Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now

You can switch off notifications anytime using browser settings.
Stock Analysis, IPO, Mutual Funds, Bonds & More

Hot sectors you can bet your money on

If you are thinking of dumping nine-to-five job, BE lets you in on some scorching hot sectors you can bet your money on. Crucial first year of business

Jan 23, 2008, 05.46 PM IST

Mukul Vasudeva was in a state of panic. The thirty year-old marketing professional was making a significant career move that demanded he relocate from Mumbai to Bangalore in two weeks. In the midst of PowerPoint presentations and quarterly targets, Vasudeva had to hire a reliable moving and packing service that would deliver his orderly household intact in Bangalore.

He agonised over employing a trustworthy maid in an unknown city to run his house while he and his wife earned their paycheques. He wondered if Bangalore would have a good and safe crèche where he could leave his eight-month-old son ... Like any well schooled brand marketer, a distraught Vasudeva cried: “I wish all this were available off the shelf all over the country.”

That the couple negotiated those testing times without permanent damage to health and sanity can be put down to resilience, and plain good luck.

But hidden in Vasudeva’s lament is an opportunity that any marketer will instinctively recognise. A latent consumer demand for organised, branded goods and services in segments that are hugely unorganised, yet hold the promise of profit for pioneering brands.

And today in India , quite a few categories appear ripe for national-level brand play, housekeeping services, taxis and car rentals, lunch catering, crèches , packers and movers, auto service garages... There are riders to each category.

Not all of them harbour potential for nationwide chains, some will be limited to region-specific initiatives. Not all offer immediate scope for branding, the gestation could be anywhere between two to five years. And in almost all categories, greenfield investments will have to be made in terms of resource mobilisation, infrastructure and real estate, and training. But like someone once said, it’s all about the money, honey...

Brand consultant Harish Bijoor believes tiffin services are one sector where brand play is imminent. “This is a ‘staple sustenance’ category and will never go out of fashion,” he says. While he isn’t quite prepared to hazard a guess about market size, he insists the category is ripe to be “re-engineered, branded and delivered on a mass scale across India’s eight megapolises and all its one million-plus population towns.”

It’s been attempted in Mumbai with great success by the famed Dabbawala Association, but its president Raghunath Medge, isn’t interested in brand building given the Association’s primary objective of providing employment. Mallika Parikh started a similar service in Bangalore where she supplied lunches to companies like Infosys and Motorola. “When north Indians come to Bangalore they aren’t comfortable eating local food; demand is very high,” she agrees.

However, Parikh scaled back due to logistics. “Delivering lunch was difficult as transportation and collection became very hectic,” she rues. The food space is one that even Nabankur Gupta, founder, Nobby Brand Architects , sees as being remunerative, although from a slightly different perspective: a single brand that provides popular snacks from across the country in a readymade format is likely to work as a one-stop shop for varied palates.

“The top 25 cities in India are fairly cosmopolitan, so there will definitely be demand,” he vouches, reiterating that such a brand should not have an ‘upmarket’ image, but one that caters to the middle-class . “You can’t have entirely centralised kitchens, but a hub-and-spoke system for different regions,” he adds.

With an increase in the number of double income nuclear families, the demand for crèches is rising. However, there’s a near absence of branding, a market that Gupta estimates to be worth at least Rs 500 crore. “The level of emotion, care and security that branded crèches can provide is huge. And pricing will not be a problem because mothers often give up careers to take care of babies, parents can just shell out a couple of thousand for the wellbeing of their child,” he explains, adding a 10% share in year one is achievable.

Anjana Dasgupta, who runs The Porridge Years in Mumbai, sees an opportunity: “The crèches are in bad condition ; sometime 30-40 children are looked after by a single maid, and they may get diseases and infections if not properly cared for.”

The challenge here is getting qualified and well-trained professionals, as this is not a curriculum-based activity. Kidzcare, the childcare brand of Zee Interactive Learning, is one of the few in this space, with presence across seven cities. Launched last year, Kidzcare works through the franchise model that demands associates have at least 1,800 sq ft space, and make investments between Rs 12 and Rs 24 lakh.

Kidzcare provides franchisees furniture, fixtures, technical know-how , manuals, activity books and extensive training. S Mukundan, senior VP, Zee Interactive Learning, says, “The staff we recruit should be trained in either child or human development, and there is an in-house nutritionist and nurse who take care of diet and health.” He thinks the childcare sector has potential to be a Rs 10,000-crore industry by 2010.

Economic growth plays a big role in the physical mobility across geographies, and evidence of that is found in Indians choosing a transfer to further their careers. This, however, usually calls for a shift in entire households, creating a need for quality moving and packing. Agarwal Packers & Movers helps transport about 45,000 households every year, and Ramesh Agarwal , joint managing director, DRS Group, admits that potential is large as currently only about 30% of this market is organised.

Since 2001, the company has grown 35% year-on-year and Agarwal is bullish. Areef Patel, executive vice-chairman , Patel Roadways , puts things in perspective: “The logistics industry in India is nearly Rs 300,000 crore, but is mostly fragmented. However, with consolidation taking place, this is fast changing. With the introduction of VAT and MODVAT, a lot of unscrupulous players have been wiped out,” he says. Patel Roadways is the market leader, and in the last five years, the company has grown roughly Rs 1,000 crore, with last year’s turnover alone being Rs 300 crore.

Maid services are another category where consumers can do with the help of brands. Maids too can benefit from brand play via superior social security and remuneration. Mitr Sanketa, an NGO based in Hyderabad, along with Microsoft Research India, has tried to organise this category to help domestic workers get benefits and facilities they’re otherwise deprived of.

For a household of four people, wages are fixed on an hourly basis, and the cost to the employer is Rs 450 per month. Aspects like weekly offs, tea/lunch and medical help are mandatory. Stree Jagruti Samithi secretary’s Geeta Menon, the NGO which set up Mitr Sanketa , says, “It is difficult to estimate the value of the market, but as per a survey of domestic workers in Bangalore, the economic value of domestic work is at a minimum of Rs 46 crore.” Menon, who does not view Mitr Sanketa as a ‘brand’, sees the offering help both workers and employers.

Expectedly, given its ‘commercial profit’ associations, most NGOs would blanch at the mention of branding, but Gupta thinks NGOs will lead this initiative. “As they expand, the factor of profitability and service motive will force them to consider branding. Lijjat Papad and Amul started as self-help cooperative movements, but have emerged as very strong brands.”

Housekeeping, primarily a B2B function, with a big role to play in vast housing societies and townships, is another category where brands can play a role. BVG India, which started with Tata Motors as a client, today counts the Rashtrapati Bhavan, the PMO, the Parliament, Mantralaya, Nuclear Power Corporation, Accenture and ITC among its clients.

BVG India posted a turnover of Rs 140 crore last year, and HR Gaikwad its CMD, sees the company at Rs 500 crore in the next five years. “If you multiply a 50 paisa-to-Rs 4 per sq ft charge into the number of commercial constructions taking place, you will realise the potential of the market,” he explains, adding that the trick is not to “supply manpower” but be “service-oriented.” Currently only 2%-3 % of BVG’s revenues come from residential complexes, but Gaikwad thinks the pie will only increase.

One category where branding has already begun is taxi services and car rentals, albeit in a localised fashion. Brands like Gold Cabs, Autoriders and Hertz are slowly expanding, and Arun Sabnis, promoter of Gold Cabs, thinks car rentals has the potential to touch Rs 300-Rs 400 crore in the next three to five years. “Due to poor infrastructure , people are pooling cars to go from the suburbs to offices,” he says. Gold Cabs is present only in Mumbai, but Sabnis claims to have offers to start in Delhi, Bangalore, Nasik and Pune as well: “In the airlines industry, though the number of players has increased, service and offers make the difference.”

According to Menaka Mulchandani, director, Autoriders India, tours and travel including car rentals, taxi services and yellow cabs will be close to a Rs 20,000-crore industry, expected to grow another 25% in the next three to five years. “We are starting Explore India which will purely be for tourism and pilgrimage purposes,” she adds.

Rajiv Vij, CEO, Hertz India, says that while over 90% of the business is unorganised , the organised part is growing much faster as customers seek quality, credibility and reliability. For Hertz, which operates a fleet of 3,000 across 13 cities, the cost of cars is the biggest investment. But maintenance is equally important as dissatisfied customers spell disaster.

Healthcare is a category that’s a money spinner for brands, be it speciality clinics or branded pharmacy chains. “The healthcare delivery sector is a $19 billion industry, not including pharma, but comprising primary, secondary and tertiary services,” says Vishal Bali, CEO, Wockhardt Hospitals Group. Wockhardt and Fortis Healthcare are super speciality hospitals with specialisations in areas like cardio, orthopaedics, neurology and oncology. Sudarshan Mazumdar, director, marketing & corporate communications , Fortis, says, “Being positioned as a speciality hospital helps attract the right people.” While both are present in multiple cities, they agree that more than metros , it’s tier two towns that offer growth.

Since 2001, Fortis has grown at a CAGR of 100%-120 %, and generated revenues of Rs 525 crore in 2006-07 . Gupta adds that there’s potential even for pharmacy chains, though previous attempts have been less than successful. “A branded chemist with a network of specialist doctors on call; emergency services like wheelchairs, ambulances and nebulizers ; and access to pathological labs... that’s a real value-add ,” he says.

Gupta also thinks there’s scope for branding service garages that cater to second-hand car owners. “Most service centres that are company-owned cater to the warranty-limit customer, and don’t have time for older cars. As the seconds market grows, there’s an opportunity for branding comprehensive service, which is today the prerogative of the roadside mechanic.

It’s logical for used-car sellers like Popular and Sai Service to get into this.” The obvious question is whether consumers would be willing to pay a premium for branded services in categories where ‘cheap’ has been the norm. Darshan Mehta, CEO & MD, Reliance Brands thinks so: “The customer today is time-starved and buys convenience. Convenience is intrinsic to branded promises.” Santosh Kanekar, head of marketing, Diageo, looks at it a bit differently. “The customer will pay a premium because he gets motivated enough by the branding exercises and may find it important to possess this new thing not just for utility reasons, but also for status.”

For those Indian consumers who’ve embraced health foods, Bagrry’s is pretty much a household name, even though many of them may not recognise the brand as being a home-grown one. Not that they can be faulted for this; after all, in most Indian supermarkets and large format retails stores, Bagrry’s jostles for shelf space with the likes of international breakfast cereal brands like Express, Kellogg’s , Kraft Foods’ Post and PepsiCo’s Quaker Oats, to name a few. It’s no small credit to Bagrry’s that the 13-year-old Indian brand shares mind space with well-known global brands. For that matter, Bagrry’s was the cereal brand that many calorie-conscious Indians were first introduced to, until two years ago, Bagrry’s was virtually the lone player in the healthy high-fibre breakfast cereal space.

The breakfast cereal market in India is estimated to be worth roughly Rs 250-Rs 300 crore, and includes a wide range of products including wheat and oat bran, wheat porridge and cornflakes. Bagrry’s aside, brands in this space include Quaker Oats, Kellogg’s and Avesta Good Earth, apart from a host of imported international brands. Bagrry’s success, however, doesn’t merely stem from the fact that it competes with big multinational brands.

To its credit , the brand has managed making inroads into the hard-to-break breakfast habits of Indians without spending top dollars on mainstream advertising, a feat that even bigspending giants like Kellogg have only partially matched. Shyam Bagri, CMD, Bagrry’s India, acknowledges that it’s been far from easy, saying, “People were not conscious about their diet and its consequences.

Besides, the taste of oats and muesli is very different from that of traditional Indian breakfasts like parathas or idli.” Yet, the trend towards healthy eating has benefitted Bagrry’s tremendously, helping the company grow at a rate of 50%- 52% year-on-year . Bagri expects to close the financial year with a turnover of roughly Rs 35 crore.

While Bagri thinks the media has played a very important role in the brand’s growth by generating awareness about health, diet and lifestyle, positive customer feedback and word-of-mouth have also worked favourably for the brand. An executive at retail chain Spencer’s reveals that it was the SEC A and A+ customers who were the early adaptors of the brand. “When people who had stayed abroad for a long time came to India and shopped, they sought out familiar international brands. But in their absence, they adopted Bagrry’s ,” he says.

Sadashiv Nayak, CEO, Food Bazaar, also believes Bagrry’s was smart enough to see the value of sticking to the core ‘health’ proposition while providing a wide range of cereal variants, more than 13 different varieties. “Bagrry’s has never strayed outside the health platform, and coupled with the variants it offers, the strategy seems to have helped,” he explains.

Bagrry’s was also the first to introduce products in plastic jars, something that struck a chord with many consumers, given the Indian tendency to recycle plastic jars for storage. “It’s nothing big, but Bagrry’s has picked up small Indian nuances that have helped,” Nayak adds.

The brand started life in the early 1990s, when the Delhi-based Bagri family, which has been in the food processing business over the past five decades, and counts the likes of Nestle, ITC, Cadbury, Domino’s Pizza and Britannia among it’s customers for processed flour, began selling wheat bran and oat bran under the names Wheatex and Oatex.

As business grew, the need was felt for a sharply defined brand name, and Bagrry’s came into being. “Under the new name we introduced products like white oats, a variety of mueslis, oat bran and wheat bran, among other products,” says Bagri. The focus on distribution has been very strong, and Bagri reveals that the primary responsibility of the 35 member-strong marketing team is talking to new retailers and stockists.

“We have a large network of super stockists and distributors across the country,” says Bagri. “Many of our distributors have their own marketing teams, who help in doing the last leg marketing to shops.” Food Bazaar’s Nayak acknowledges the company’s distribution capabilities, saying, “They have distributors even in small towns like Ambala, Sangli and the corners of various suburbs. They have never let us down on availability.”

Brand promotion activities include participation in food fairs, exhibitions, shop demonstrations, point-of-sale promotion and PR. So far, Bagrry’s has stayed away from TV advertising, but Bagri reveals a TV commercial is in the pipeline. “We have been using print, and advertise largely in magazines,” he adds.

For Bagrry’s , southern and western India are crucial markets. “Customers in the south are very knowledgeable ; they know the importance of health and have adopted Bagrry’s as a breakfast of choice,” Bagri reveals . Unlike in the south where sales come even from smaller towns, in the West business comes mostly from the larger metros. Bagrry’s target consumers are both young professionals in the 25-plus age group, as well as the elderly in the 55-60 age group who consume low-calorie and low-glyceamic foods.

Besides India, Bagrry’s is present in Nepal and Bhutan, and has plans to export to Bangladesh and Pakistan as well. “These are promising markets which can give us decent turnover,” says Bagri, adding that the company is also present in Middle-East through the distributor channel. But gaining presence across India is the priority. “We first want to improve on our presence in Eastern and Central India,” Bagri insists.

An expansion of the product portfolio is also on the anvil. “We will diversify in terms of flavoured oats, but our focus will always be health grains. The customer has woken up to the benefits of health which will help our business. Health bars is another product category we are looking at entering,” says Bagri. For Bagrry’s at least, there’s no argument about health being the conduit to wealth.

Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Popular Categories

Other useful Links

Follow us on

Download et app

Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service