Aachi Group, the South Indian multi-product, multi-brand conglomerate, has entered the highly competitive North Indian masala (spices) segment. Aachi Masala, the power brand of the group, has become a household name in the southern belt for its South Indian range of masalas. Created by Mr. A.D. Padmasingh Isaac, the Chairman and Managing Director (CMD) of Aachi Group, this group is now more than two decades old and has gradually grown from being just a masala brand to an FMCG company and enjoys a considerable mind share in South India, especially in Tamil Nadu. In 2015, Aachi Masala forayed into North Indian masala range as a part of its expansion strategy. Mr. Isaac was wondering if the brand, which has predominantly been catering to South Indian taste buds, will be able to earn and enjoy a similar position with its North Indian versions.
The food processing industry of India (Exhibit 1), accounts for more than 32% of the total food market of India and is growing at an average annual growth rate of 11%.1, 2 It is ranked 5th in terms of production, consumption, and exports. It accounts for 14% of India’s GDP and 13% of total exports.3 As per Confederation of Indian Industry (CII) estimate, the food processing industries have the potential to attract more than US$ 33 billion of investment over the next 10 years.4
The sector is primarily divided into three broad segments.5
The primary and secondary segments accounts for more than 60% of processed foods in value terms and the value-added food segment holds around 40% share in the total processed food market.
Aachi Group was established in the year 1995 by Mr. A.D. Padmasingh Isaac, a first generation entrepreneur hailing from Nazareth in Tirunelveli District of Tamil Nadu. After a stint in Godrej in sales and marketing positions, Mr. Isaac’s entrepreneurial journey began with liquid blue brand, Twinkle. He launched it in pocket-friendly sachets catering majorly to the semi-urban and rural markets in Tamil Nadu.
Mr. Isaac attributes the idea of Aachi Masala to his mother Mrs. Flora and his wife Mrs. Thelma, whose cooking skills, especially the use of masalas inspired him to venture into this business.6 Making women’s work easy was also another inspiration behind the idea of Aachi, as per the company website.7
Aachi products are sold in more than twenty-five states in India. The brand has nearly 200 products with over 700 Stock Keeping Units (SKUs) as in the beginning of 2016.8 The total employee strength of the group is in excess of 20,000. Latest company sources indicate that Aachi Group is growing at a CAGR of 30% over the last three years, which is higher than that of the industry average. The company is eyeing a turnover of ₹1200 crores for the year 2017–18. Over the years, Aachi group and Mr. Isaac have won many awards and accolades.
Aachi group is a family-owned undertaking. While Mr. Isaac steers the group as its CMD, his sons Mr. Ashwin Pandian and Mr. Abhishek Abraham also play important roles in the management of the organization.
The Aachi Group comprises of the following companies
Brands under Aachi Group:
Aachi Masala: The core brand comprising a gamut of packed ground spices.
Twin Birds: a special product for non-vegetarian pickle and curry items
Frispoo: The snack range
Twinkle: The home cleaning range
Tanjus: The bottled fruit juice range
Aachi packaged drinking water
Ponnii: a range of edible vegetable oil
Sabash: Herbal cosmetic brand
Blesso: Cough syrup
The Aachi Kulambu Chilli Powder is the flagship product of Aachi. Despite being a failure during the early phases of the product launch, the product picked up and is currently one of those products that keeps the cash registers ringing for the company.
Red chilli is the main ingredient in most of the Aachi Masala products. The portfolio includes blended masalas for generic vegetarian and non-vegetarian South Indian recipes such as sambar, rasam, biriyani, vathal kuzhambu, tamarind rice powder, lemon rice powder, etc., in the vegetarian segment, and chilli chicken, pepper chicken, chicken 65, egg curry, fish curry, mutton curry masala, etc., in the non-vegetarian masala segment. The ground spices range includes the flagship kuzhambu chili powder, red chilli powder, coriander powder, turmeric powder, etc.
Company sources say that for new product development and manufacturing, Mr. Isaac’s everyday morning walks provided him with the insights. It is said that he used to give a quick scan into the dustbins during his walks to understand the consumption pattern in his neighbourhood, based on the empty product wrappers thrown. This helped him to learn and study the food habits, product usage, and preferences of people in that locality and create new products. The core raw materials, red chilli and turmeric, are procured directly from farmers. For instance, chillies are sourced from Guntur, turmeric from Erode, coriander from Rajasthan, pepper and cardammom from Munnar, cumin and mustard from Madhya Pradesh, and so on.
The manufacturing facility of Aachi is located at Keel Ayyanabakkam, 15 km from Chennai in Tamil Nadu. It has a manufacturing capacity of 120 metric tonnes of spice powders and spice mixes per day. Production of some masala variants is outsourced for cost efficiency, but sources say that the company adheres to strict quality control system to ensure quality of the finished products. For quality testing, the group invested in an exclusive testing services entity, Scientific Food Testing Services (P) Ltd., for following food standards in the products based on biological and chemical content.
The manufacturing process is governed by the Food Safety Management System with ISO 9001:2008 Certification. The R&D Team coordinates with the manufacturing units in developing new products, packaging material, food labelling, product shelf life, and suitability of new products for human consumption.
The spices and spice mix powders are packed in automatic packing machines. Packs are ensured to be tamper proof and sturdy enough to retain the aroma and flavour for a longer shelf life. The dispatch is done with the company’s own trucks. The distribution is supported by a sales team, which is monitored directly by the CMD.
Over the years the brand has extended into categories likes ready-to-cook range with products such as gulab jamun mix, rava idly mix, pal ada payasam mix, rava kesari mix, etc., It also manufactures rice paste varieties such as biriyani rice paste, tamarind rice paste, tomato rice paste, etc., and pickles in a wide range from lemon, mango, tomato, mixed vegetable, garlic, citron, etc., Ghee and jams are also being manufactured. The brand currently has over 250 products in its range.
Aachi’s products are available in different package sizes ranging from 100 grams to 5 kg packs, catering to different buyer segments. Apart from this, the regular ground spices are also available in sachets priced at ₹2, ₹5, and ₹10 to target the lower-middle income segments. Most products have a shelf life of 24 months, which again is higher than that provided by competitors which ranges from 9 to 18 months.
Aachi’s products reach the consumers through 5000 agents and 12 lakh retailers. The product range is classified into 8 divisions for easy distribution. As per the company sources, Aachi offers more than 20% gross margins to retailers, which again is higher than the market standards which ranges from 8–14 %.
With a view to serve small retailers in towns and villages, Aachi used the Hawker Sales Distributors, whose everyday responsibility is to go all around and sell Aachi brand of products in the remotest corners of markets across India.10 The project began in April 2014 and currently there are around 700 hawker sales force distributing Aachi brand of products in the markets.
Apart from the conventional distribution network, Aachi also opened Aachi Model Shops to stock and sell the entire range of Aachi group products. The company believes that this model can enable customers to choose from a wide range of products, including those that may not be available in their neighbourhood stores such as toiletries and health products. The Aachi range of masalas and food products are also exported to USA and the Middle-East. The company received the Export Excellence Award for 2016 from FIEO – Federation of Indian Export Organisation.
From the initial stages, Aachi has been investing on above-the-line (ATL) promotions. The TV ads of the brand are very popular. During the launch of Aachi Kuzhambu chilli powder, Aachi roped in Devayani, a leading Tamil actress to promote the product. Actors like Satyaraj were also featured in TV ads promoting non-vegetarian masala line. In the most recent TV advertisement of the brand, Mr. Isaac himself promotes the brand, showcasing the procurement and manufacturing practices and the motto of the organization. Below-the-line (BTL) promotions like quantity purchase schemes with the objectives of achieving a reasonable level of distribution and a good deal of shelf/string space in retail outlets is also done alongside ATL for better reach and coverage.
Unlike the South Indian masalas, where red chilli is a dominant ingredient, the North Indian Masalas have a unique taste and flavor where a distinct combination of spices are used. Spices such as bay leaves, cinnamon, pepper, cloves, cumin, fennel, kasuri methi (dry fenugreek leaves), mango powder, mint, pomegranate seeds, etc., form important ingredients in North Indian masalas alongside lal mirch (red chilli), giving it the distinctiveness.
Aachi Masala forayed into the North Indian masala segment in 2015 as a part of its expansion strategy. The product range includes Garam Masala—the universal masala, which is used in most of the North Indian dishes in two varieties, Royal and Super Garam Masala, Kitchen King Masala—another universal masala which can be used both in vegetarian and non-vegetarian dishes, Chaat Masala, Channa Masala, Pani Puri Masala, Jal Jeera Masala, Paneer Tikka Masala, etc. The package sizes of North Indian masalas are 15 grams and 50 grams for most of the products. The company believed that its unique packaging strategy, which gives its products a longer shelf life, and a pocket-friendly pricing strategy will be able to take its range successfully to the northern and eastern regions of the country.
The major competitors in the category are Everest and MDH at the national level.11.
Everest is India’s largest spices brand based in Mumbai. The brand is stocked by 400,000 outlets in more than 1000 towns across India. More than 3.705 billion packs of Everest are sold each year. There are more than 42 varieties of masala blends under the Everest brand name.
MDH (the Mahashian Di Hatti Limited) specializes in several unique traditional blends of spices suitable for different North Indian recipes. The company was founded in 1919 by Mahashay Chuni Lal as a small shop in Sialkot, and has since grown in popularity all over India. The MDH brand name is very well known throughout India.
Apart from these, brands like Catch and Ramdev Masalas also enjoy a considerable market share in the North Indian masala Category.
At the regional level there are players like MTR, which has a very strong presence in South India. MTR was established in 1924 as a restaurant chain by the Maiya family in Bangalore.12 Apart from its South Indian masala range, the company has a wide range of North Indian masalas and ready-to-cook range, and targets the northern and eastern markets, and also the global markets.
State-level player, Shakti Masala has also got a decent market share in the masala segment.13 The company has been operating from Erode, Tamil Nadu since 1975. The brand offers a wide variety of South Indian and North Indian masala range.
Aachi Masala’s core differentiators are affordability, shelf life, distribution, and retailer friendliness. It has found itself a distinct place in Tamil Nadu households, especially in the last decade. With a brand name that resonates with the Tamil-speaking market segment, it also enjoys a considerable mind share and brand recall, as per the company sources. Despite being seen as a strategic move to establish itself as a national brand, its expansion into the highly competitive North Indian masala range and other new products that cater to the pan-Indian customers, has its own challenges. The brand presence of the competitors in the North Indian markets and brand loyalty of the customers are the major challenges apart from the logistics and retailing challenges. Only time can say if Aachi is able to taste success in its product and market expansion strategy, especially in the North Indian masala range.
Sector Snapshot - FOOD PROCESSING
Sector Contribution To Emplyment Generation
SI. No. | Name of the Award / Award Constituted by | Award Given For | Year |
---|---|---|---|
1 | National Award | The Best Employer Award | 2016 |
2 | Most Influential Leader | ERTC | 2017 |
3 | Asia’s Most Promising Brands | World Consulting & Research Corporation. | 2017 |
4 | Centennial Legacy Award | LIONS Clubs | 2017 |
5 | International Achievers Conference | Fatest Growing Indian Company Excellence Award | 2016 |
6 | Confederation of Indian Industry | CII - 5S Excellence Awards | 2016 |
7 | Export Excellence Award - FIEO | Export Excellence Award | 2016 |
8 | Fast 50 | India’s Fastest Growing Brands | 2016 |
9 | WCRC Leaders | Power Leaders | 2016 |
10 | The Brand Trust Report | India’s Most Trusted Spice | 2015 |
11 | Mayan Awards (Vista India Communications) | Helping Hand to Humanity | 2015 |
12 | Indian Institute of Materials Management | Significant Sontribution to SCM field | 2015 |
13 | Comniscient | India’s Most Attractive Brand | 2015 |
14 | Corporation Bank | Best Entrepreneur | 2015 |
15 | WCRC Leaders Summit 2014 | Asia’s Fastest Growing Marketing Brands | 2014 |
16 | ABK - AOTS DOSOKAI | Sustenance Award | 2014 |
17 | Lions Club International | Worlds No 1 Masala Products | 2014 |
18 | TEA Award | Best Spices Advertisements “Aromatic Kings’ Award | 2013 |
19 | ABK - AOTS DOSOKAI | ABK - AOTS CDISSIA 5S Trophy & Certificate | 2012 |
20 | Lions International | Life Time Achievement Award | 2012 |
21 | FICCI Tamil Nadu State Counil | CSR Excellence Award | 2012 |
22 | MEGA TV | MEGA Womens Award | 2010 |
23 | TIE Chennai | Extreme Entrepreneur Award | 2010 |
24 | Times Group | Trialblazers | 2010 |
→ Mr. Isaac is committed to supply high quality food products to satisfy the expectations of millions of customers globally through strictly adherence to Food Safety standards. Aachi products are made under ISO and HACPT certification.
→ Most Aachi products are packed at their own manufacturing units. To have control on Quality and Food safety standards. Aachi relies on the CQAT. It is headed by a General Manager having rich experience in Food Processing. Testing and Food Safety. CQAT has QA Analysis at each and every manufacturing unit. CQAT Members are trained on HACCP. Consumer Affairs. Legal Metrology, Packaging Technology, Six Sigma, 5S Tools, Global Food Safety Initiative (conducted by US AID) etc.
→ To comply withthe Food Safety Managment System (FSMS / ISO 22000:2005), all incoming Raw materials and Packaging are tested for compliance to set specifications. All produc flows are monitored on-line as part of Quality Assurance. Quality Analysts keep close vigil on Process Flow for compliance to Standard Operating Procedures and Regulatory issues.
→ CQAT monitors the on-going productions to fulfill the high quality expectations of Aachi. CQAT recommends Imporovements in Process. Automation, Modernizing present facilities and implementing latest testing methodologies to check Food Adulterants. Quantity inherent properties of Process Ingredients and Human Health Pathogens to the Top Management.
→ Vendors, Audits are made to identify best suppliers of repute. Aachi CQAT bears the moral responsibility in achieving the Vision and Quality Policy of Aachi, It strives hard to protect the ‘Aachi’ brand name and secure its reputation.