20 Sourced from the website http://www.fnbnews.com/article/detnews.asp?articleid=18007&sectionid=32, April 19, 2012.

21 Ibid.

within 3-4 hours. Therefore, crates were handled

roughly. They were stacked inside a truck and trans-

ported to various markets. Normally, no empty space

was left in the trucks. Usually one person on the truck(3.5-4 ft. high) handed over the crates to two persons on

the ground who carried them to the shops on the shoul-

der. These crates were dropped from the shoulders (4-

4.5 ft. high) usually on the concrete floor and hence the

impact damaged the crates.

The company organized a design competition among

the students of the Indian Institute of Technology (Delhi)

to develop a creative technology innovation so that the

crate could be carried at a lower height thus reducing

the impact level, while not compromising on the quan-tities carried and also increase the trays resistance to

cracking on falling on the ground. A presentation/video

with reference to the design statement was shown to

the participants who were told that the original crate

must remain the same.

COMPETITORS

Among major competitors of Harvest Gold was the com-

pany manufacturing Premium bread under the brand

name PERFECT which figured in most of the Premiumstores and virtually all the 5 Star joints in Delhi. It had

started its business in 1993 with a small plant, Seeta

Foods Pvt. Ltd., located in a small industrial town,

Hathin, Faridabad with a very minimal turnover. In a

span of just a few years, by adding on two most modern

plants, LR Foods (established in 1997) and Harpreet

Foods Pvt. Ltd. (established in 2000) at Faridabad, and

further coming up with Perfect Bake in 2006, LR Foods

Pvt. Ltd. had garnered 45 per cent of the market share



9/17


10/17

126

value addition and its success wholly depended on it.

In this way the company was accountable to its custom-

ers in addition to keeping strict control on the channel

members. The customer base was also wide and carried

names like Reliance, IIT Delhi, and Private Hospitals,

etc. The company was quite sure of making the product

available in the morning on the breakfast tables of its

customers. The future task ahead however was to de-

velop a business model for national presence (market

expansion) and it could involve franchising and contract

manufacturing and stringent cost-cutting measures

without diluting the quality and compromising on stand-

ards.

The companies which had greater geographical presence

or were multinationals could achieve better price by buy-

ing bigger volumes instead of buying for individual

units. Central buying policies were recommended forsuch units. Bulk buying resulted in annual contracts for

a period of twelve months with prices being finalized

for the entire period.26

Even a company like HUL known for excellent distri-

bution could not help Modern bread. This was the chal-

lenge Harvest Gold faced in going national. Also it had

to be very careful in designing its business models be-

fore launching the bread in the country with different

cultures and languages and above all different tastes.

Bread-making was its core competency which it did not

want to deviate from. They were totally focused on

making good quality bread and increasing their size by

going national only by selling bread and its variants.

The promotion gathered lot of attention from the peo-ple as many waited for the advertisement in Delhi Times

Magazineon every Friday. Even kids in the age group of

3-4 years could very well recognize the bread advertise-

ment because of its vibrant colour and style. Harvest

Gold had become a generic name for bread in almost

every household of Delhi and NCR. Moreover, they were

holding meetings with their advertising agency, Equus

Red Cell, for launching their website, a common plat-

form used for communication these days.Just the other

day, one of her vendors had asked for the business card

and was taken aback when he did not see any website

address on the card. They had to launch a creative fresh

looking website as this was the trend and need of the

hour. As far as CNG fitted trucks were concerned, there

was still some time in the implementation of the stric-

tures. So, they could rest for a while. It was possible that

it might not even happen. So, they had to sit with their

fingers crossed.

26 Sourced from the website http://www.shumaonline.com/html=, May 29, 2010.27 Sourced fro the website http://bakerybazar.blogspot.in/2009/06/cost-reduction-strategies-for-bakeries.html=, June1,201028 Sourced from the website http://www.shumaonline.com/on June1,2010


Appendix 1: Cost Cutting Measures27

The competitive world corporate houses and businesses

were struggling to maintain profits and healthy bottom lines.

The costs of production, fuel, raw material, and human re-

sources were rising each year. These developments have

prompted people to look for cost reduction ideas and meth-

ods.

Those who had opted for focused cost reduction strategies

survived; those who could not manage perished. During eco-

nomic downturn, it became more important to make cost

reduction programme a major initiative in the industry.

Companies were finding it difficult to retain people and were

laying people off which was unprecedented in the recent

history of industrial recession. Companies had to develop

their own cost reduction programme for saving without

cutting jobs.28

Economic slowdown and low spending by consumer had

forced big bakery manufacturers to implement cost reduc-

tion strategies in their plants and operations. They were

ongoing rather than knee-jerk programmes. One had to con-

tinuously strive for innovation, modification, or automation

for savings in factory operations

Substantial cost savings could be achieved in the following

areas:

Procurement or Purchasing

Procurement involved acquiring products, services, and

works from vendors or internal source. Sourcing was the

process of identifying, evaluating, and negotiating with sup-pliers and service providers. This included the entire ven-

dor selection process as well as contract management. It

opened doors to a rich supply of raw materials, facilities,

and labours at lower prices, thus reducing costs and increas-

ing competitiveness in markets around the world. The pres-

ence of foreign-produced finished manufactures compels


11/17


domestic industries to be innovative and efficient, both of

which are keys to profitability and longevity.

Raw material comprises around 60-65 per cent of the prod-

uct cost. Hence savings in raw material purchase can add

on to profits. The main raw materials are flour, fat, sugar,

additives. Apart from these, engineering items and packag-

ing materials are also required. Some of the cost-saving ideasinclude bulk buying, forward buying, sales tax exemption,

excise duty free procurement, reverse auction, imports or

sourcing from across the globe.

Logistics

The cost of transportation both inbound and outbound was

very high. Efficient logistics management in the following

areas definitely helped reduce cost:

Freight or transport management

Inventory management

Warehouse design and location

Type of transportation

Energy

Energy also contributed to the cost of manufacturing; hence

reduction of cost of energy should be a priority for manu-

facturers. Following are some ideas for reducing energy cost:

Getting an energy audit done and implementing the au-

ditors suggestions

Saving fuel through energy efficient burners

Saving power energy through energy-efficient motors

Installing screw compressors

Using alternate fuels by sourcing cheaper fuel like CNG,

LPG, RFO, LDO, etc.

Recovering heat from ovens

Using FRP fans for cooling tower

Packaging

Packaging material was also a major factor in the cost of

manufacturing; hence selection of packaging material had

to be done with care . Few ideas were:

Reducing or modifying shape and size of the product

Reducing packaging waste through thickness or gauge

reduction

Automation to Increase Productivity and Reduce Manpower

Automating bakery processes can result in substantial sav-

ings in cost. Areas where we can go for automation are:

Raw material and finished product handling and stor-age

Adding radio frequency dryer to increase the oven pro-

ductivity

Automating packaging processes from feeding to

cartoning and palletizing.

Outsourcing

Few of the processes like sugar grinding, promotion, pack-

aging and distribution could be outsourced.

Appendix 2: Factors Affecting Wheat Flour Prices in India

Production and consumption of wheat: India was the sec-

ond largest producer of wheat in the world, averaging an

annual production of 65,856 TMT. On average, India con-

sumed 65,283 TMT of wheat, and was ranked as the second

largest consumer of wheat in the world. India did not pro-

duce enough wheat to be self-sufficient. So, to make up the

difference, it imported.29 Therefore, when production was

not sufficient and the demand was more, prices would au-

tomatically rise.

Yield of wheat: It was the yield of wheat which was a decid-

ing factor for the good production of wheat. How efficient

would be the farm to produce maximum output of wheat

with minimum input decided the overall wheat production

and finally the price. Generally, the yield of wheat had been

fairly good in several regions, e.g., Punjab and Uttar Pradesh,

thereby controlling the wheat prices.

Seasonal variation:The monthly price of wheat flour usu-

ally went up in the rainy season because the demand of

wheat bran would go down due to green pastures avail-

able. The millers in this situation would increase the price

of wheat flour to recover the total cost of wheat.

Stock of wheat (procurement and minimum support prices):

The governments policy was to have a buffer stock of food

grains for emergency situation, and it procured wheat ac-

cordingly through the Food Corporation of India (FCI)

godowns. This not only increased the maintenance cost of

the government but also created artificial shortage in the

open market. Again, when the government tried to dispose

off the stock, the price was fixed in such a way that the open

market price was less than the FCI price. On the other side,

India was unable to export wheat because of poor quality

and price difference in the world market. Thus the stock was

29 Sourced from the website of spectrum commodities, http://www.spectrumcommodities.com/education.commodity/statistics/wheat.html, August8,2011


12/17

128

spoiled in the godown. The government was also selling that

stock at higher prices to the exporters. That also discour-

aged the processing industry leaving the stock in the

godown. The government was thus not in a cozy situation:

the stock was piling up, the hoarding cost was going up, the

quality was deteriorating. So, it had no other option but to

sell it at a price, which was affordable to the millers. That

lowered the price of wheat flour in the country and it couldbe exported at a competitive price.

Price of by-product of wheat:Out of wheat, maida30, atta31,

bran32and suji33were made in the ratio of 55:15:25:5.To re-

cover the price of wheat purchased, the miller also depended

on those by-products. If the price of by-products like bran

and atta went down, the price of flour went up.

Export-import of wheat:India was a significant importer of

wheat prior to the 1990s. During the 1990s, India had be-

come a marginal importer and even an exporter on occa-

sions. However, since India had a large demand, these

marginal quantities could often be significant for the worldmarket. Wheat trade had been under government control in

the past, and the export import quantities reflected Govern-

ment decisions over each year as well as across the years in

managing the supply, demand, stocks and the food prices

in the country. If the production was less than the consump-

tion, India had to import.34

On average, India imported 990 TMT of wheat, and, for vari-

ous reasons, exported an average of 767 TMT of wheat. The

ending stocks in India averaged 9,900 TMT, giving India the

third largest ending stocks in the world.35

Effects of WTO:Under the WTO, the quantitative restric-tions from wheat import and export were removed in India.

The trader would have greater freedom to trade the wheat

and wheat products and hence the wheat market would

become more dynamic. Moreover, under the WTO regime,

the provision of export subsidy had to be reduced as these

kind of subsidies were very much present in the developed

countries especially in the US and EU, while in India and

other developing countries, the export subsidy was already

nominal or nil, so, we would have advantage in wheat ex-

port. So, it was predicted that exports were going to increase

in India and accordingly, wheat price and wheat flour price

might also go up.

Effect of El-Nino:El Nino was the local warming of surface

water, which would take place in the entire equatorial zone

of central and eastern Pacific Ocean off the Peruvian coast

and affect the atmospheric circulation worldwide. It usu-

ally would peak around Christmas hence the name of thephenomenon El Nino which was the Spanish name for Christ

child.36 El Nino would occur every 4-5 years sometimes less

(2-3 years) and sometimes more (8-11 years). If the tempera-

ture increased by 2 degrees in the equatorial region, it might

cause serious damage to the crops in that region. So, it was

better to keep an eye on this event. This could decrease the

total production in several countries including the US and

thus lead to the rise in the wheat price.

World wheat production and consumption:The world wheat

production was very important for the price of wheat and

wheat flour. When the production of wheat in wheat pro-

ducing nations fell, the prices automatically went up andvice versa.

The world wheat production in the recent years has hov-

ered between 560-580 million tonnes a year. The biggest cul-

tivators of wheat were EU-25, China, India, USA, Russia,

Australia, Canada, Pakistan, Turkey, and Argentina. EU-25,

China, India and USA, the four largest producers account

for around 58% of the total global production. World wheat

consumption was consistently growing with growth in

population, as it was one of the major staple foods across

the world. The major consuming countries of wheat were

EU, China, India, Russia, USA, and Pakistan. Around 16-

19% of the world wheat production was traded annuallybetween countries. The annual world trade in wheat was to

the extent of 102-106 million tonnes. USA, Australia, Canada,

EU-25, and Argentina were the five largest exporters of

wheat in the world. Major importing countries that topped

in the figures were China, Egypt, Japan, Brazil, and the Eu-

ropean Union. Other importing nations were Mexico, Indo-

nesia, Algeria, Philippines, and Iraq. However, the import

amount varied year to year depending upon the domestic

production.37


30 Attais the Hindi word which means wheat flour, out of which indian bread like roti/chapati is made.31 Maidais the Hindi word for refined flour.32 Bran is the outer layer of cereal grain which has high dietry fibre.33 Sujiis the Hindi word for Semolina34 Sorced from the website http://www.jstor.org/stable/4415713=, on april 20,201235 Sourced from the website of spectrum commodities, http://www.spectrumcommodities.com/education.commodity/statistics/wheat.html, August

8,201136 Sourced from the website http://www.fao.org/sd/eidirect/EIan0008.html,= on april 20,201237 Sourced from the website of Indiamart, http://finance.indiamart.com/markets/commodity/wheat.html, August 8,201


13/17


Bread Manufacturing Process

Bread was made with three basic ingredients: grain, water,

and bakers yeast. The harvested grain was ground accord-

ing to the type of bread being made. All grains were com-

posed of three parts: bran (the hard outer layer), germ (thereproductive component), and endosperm (the soft inner

core). All three parts were ground together to make whole

wheat and rye breads. To make wheat flour, the bran and

the germ had to be removed. Since bran and germ contained

most of the nutrients in grain, the wheat flour was often en-

riched with vitamins and minerals and some wheat flour

was fortified with fibre and calcium.

The grains were ground in the grain mills and then sold in

bulk to Harvest Gold which kept the grains in storage sacks

until they were ready to be used. In the baking factory, wa-

ter and yeast were mixed with the flour to make a dough.

Additional ingredients such as salt, fat, sugar, honey, rai-sins, and nuts were also added in the factory.

Raw materials used in bread manufacturing were flour, fat,

sugar, salt, yeast, sodium stearoyl lactylate, smp solution,

bread improvers, ascorbic acid, potassium bromate, calcium

propionate, acetic acid and other additives. Plant and ma-

chinery required for bread were spiral mixers, silos, sifters,

conveyors, bowls, dividers, hander up, interproover,

moulder, final proovers, baking ovens, depanners, cooling

racks, cooling tunnels, slicers and sealers, and plastic trays.

Utilities like chilling plants, air compressors, boilers, and

cold storage rooms were required for different applications.

Mixing and Kneading the Dough

The sifted flour was poured into an industrial mixer. Tem-

perature-controlled water was piped into the mixer. This

mixture was called gluten and gave bread its elasticity. A

pre-measured amount of yeast was added. Yeast was actu-

ally a tiny organism which fed off the sugars in the grain

and emitted carbon dioxide. The growth of the yeast pro-

duced gas bubbles, which leavened the bread. Depending

on the type of bread to be made, other ingredients were also

poured into the mixer.

The mixer was essentially an enclosed drum that rotated at

speeds between 35 to 75 revolutions per minute. Inside thedrum, mechanical arms kneaded the dough to the desired

consistency in a matter of seconds. Although modern bread

production was highly computerized, the ability of the mix-

ing staff to judge the elasticity and appearance of the dough

was critical. Experienced personnel were able to determine

the consistency by the sound of the dough as it rolled around

the mixer. The mixing process took about 12 minutes.

Fermentation

Three methods were used to ferment the dough. In some

plants, the high-speed machinery was designed to manipu-

late the dough at a very high speed and with great force,

which forced the yeast cells to rapidly multiply. Fermenta-tion could also be induced by the addition of chemical addi-

tives such as 1-cysteine (a naturally occurring amino acid)

and vitamin C. A certain portion of the bread was allowed

to ferment naturally. In this instance, the dough was placed

in covered metal bowls and stored in a temperature-con-

trolled room until it rose.

Division and Gas Reproduction

After the dough fermented, it was loaded into a divider with

rotating blades that cut the dough into pre-determined

weights. A conveyer belt then moved the pieces of dough to

a moulding machine. The moulding machine shaped thedough into balls and dropped them onto a layered conveyer

belt that was enclosed in a warm, humid cabinet called a

prover. The dough moved slowly through the prover so

that it could rest and thus allow the gas reproduction to

progress.

Moulding and Baking

When the dough emerged from the prover, it was conveyed

to a second moulding machine which re-shaped the dough

into loaves and dropped them into pans. The pans travelled

to another prover that was set at a high temperature and

with a high level of humidity. Here the dough regained the

elasticity lost during fermentation and the resting period.

From the prover, the pans entered a tunnel oven. The tem-

perature and speed were carefully calculated so that when

the loaves emerged from the tunnel, they were completely

baked and partially cooled. While inside the tunnel, the

loaves were mechanically dumped from the pans onto

shelves. The baking and cooling process lasted approxi-

mately 30 minutes.

Slicing and Packaging

The bread continued to cool as it moved from the oven to

the slicing machine. Here vertical serrated blades moved upand down at great speeds, slicing the bread into consistently

sized pieces.

Eight metal plates held the slices together while picking up

each loaf and passing it to the wrapping machine. Pre-

printed plastic bags were mechanically slipped over each

loaf. The bags were closed with wire twists or sealed with

heat.38

Appendix 3: Bread Production Process

38 Sourced from the website http://www.madehow.com/volume-2/bread.html=,May 29, 2010.


14/17

130 HARVEST GOLD: DELHIS NO. 1 BREAD


15/17


Mixingingredients 1

Mixingdough 2

Doughdividing 3

Rounding up4

Prooving5

Moulding6

Final prooving7

Baking8

Depanning9

Packing10

MIXING INGREDIENTS 5-10 MINUTES

FROM MIXING DOUGH TO FINAL PROOVER 15 MINUTES

FINAL PROOVING 75 MINUTES

BAKING 30 MINUTES

COOLING 60-90 MINUTES

PACKING 15 MINUTES

Food Safety and Standard Authority of India (FSSAI) had

been established under the Food Safety and Standards Act,

2006 which consolidated various acts and orders that have

hitherto handled food-related issues in various Ministries

and Departments. FSSAI had been created for laying down

science-based standards for articles of food and to regulate

their manufacture, storage, distribution, sale and import to

ensure availability of safe and wholesome food for human

consumption.

Highlights of the Food Safety and Standard Act, 2006

Various central Acts were repealed after commencement of

FSS Act, 2006:

Prevention of Food Adulteration Act, 1954

Fruit Products Order, 1955,

Meat Food Products Order, 1973,

Appendix 4: Food Safety and Standard Authority of India (FSSAI)39

Vegetable Oil Products (Control) Order, 1947

Edible Oils Packaging (Regulation) Order 1988,

Solvent Extracted Oil,

De- oiled Meal and Edible Flour (Control) Order,1967

Milk and Milk Products Order, 1992

The Act also aimed to establish a single reference point for

all matters relating to food safety and standards, by moving

from multi-level, multi-departmental control to a single line

of command. To this effect, the Act established an independ-ent statutory authority the Food Safety and Standard Au-

thority of India with its head office at Delhi. The Food Safety

and Standards Authority of India (FSSAI) and the State Food

Safety Authorities enforced various provisions of the Act.

Duties and Functions of the Authority

FSSAI had been mandated by the FSS Act, 2006 for perform-

39 Sourced from the website http://foodsafetyhelpline.in/FSSAI/AboutFssai.asp?GL=2, on April 20,2012


16/17

132 HARVEST GOLD: DELHIS NO. 1 BREAD

ing the following functions:

Framing of Regulations to lay down the Standards and

guidelines in relation to articles of food and specifying

appropriate system of enforcing various standards thus

notified.

Laying down mechanisms and guidelines for accredita-

tion of certification bodies engaged in certification of foodsafety management system for food businesses.

Laying down procedure and guidelines for accreditation

of laboratories and notification of the accredited labora-

tories.

Providing scientific advice and technical support to Cen-

tral Government and State Governments in the matters

of framing the policy and rules in areas which have a

direct or indirect bearing of food safety and nutrition.

Collecting and collating date regarding food consump-

tion, incidence and prevalence of biological risk, contami-

nants in food, residues of various, contaminants in foods

products, identification of emerging risks and introduc-

tion of rapid alert system.

Creating an information network across the country so

that the public, consumers, Panchayats, etc., receive

rapid, reliable and objective information about food

safety and issues of concern.

Providing training programmes for persons who are in-volved or intend to get involved in food businesses.

Contributing to the development of international tech-

nical standards for food, sanitary and phyto-sanitary

standards.

Promoting general awareness about food safety and food

standards.

Bakery manufacturers needed to follow up with the Food

Authority for labelling, adultrants, additives, and their

permissible levels, etc.

ANNEXURE: Sample Advertisements


17/17


40 Sourced from the website http://www.expressindia.com/news/fe/daily/19980223/05455374.html=, June 1,2010

If one has worked in an ad agency, he would know that

creating a big idea is painfully slow. An unusual product

should have an unusual campaign. Every Friday, one can

enjoy while reading Just like Harvest Gold which is not

just another bread.

Ultimately, the idea was to make Harvest Gold a genericname for the premium quality bread. To make the edible

brand indelible, the Delhi ad-shop of Equus Advertising

Company cooked up a high-value, high-impact campaign

which used a different nonsense verse each week, in half-

Punjabi (Punjab is a state in North-West of India and Punjabi

is the language spoken there and very commonly spoken in

Delhi too as it is the easiest language to learn), half-English,

to hook the consumer.

The last line always drives home the core concept: Harvest

Gold: Not Just Another Bread and while the rhy-mes have

little reason, they do have tonnes of topical interest. Here isone sample:

Election time is coming. There is obviously lot of stress.

Political scene te twanu pata hai Bilkul disgusting mess,40

Noria Farooqui has been an Assistant Professor in the Depart-ment of Management at Hamdard University, Delhi since 2006.She was earlier associated with the Institute of Clinical Re-search, India as a management faculty. She has been in the

teaching profession for the last eight years and teaches Strate-gic management, Advertising, and Strategic retail managementfor post-graduate students of management. Her research ar-eas are agriculture and rural management, the thrust areas be-

ing food security and qualitative and quantitative indicators.She is an Alumnus of Aligarh Muslim University where shecompleted her Masters in Agricultural Economics and Busi-ness Management. She has received Dr Zakir Hussain Medal

for consistent good academic record in graduation.

e-mail: [email protected]

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