DIAGNOSES

presents analyses of the

management case by
academicians and practitioners

Harvest Gold: Delhis No.1 Bread

Noria Farooqui

Case Analysis I
Azhar Kazmi
Professor of Management
King Fahd University of Petroleum & Minerals
Dhahran (Saudi Arabia)
e-mail: azhar_kazmi@yahoo.com

he Harvest Gold case study is an engaging story of entrepreneurship of a

gritty young couple who seems to know which side of ones bread is buttered. The Case offers insight into the trials and tribulations of setting up a
manufacturing unit, selling its products, and trying to make the venture successful
in the face of formidable teething troubles. Imbued more or less with a sense of a
clear direction, the Hasan-Siddiqui couple make and sell the daily bread a ubiquitous article of consumption present on the breakfast tables of a growing population
of Indians living in the bustling metropolis of the national capital and its environs.

The Anatomy of Food as a Product

Food is an intensely personal article of consumption unlike so many other things
consumers buy and use. It is actually consumed making it an integral part of ones
existence. Unlike clothes or gadgets, food is different as a product of consumption,
making consumer behaviour complex to understand and predict. Food tastes and
preferences are unique to a culture and tradition. To the experts, the sociology of
food covers a gamut of issues related to social, cultural, psychological, and political
aspects of food production, distribution, and consumption.

The current issue of Vikalpa

has published a Case titled,
Harvest Gold: Delhis
No.1 Bread. This Diagnoses features analyses of
the Case by Azhar Kazmi,
Srabanti Mukherjee, and
Akram A Khan.

Culture plays a crucial role in determining food patterns of a country or region.

Each country has a national pattern of food system; each sub-culture has its own
local food and nutrition patterns. Furthermore, a global food culture has an impact
on the developing countries in gradually adapting a more universal food consumption system. Some of the food patterns get adopted from developing to developed
countries too. It is in this likely context that the omnipresent double-roti became a
part of the Indian breakfast and snack menu while the curry started titillating the
palates of Europeans and Americans.
Packaged or branded bread is not an Indian innovation. It has European origins
with process innovations such as slicing, packaging, accelerated fermentation or ad-

VIKALPA VOLUME 37 NO 2 APRIL - JUNE 2012

135

vances in storage and distribution resulting in industrial bread making becoming a highly automated process. Such bread has gradually entered the Indian
markets making itself an essential part of the cuisine.

Fragemented Industry
Bakery industry in India, as most places elsewhere, is
basically a fragmented industry with a majority of manufacturers in the unorganized sector spread all over the
country. With just two large and 25 medium and 1,800
small manufacturers, the fragmented industry structure
makes competition diffused with no single manufacturer
able to set the direction of industry. While the government regulation of keeping bread manufacturing confined to small scale sector is a major factor in making it
a fragmented industry, other factors such as short shelflife of the product, dispersed markets with varying demand patterns, lack of cold-chain infrastructure, and low
technology requirements tend to keep it fragmented.
Fragmented industries generally have commodity-type
products and low entry barriers. Additionally, low technology does not limit the entry of new competitors. Low
investments also make it easier for manufacturers to exit
with relative ease. The low entry and exit barriers encourage the entry of new competitors into the industry whenever profits are high. The entry of new competitors
leads to excess capacity in the industry and they begin
competing on price to utilize their capacity and to maintain their market shares. As a result, such industries often experience boom-and-bust cycles and price wars. In
such a situation, everyones profits are hurt and some
manufacturers leave they are either acquired by other
competitors, or are forced out of the market. All this
constant motion creates a flux within the industry making it difficult to define its structure as well as the state
of competition.
It is in such a dynamic industry that Harvest Gold enters as a bread manufacturer that is set to make its mark
as a product of impeccable quality backed by efficient
distribution. Early years of the company demonstrate
how difficult it was for the entrepreneurs to enter into a
market that was dominated by two big manufacturers
but who were lately doddering due to their own problems. The Delhi market offers a niche for Harvest Gold
to enter. But things were not easy as the case narrative
demonstrates.

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Differentiated Product
The cacophony of a fragmented industry makes it difficult for a single or few manufacturers to make their presence felt. Differentiation is imperative in a state of
commotion that arises in order to be noticed and counted. Small manufacturers have the advantage of being
flexible with simple organizational structures enabling
them to be responsive to market trends and keeping their
overheads low to offer products at lower price. Big
manufactures may enjoy economy of scale but are
bogged down with bureaucratic structures and slow
response to markets.
Harvest Gold entered the Delhi market with an inherent advantage of being a newcomer led by sprightly
owners eager to innovate and experiment and learn
through their mistakes. Modern Foods and Britannia
were engaged in mutually destructive competition despite having been granted the special statutory permission to retain their large scale operations, when in
general bread-making was restricted to small manufacturers.
The crucial aspect of the Companys initial success seems
to have been serendipity rather than any long-term planning. They happened to be there at the right time and
the right place. This advantage was not going to remain
for long as the laws of economics brook no vacuum in a
market where demand is partially unsatisfied. So, the
early success of Harvest Gold can largely be attributed
to their entrepreneurial actions in setting up their manufacturing unit with a distribution network backed by
effective advertising. These were underpinned by successful efforts at differentiating their product in a crowded market in a highly fragmented industry.
The differentiation of Harvest Gold rests primarily on
creating a perception of superior quality in the minds of
consumers. The brand positioning is consistent with the
product being targeted at the Delhi consumers. The advertising is loud and cheeky, keeping in mind the Delhi
culture of a potpourri of Punjabi effervescence and
Haryanvi rusticism and with a sprinkling of the pan-Indian milieu of the rising middle class that is not averse
to showing off its newly attained affluence.

Technological Imperatives
Baking technology is a long established traditional process. The skills of bread-making have ancient origins and
DIAGNOSES

have passed through generations resulting in their being widespread in the population. The basic principle
of cooking by dry heat in an oven has changed little since
the time Egyptians might have started using it. Traditionally, the dough was heated over open fires and hot
stones. This progressed to ovens of various shapes and
sizes and simple static ovens were designed and used.
Heat may be derived from a variety of energy sources,
ranging from burning animal dung cake, coconut husk
or firewood to heating by electricity or gas.
The issue of quality of manufactured bread is somewhat
dicey. The primary reason is that the main ingredient,
wheat, is a natural, agricultural commodity with inconsistent quality. Such inconsistency seeps through the
manufacturing process; so, selection of good quality
wheat is a crucial element of the bread manufacturing
process. Harvest Gold is located favourably with regard
to this crucial input. Its manufacturing unit at Bhiwadi
near Delhi is in proximity to the granaries of India, viz,
Punjab, Haryana, and Uttar Pradesh. It has a fairly wellestablished network of supply of wheat and its other
forms such as flour and bran. Over a period of more
than 17 years, Harvest Gold has developed the capability to deal with the technical issues of testing input quality as well as making in-process quality control checks
of dough and semi-processed bread. It also claims to conform to the standards of the American Institute of Bakers. Packaging at Harvest Gold was an innovation to
start with but was swiftly imitated by the rival manufacturers making it ineffective as a basis for differentiation indicating the fragile nature of using technological
aspects as the basis for differentiation.
The significant point of technological capability is that
there is little scope for creating differentiation as the technology is widespread, well-known, unpatented, and
tried and tested. Any minor improvement is unlikely to
have a significant impact on the quality of the manufactured bread with the accompanying risk of them being
easily imitable. For bread manufacturers, thus, the technology factor is a given with maintenance of high standards being an imperative yielding no noteworthy
benefits in terms of differentiation.
From the customers perspective, quality of bread could
be more of a perceptual matter rather than having any
firm technical basis. What the consumers expect is a
bread of adequate volume, attractive shape and colour,
VIKALPA VOLUME 37 NO 2 APRIL - JUNE 2012

and a crumb that is finely and evenly distributed and

soft enough to chew but firm enough to slice. Such quality characteristics can only be achieved through a mix
of cautious choice of ingredients and stringent control
of the manufacturing process, protective packaging, and
hassle-free, efficient transportation. Harvest Gold seems
to satisfy all these parameters to provide high quality
bread to its customers. Yet, there does not seem to be
any significant addition to the value of the bread as a
product as all these conditions could easily be provided
by the rival manufacturers resulting in no significant
competitive advantage to Harvest Gold.

Critical Success Factors

Price, availability, and quality could be considered as
the three critical success factors in the bread industry in
India
Price: The price of bread is a critical success factor as it
as an item of daily consumption with frequent repeat
purchase. Unit price is an important consideration for
customers who can decide to buy bread at low, medium
or premium price depending on their expectation of the
quality of bread. For the market segment that Harvest
Gold primarily caters to, the flagship product is the premium white bread that could be priced competitively,
yet a notch above the market price to benefit from pricerelated quality consciousness among consumers. Quality-based differentiation also makes it possible to avoid
price-based competition. Yet there are severe limits to
price increases as the product is an item of frequent, repeat purchase consumed daily. It would be safe to assume that the market segment that Harvest Gold caters
to is in a position to tolerate minor increase in prices in
gradual stages as the Indian consumer is attuned to price
increment in items of daily consumption. Differentiation also makes it feasible for Harvest Gold to charge a
higher-than-market-price especially in relation to the
price of artisanal bread where the moderate margins for
the small manufacturers may be a matter of survival for
them and they would not like to challenge Harvest Gold
on the basis of price.
Availability: Availability of bread during morning and
late afternoon hours on the store shelves is a critical success factor in the bread manufacturing industry as consumers cannot wait or postpone their purchases. Harvest
Gold has achieved considerable success in this critical

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factor through a combination of self-owned transport

vehicles, innovations in packaging and handling, and
cost-effective, efficient distribution. In fact, if we look
back, it was this hurdle that Harvest Gold was able to
cross in its initial years and which the big boys of the
industry were not able to handle leaving the market open
for forays by an energetic newbie such as Harvest Gold.
The market space that Harvest Gold captured by making its bread available to consumers ensured success for
several years demonstrating the power of availability
as a critical success factor in the bread manufacturing
industry. Does availability constitute a unique differentiation factor for Harvest Gold? Maybe, it does but even
if it does, it might not be a source of enduring competitive advantage owing to the ephemeral nature of distribution advantages.
Quality: The perceived quality of bread as experienced
by the consumer by visual observation and taste is a critical success factor. A loaf of bread that does not look attractive, or taste good, nor has a pleasing aroma is unlikely to be purchased. Freshness as a product attribute of
bread is an extremely crucial factor in creating the perception of good quality. Harvest Gold seems to have
made considerable effort on the quality front. It has successfully internalized the technicalities of the manufacturing process, learned to source its raw material
requirements efficiently and wisely, managed to maintain the quality of its equipment and processes, and kept
the packaging with unique and catchy design to be both
attractive as well as functional. Consumer concerns
about egg being used in the manufacturing process have
to be addressed more forcefully as they indicate a lurking suspicion about how Harvest Gold manages to make
such flawless white bread. It has to educate the consumers on this aspect so that this misplaced suspicion does
not hurt its quality perception. Overall, it would be safe
to assume that perceived quality (as opposed to real
quality that is difficult for consumers to measure) seems
to be the differentiating factor for Harvest Gold and the
basis of its competitive advantage.
This brings us to the question of core competencies of
Harvest Gold. An analysis of the three critical success
factors shows that the core competency of Harvest Gold
may lie in the unique way in which it is able to combine
price (cost control) and availability (own trucks) with
heavy emphasis on creating a positive perception of
quality (cheeky advertising). Most of its rivals in the

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Delhi and NCR may be able to compete either on price,

availability, or quality, but they may not really be able
to understand or imitate the unique ways in which Harvest Gold is able to integrate these three factors.

Managerial Behaviour
The sequence of events in the Case amply demonstrates
the incremental nature of managerial behaviour. The top
management consisting of the entrepreneur-couple
make the management of the organization top-driven
and top-led. The initial years of such entrepreneur-led
organizations are difficult and challenging. There are
problems occurring everywhere all the time and there
is a lot of fire-fighting going on. This may be essential as
the top management is itself in a learning mode. They
are learning to deal with new situations, new problems,
and new challenges. With a mix of failures and successes,
the organization moves on through an incremental process of decision-making.
Typically, the top management in Harvest Gold inform
the employees of a new product they would be introducing. They dont seem to discuss or confer. Naturally,
the contribution from the rank and file would be meagre. For instance, the confabulations with the ad agency
are typically limited to the top bosses and the ad agency
boss. This is a typical way that organizations in the entrepreneur mode run. But then, there cannot be a perpetual entrepreneurial mode as the next stage is of stability where delegation of authority is needed for the top
management to focus on strategic tasks rather than involve themselves in day-to-day routine tasks. But old
habits die hard. The top management has got into the
habit of playing a hands-on role which is difficult to get
out of. There may not be a second line of management
to take over. And, even if there were, the top management does not have the confidence of letting go. The
second line is content with taking orders and implementing them rather than taking initiative a role they seem
to have become comfortable with. This scenario related
to organizational growth and life cycles may well be
playing out inside Harvest Gold.
While the entrepreneurial mode may suffice for several
years, it becomes a millstone around the neck when the
organization has to move on and tackle different strategies. This tendency may also be a severe limitation on
Harvest Gold taking on other businesses whether in the
related or unrelated lines.
DIAGNOSES

SWOT Factors

Strategic Options

Table 1 presents the strengths, weaknesses, opportunities, and threats for Harvest Gold circa 2012. The Company has several positives working in its favour. Brand
positioning seems to be its forte with clear market segmentation making up the ingredients of a successful
marketing strategy. This is backed by efficient distribution and targeted, catchy advertising.

We now consider different feasible strategic options before Harvest Gold starting from market penetration to
diversification.

Notably, several of its strengths reside in the marketing

function. Weaknesses primarily may be due to limitations on corporate experience as well as limitations of
small size. Opportunities are in demand potential and
the wide margin of manoeuvre in terms of product variety. Threats arise due to substitutes and alternate
sources of products.

Market Penetration
There is limited scope in Delhi and NCR as Harvest Gold
already has a dominant share in these regions. Market
penetration could aim at moving sideways into other
market segments such as institutional markets or industrial markets where bulk purchases may provide stability to sales as well as higher margins on sales based on
large volumes.

Table 1: SWOT Factors for Harvest Gold

Strengths

Weaknesses

Favourable location in terms of both supply sources

as well as markets
Quality of bread: Good quality equipment, careful
selection of ingredients
Distribution and logistics: Own transportation
Market segmentation: limited to Delhi and National
Capital Region
Brand positioning: Sharply focused on Delhi residents
Identifiable packaging acting as preserver as well as
silent salesperson
Cheeky and loud advertising garnering attention
Stringent quality control methods
Dependable asset quality; plant and equipment in
good working condition

Top-driven management used to operating in

entrepreneurial mode
Corporate experience limited to one industry and one
product in a limited geographical region
Failure in selling mineral water indicating limited ability of
management to foray into related or unrelated areas of
business
Fatigue due to continual fire-fighting dealing with routine
problems
Small size limiting growth

Opportunities

Threats

Low bread consumption in India leading to high market

potential
Rising population of Delhi and NCR likely to reach
23 million by 2021
Lifestyle changes of middle-class population favouring
bread consumption
Multiple uses of bread as a product: breakfast item;
food item; used for making other food items such as
bread pakora; bread halwa; etc.
Multiple ways of bread usage: meal solution, on-the-go
meal, desk lunch, ceremonial / party food, etc.
Growing demand for variants of bread including brown,
bran, whole-wheat, wholemeal, etc.

VIKALPA VOLUME 37 NO 2 APRIL - JUNE 2012

Lots of substitutes for bread

Most inputs natural so quality variations beyond control
Low-tech product so easily imitable
Perishable product; limited shelf life
Delhi government insistent on use of CNG in
transport vehicles
Alternate production sources: artisanal bread, in-store
supermarket bakeries,
Negative customer perception of bread as stale dough
packed into plastics
Bread manufacturing limited to small-scale production;
investment limited to INR 30 million
Customers doubts on ingredients including eggs or
undesirable fat; some customers conscious of excessive
carbohydrates
Emerging trends of reducing amount of processed food
consumption; seeking food items with no or lesser
additives; rising preference for organic products

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Market Development
Harvest Gold already covers Delhi and NCR with some
supplies going to a few places in the neighbouring states.
The short shelf-life of the product prevents it from being transported to distant places. So, market development could only be possible by enabling means of
strategy implementation such as franchising and contract manufacturing. These options seem to be under
active consideration of the management as the case narrative reveals. Legal ramifications for these options
would need to be examined before their actual choice.
Both these options pose some risks for Harvest Gold such
as loss of control, loss of insider technical knowledge,
potential conflict in relationship management, and likelihood of legal hassles arising from differing interpretations of partnership conditions.
a) Franchising: Typically, franchising is good for business when expansion is desired without capital infusion with the added advantage of continual revenue
streams in terms of royalty, fees, or commission. Franchising capitalizes on brand strength. Franchisees on
their part look to an established brand, technology
support, production system, and training and expertise transfer. The question to examine here is: Why
would a prospective investor buy a Harvest Gold
franchise? As we saw in the preceding analysis, technology is not an attractive giveaway in bread manufacturing; so, brand name could be of value. But, is
the brand name of Harvest Gold of value outside the
region in which it presently operates? For instance,
why would someone take a franchisee in distant Goa
or Andhra Pradesh? There is no obvious benefit. Prospective investors in bread manufacturing may typically be small entrepreneurs themselves on a lookout
for a favourable deal and so the offer from Harvest
Gold may not really be attractive to them.
b) Contract manufacturing: To Harvest Gold, the attractiveness of contract manufacturing lies in its ability
to offer geographical growth without high investment building up a network of manufacturing partners willing to share risks. Why would a business
entity take up contract manufacturing for Harvest
Gold? It could do so if it had spare manufacturing
capacity that could well be utilized to make some
money or even setting up additional capacity if longterm contracts were ensured. For Harvest Gold, however, a strategic issue is whether it could be sharing

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its core competence of its integrated usage of pricing, availability, and quality. If it happens, then contract manufacturing is not advisable as handing over
or sharing core competence is not a wise business
decision. It would be feasible only if it does no harm
to its core competence.
Overall, neither franchising nor contract manufacturing
might be a feasible strategic option for Harvest Gold. In
fact, any strategy that requires geographical expansion
might not bring in much benefit to Harvest Gold as it
would result in loss of management control a situation the top management may not be comfortable with.
Product Development
Bread has many variants and Harvest Gold has the potential advantage of extending its brand name to those
variants in its existing markets. The existing products
of Harvest Gold include white, sandwich, brown bread;
burger and sweet buns, Bombay pav; kulcha; pizza base
and milk rusk. There is scope for focusing on the growing market segment of the health-conscious consumers
who would go for multigrain, whole wheat bread. Then
there is potential in other bread variants that may have
a shorter or longer shelf life such as: biscuits, cakes,
breakfast cereals, other breads such as French bread,
ginger bread, shortbread, fruit bread, rolls, muffins, etc.
The list is long as natures bounty of wheat and other
grains has a wide range of application. Harvest Gold
already has plans to offer semi-cooked roti the most
popular wheat product consumed by most Indians in
large numbers. In fact, there need not be hesitation in
going ahead with this product as it has a large market
potential. Lifestyle changes, and working women, viewing semi-cooked roti as convenience food, etc., are factors that support its introduction in the markets.
Pancakes, pita, naan, tortilla and the likes are popular
products worldwide and so semi-cooked roti could be a
good product to consider for introduction.
Related Diversification
Another feasible strategic option for Harvest Gold could
be related to diversification where it could look to products that could use its expertise expanding its business
into other consumable items. This could happen in two
ways: first, related diversification into areas where its
individual expertise in entrepreneurial mode of operating, mastering bread manufacturing, devising an effiDIAGNOSES

cient distribution system, and using natural inputs to

manufacture packaged, branded products, could be applied. Secondly, it could try related diversification into
areas that could benefit from its core competence of integrated pricing, availability and quality competencies.
This could be a challenging area but has the promise of
high potential. A big advantage of related diversification strategic options is that Harvest Gold could continue operating in its familiar geographic region without
taking undue risk of geographical expansion.
Unrelated diversification strategies are not recommended for Harvest Gold as its size does not permit unnecessary risk that such strategies entail. The constraints
of top management too limit moving into uncharted territory.

ated with restructuring would be the issues of higher

level of delegation of authority, empowerment of managerial and supervisory staff, and provision of employee
training.
Expansion plans would have to consider the financial
implications. It is likely that the company has enough
surpluses with profitable operations over several past
years to invest. Debt sources in the form of bank loans
could be another source of financing. Franchising and
contract manufacturing may partly obviate the need for
financing but as discussed above, the disadvantages may
outweigh the benefits.

Depending on its strategic options, Harvest Gold would

have to consider its implementation aspects. Market
penetration and market development could be carried
out through its existing company but product development and related diversification could involve separate
companies. This would have the additional benefit of
bypassing the investment limit on bread manufacturing.

Functional policy changes in the area of production,

marketing, and human resource management would
have to be in line with the strategic option chosen. For
instance, if Harvest Gold opts for contract manufacturing or franchising, then organizational arrangements for
managing these activities would have to be made within
the existing structure of Harvest Gold. Concomitant
changes in functional policies would have to be made;
for instance, recruitment and selection of experts for
managing and coordinating contract manufacturing and
franchising would be required. Use of computerized
information system would greatly benefit any expansion plan.

Organizational restructuring would become necessary

when the scale of expansion is substantial. It is likely
that the personnel ratios would have to be recast with
managerial and supervisory staff increasing in numbers
in proportion to the workers. This would be necessary
to broaden the base of management expertise. Associ-

In general, implementation would benefit any strategy

that involves piggybacking on the existing brand name,
using distribution expertise requiring logistics and transport of consumable products on a daily basis, and selling consumable products backed by effective advertising.

Implementation Issues

Case Analysis II
Srabanti Mukherjee
Visiting Assistant Professor
Indian Institute of Management Indore
e-mail: srabanti@iimidr.ac.in

he environment-friendly Harvest Gold, which is a

well-known bread brand in Delhi NCR region, was
about to add semi-cooked chapatis in their ever-challenging product mix. Along with the launch of this new product, the company was also looking for a nation-wide
branding of their bread brand while focusing on their
VIKALPA VOLUME 37 NO 2 APRIL - JUNE 2012

unique selling propositions, viz., quality and green. Although green stands for environment-friendliness, Harvest Gold used the word to ensure its customers that
their product was completely vegie. However, given
the high food-sensitivity of the Indian consumers especially the men, nationwide branding and distribution of

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such highly perishable product like bread was never an

easy task. Moreover, since the shelf-life of bread is maximum seventy-two hours, the Government had made it
mandatory to print the manufacturing and expiry date
on the packet. Therefore, to ensure freshness of the bread,
the logistics system had to achieve a lightning speed.
Nonetheless, as the Commonwealth Games were drawing closer, the environmental laws of the Delhi Government had become very stringent. They had announced
that only CNG fitted trucks could carry Harvest products. But, given the limited number of CNG fuel stations, the trucks had to wait in long queues which in
turn appeared to be a potential threat as far as supply
was concerned. Secondly, since bread was a fast-moving consumer good contributing to the routinized response need of the consumer, if supply was not adequate
and timely, there was always a threat of brand substitution at the retailer level. Thirdly, in terms of nationwide
distribution, the company was supposed to face a competition from Britannia and in particular, the FMCG giant, Hindustan Unilever Limited. The seller of Modern
bread, HUL, undoubtedly had a huge nationwide presence and an established distribution network. Fourthly,
though the innovative mixture of conventional (humorous advertisements in Delhi Times) and non-conventional
(painting the name of Harvest in the trucks) modes of
promotion of Harvest Gold worked well in the NCR
region, in order to ensure nationwide distribution and
branding, the company required a proper understanding of diversities of taste and preferences across India.
According to the Case, many initiatives of this company
had failed earlier, which indicates either a lack of understanding of feasibility or consumers mindsets. Finally, given the investment ceiling of Rs 30 million in
the reserved sector like bread, Harvest may have to opt
for franchising and contract manufacturing while maintaining their focus on their USP quality.
Therefore, looking forward to nationwide distribution,
the company needs a careful analysis of a viable business model which would ensure an appropriate mix of
product (quality and taste), price (cost containment),
place (especially logistics), and promotion.

Context
In the early nineties, the Indian bread market was mostly
dominated by Brtiannia and Modern. But the high perishability of bread posed a serious challenge in terms of

142

distribution in the far-flung areas. Adil Hassan and his

wife Taab Siddiqui, on returning to their country realized that fresh and tasty bread was hardly available in
the Delhi NCR region. Though of late Harvest Gold has
opted for several diversified products, given the fact that
82 per cent of the bakery market was then dominated
by bread and biscuits, the Companys flagship product
was white bread. The bread industry at that time was
growing at the rate of six per cent while the organized
sector looked even more promising with an eight per
cent growth rate.
After the initial teething trouble of distribution, the brand
was performing well in the Delhi NCR following a one
plant, one city and one product cult. It gradually diversified from only white bread to sandwich bread, Bombay pav, burger bun, brown bread, kulcha, pizza base,
sweet bun and milk rusk, daliya bread, garlic bread, etc.,
and made a strong foothold in the Delhi NCR region.
Nonetheless, given that the bread was a short-shelved
product and the bread industry had a thin margin, high
efficiency in terms of cost control and distribution was a
necessity. Secondly, the taste and preference patterns of
the different parts of India were never very similar.
Therefore, it was time to relook into the existing promotional strategy with the trucks painted with Harvest Gold
and humorous promotional messages appearing in the
Delhi Times only on Fridays.

Competitive Scenario
The company was facing a tough competition from the
PERFECT bread from Seeta Food Products Pvt. Ltd.,
which was in a massive expansion mode and covered
not only the Delhi NCR region, but also the neighbouring areas like Agra, Ferozabad, Bharatpur, and Alwar.
As compared to Harvests one plant, one city, one product, PERFECT was already having a competitive advantage of two additional modern plants and was
therefore, capable of capturing 45 per cent of Delhis
market share in the premium bread category.
Nonetheless, Harvest seemed to be definitely better off
than their other two major national level competitors.
To elucidate, Britannia was more interested in its biscuits division and Modern Foods, even after its merger
with the FMCG giant, HUL, was crippled with lack of
distribution network, low quality standards, high production cost, unmanageable workforce, trade union
DIAGNOSES

problems, and some other political issues. According to

HULs insiders, from 13 production plants of Modern,
now only 6 are in operation.

Issues in Cost Control

Although Harvest was trying hard to reduce the cost by
downsizing some steps in the production process without compromising with the quality, the following issues
posed real challenge in terms of cost control of Harvest:
a) The rising price of wheat flour which is the key ingredient of bread was enough to raise the eyebrows
of Taab Siddiqui. First, India being both the second
largest producer and consumer of wheat was not selfsufficient in terms of production which called for
import of wheat and subsequently increase in the
price of wheat flour (as wheat constituted 55% of the
total ingredients of wheat flour). Moreover, low export duty of wheat encouraged the producers to export more of it and this resulted in short supply and
increasing price of wheat domestically. Secondly, like
any other agri-product, wheat production was also
subjected to seasonal variation, which in turn led to
price adjustments across the seasons. Thirdly, the
millers quoted more price of wheat flour as and when
the price of by-products fell. Fourthly, the Food Corporation of India procured and stored huge amount
of wheat every year for rainy days. This also resulted
in artificial shortage of wheat and subsequent increase in its price. Finally, the risk of global warming
(due to the possibility of damage of crops) and fluctuations in import might have also posed future
threats of short supply and increase in price of wheat
to some extent.
b) The second important component of cost control was
ensuring efficient logistics and minimizing losses in
material handling. It was reported that already, while
circulating in the Delhi NCR region, the companys
plastic crates (each create carried bread worth of Rs
200) were handled so carelessly that serious cracks
and breakages at the edges were common phenomena. Apart from mishandling of crates due to acute
time-pressure, the crates were stacked inside the
truck with no free space. From this, the damage
caused to the loaves wrapped by thin cellophanes
could be well interpreted.

VIKALPA VOLUME 37 NO 2 APRIL - JUNE 2012

Issues in Distribution and Stringent

Food Security Norms
Since the Food Safety and Standards Act, 2006 was enacted, it was mandatory for the food manufacturers to
abide by their stringent procedures and guidelines. They
were also engaged in collating and collecting the dates
of consumption, expiry date of the food products, and
improving overall customer education about food standards. Therefore, for the purpose of franchising and contract manufacturing, the Company needed to be extracautious in terms of quality and food security standards.
Now, given that the Harvest is planning to go national
and the fact that bread is a low involvement product, it
has to be ensured that it occupies adequate retail shelfspace at any given point of time across the nation. Keeping into consideration the high perishability of bread,
fast recycling was absolutely necessary. On the other
hand, government specification enforcing mandatory
use of CNG trucks for bread transportation was acting
as a speed-breaker in the delivery system as CNG fuelling units were very less in number and the trucks had
to wait in long queues for refilling fuels. This paradox
posed a harsh challenge of ensuring competent distribution for Harvest.
Moreover, bread is subject to quality loss with increasing exposure to sunlight and heat. Therefore, the retailers had to be educated regarding the storage of the
products. Now, if Harvest had to go national, they needed to train the retailers across the length and breadth
of the country, which again was not an easy task.

Issues and Challenges in Brand Building

Harvest Gold was no doubt a well-known bread brand
in Delhi NCR, thanks to their visual cues (painting of
brand name, logo, etc., on the trucks), cellophane packaging (displaying the quality and texture of bread) and
humorous print advertisements in Delhi Times on Fridays. Nonetheless, as far as nationwide branding was
concerned, these steps did not appear to be sufficient.
First, Harvest wanted to focus on quality and freshness
through its innovative packaging strategy with cellophane wrappers and clearly printed product details with
red marks. However, this low-cost packaging innovation was soon plagiarized by local manufacturers with
similar look and texture and even logos of Harvest. Gradually, these local bread brands flooded the retail shelves.

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Secondly, while Taab was quite sure about her brands

taste and quality, no product-related attributes were
used in promotion to build up the brands personality.
Although the advertisements caught public attention,
given the strong presence of the wannabes like Taaza
Gold, Golden Harvest, etc., converting this attention into
purchase intention at the national level was a challenge.
Moreover, as the Case suggests, these high-cost and the
so-called high-impact advertisements with cartoons and
parodies appeared to be quite silly to the customers.
Further, as most of the brands talked about quality, creating a distinctive brand personality was the call for the
day.

Conclusion and Recommendations

Keeping the above scenario into consideration, franchisee and contract manufacturing seems to be a good option. Firstly, this will provide the advantage of localized
production and distribution. The speed of distribution
and recycling would get magnified and cost can be
brought down. Alternatively, better quality crates can
be used to minimize the material handling loss and retain the quality of bread. Nonetheless, to assure quality
standards specified by the Food Safety and Security Act,
2006, special monitoring and care is required in case of
contract manufacturing.

Secondly, throughout the year, proper planning of procurement of raw materials (especially wheat) is required
so that the firm is not subject to seasonal price rise or
artificial short supplies.
Thirdly, as the company assumes quality to be its key
competitive advantage over the competitors, the focus
of its promotional messages has to be on the qualityrelated attributes of the brand and not on silly cartoons
and comics. These humorous advertisements may
temporarily attract the eyeballs of the audience, but keeping in mind the diet-conscious modern populace, Harvest should emphasize on the nutritional values of the
brand to build its own cult in this low-margin industry.
Some careful measures to protect the packages from
imitations also call for special attention. The Company
may take an initiative to arrange competitions amongst
engineering students (which they have already done to
design better crates) to come out with some advanced
packaging alternatives.
Thus, to build up a nation-wide brand, Harvest Gold
needs to tread a careful path of innovative packaging,
cost containment (through efficient procurement, logistics and distribution), and innovative promotional messages, highlighting the significant unique selling propositions of the brand.

Case Analysis III

Akram A Khan
AssociateProfessor
Department of Agricultural Economics and Business Management
Aligarh Muslim University
email-akramakhan1@gmail.com

his case on Harvest Gold can be analysed from different angles. It opens with an entrepreneurs dilemma of going national and leaves an impression of
thorough monitoring of supply chain which is an integral part of decision-making for any food and beverage
company. The pros and cons of the CNG norms in the
capital city, Delhi and the growing demand for integrated marketing communication are among the challenging issues that need to be addressed. The fact that
the company wants to focus on manufacturing bread
indicates that it is satisfied with the single-product business and would like to add value to it by introducing

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new variants in the product from time to time so as to

keep the customers of different age groups happy and
also by putting up well-designed witty advertisements
in the newspaper.
The various areas that are discussed in the Case can be
analysed one by one starting with the Indian bread industry. It gives a clear picture to the budding entrepreneurs, who would otherwise want to be more into the
service industry as this business is of low margin and
high volume with fixed cost and high initial investments.
They may take lessons from Harvest Gold on how to
DIAGNOSES

accept challenges and give competition to big brands

like Britannia and Modern and enjoy the largest share
in the market. The author subtly gives an account of the
entrepreneurial nature of the firm and the success it gets
within five years.

Building Competitive Edge through Distinction

Procurement is handled by the Purchase Department
various strategies are adopted to procure the right raw
material. The operations and value addition at each stage
make their bread a differentiated product. Manufacturing or production is the key component of this business
and it is the quality of bread that is of prime importance
to successfully stay in the business. The use of alveo
graph is not only the deciding factor but it also tests the
flour on the floor which is expected to be consistent if
Harvest Gold decides to go national. In that case, it will
have to centralize the operations to some extent and
strictly monitor quality. It would be a wise step to undertake an in-depth study of what went wrong with the
big bread-manufacturing companies so as to avoid those
strategies.
The Case also talks about the various strategies the entrepreneurs have developed and implemented. They
want to and are doing wonders with one product in one
city and plan to extend it across the nation. They are
working on their core competencies thereby gaining
sustainable competitive advantage. The major emphasis is on the distribution strategies which are the deciding factors and the tools and techniques for achieving
the objectives. In order to have countrywide presence,
their major effort shall be on the supply chain and logistics for which they have been rehearsing day and night
in Delhi by adhering to the CNG norms.
The Case throws light on the role of wheat industry,
sugar industry and many others as major contributors
to the success of bread or bakery industry. It also highlights the need for government support both at the state
and central levels for such entrepreneurs by developing
SEZs or AEZs. The study on macroeconomic indicators
like world wheat production, wheat production in India, wheat consumption, pricing of wheat, climatic conditions like El Nino, prices of by-products, effects of
WTO, and export import, etc., may not only help them
in bread manufacturing but also in starting related business in future.
VIKALPA VOLUME 37 NO 2 APRIL - JUNE 2012

Business Strategy and the Marketing Mix

The decision to stay with only one product is really an
important subject of discussion because there is a possibility of green pasture in biscuit manufacturing for the
company. It may also be seen as the differentiating factor; it works on its core competencies each time new variants are introduced.
The pricing strategy of Harvest Gold is to gain cost leadership because it is a mass product with very little difference from its competitors. However, it is noted that it
does offer premium pricing for some of its variants.
The packaging strategy of Harvest Gold brought laurels to the company because it pioneered in the transparent packaging giving the customer the confidence
while buying the bread; and, with this first mover strategy, it became a household name within no time. The
bread also claims to be vegetarian in nature and to support it, a green mark was introduced on their packaging.
As far as the companys choice of media or media strategy is concerned, it is important to note that with minimum communication effort, it has got the maximum
benefit at a time when the whole world of business is
running after integrated marketing communication.
Harvest Gold wants an internet presence to match with
the current times. It may not require aggressive advertising; but brand recall does play a significant role. It
follows a sharp creative advertising strategy to catch the
attention of the Delhi people. The Hindi slangs it uses
are imaginative and strong, leaving a lasting impression
in the minds of the people. But the company will have
to decide whether for national presence, it would want
to retain the same content as used in the Delhi region or
try accepted conventional methods.

Facing the Challenges

Coming back to the issue of gaining national presence,
it seems to be a major task the owners will have to take
a country tour to meet different suppliers of the raw
materials especially maida. The different qualities of
wheat produced due to the different soil textures may
make it really difficult for them to identify the appropriate flour for attaining the accurate bread manufacturing standards. Not only wheat but even sugar, fat
and other ingredients would need the right suppliers.

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Keeping in mind the response which Britannia and

Modern received for having national presence, the difficulties faced by them, and the restructuring efforts
made by them, Harvest Gold will have to develop sustainable strategies and particularly adopt suitable methods for stringent cost control. The typical SWOT and

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PEST analysis, market research and many research tools

will have to be conducted to finally launch the product
in every corner of the country. Besides this, it would
also be a challenging step for the entrepreneurs to get
familiar with tastes and preferences of people from different cultures and communities.

DIAGNOSES