A Project Report on

Nature Valley Growth and opportunities.

By Akhil Malhotra

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Introduction – FMCG

The Indian Fast Moving Consumer Goods (FMCG) sector is the 4th largest in the
Economy. The market size for this sector is in excess of US$13.1 billion. The market
is essentially full of Consumer Non Durable products, which in turn are used in
everyday situations by majority of the population. There is a large presence of
Multinational companies in the FMCG sector, some examples being:

• Unilever

• General Mills

• Nestle

• Cadbury

• Coca-Cola

FMCG Characteristics

The main characteristics of FMCG products are that they can be produced at a
relatively low cost and are sold frequently. The profit levels per piece may not be
high, but the total profit will increase incrementally due to the large proportion of
products sold.

Retail distribution in Bangalore

There are two forms of retail in Bangalore, modern and tradition.

Modern Retail

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Modern retail is a new type of retail in India. There are numerous chains of modern
retailers, however the amount of actual outlets is less than that of traditional retail,
but the size of orders may be larger. Most Modern format outlets will be given credit
for their stock for approximately 30-35 days.

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Traditional Retail

Traditional retail accounts for a large proportion of trade in India. There is a huge
amount of outlets, however the size of the outlets are far smaller than that of their
Modern Retail counterparts, hence smaller orders being placed per outlet.
Traditional trade outlets will pay upfront for the goods they receive.

Distribution

In Modern retail orders would be placed via email directly from the outlet to the
company. Stock would then be sent to the stores distribution center. From there the
stock would be routed to the appropriate outlet when it is required. This is therefore
an automated distribution system.

In traditional trade there is a different system in place. The outlet will first be visited
by a DSM who will take the order from the outlet. The DSM will then give the order
to the distributor who will inform the company and then the next day the order will
be sent to the shop.

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Project Description

This project will be a study of the awareness levels of the Nature Valley Granola
Bars in Bangalore. I will be looking at the depth and breadth of awareness of Nature
Valley and its Competitors.

I will also be looking to study the retention rates, this will lead me onto the current
distribution penetration levels in functional food outlets.

Data will be obtained from various consumers of FMCG products in Modern Trade
Format outlets, as well as Shop-keepers and owners of Traditional trade outlets.
Secondary Source data will also be used in the study and analysis of Nature Valley
in retail stores regarding sales figures and competitors’ placement.

The project will last approximately 8 weeks, from the 12th of July till the 3rd of
September.

The main objectives of the project are:

• To check the availability, visibility and category movement of Nature Valley

and its competitor products in modern trade format and traditional trade
format.

• To know the impact of Retail Visibility on customers ultimate purchase

intension.

• Understanding about the functioning of merchandising system, visual

merchandising and display.

• To study the position of the Nature Valley in relation to competitors product.

• To study the market capitalization of Nature Valley products in total sales.

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Product Description

Nature Valley Granola Bars are snack bars that are 100% natural. There are several
varieties of Nature Valley bars:

• Crunchy

o Roasted almonds

o Oats and Honey

o Apple Crunch

• Chewy

o Fruit and Nuts

o Mixed Berry

Nature Valley is a very new concept to the Indian Market. There are several
noticeable differences between Nature Valley in India and Nature Valley in the UK.
Main differences include the differences in flavors available for Crunchy bars, where
as in the US there is a vast amount of varieties of bars, and flavors.
Crunchy

Nature Valley Crunchy bars were introduced into the Indian Market in

There are 3 flavors of the Crunchy granola bar:

• Oats and Honey

• Roasted Almonds

• Apple Crunch
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The bars are manufactured in Spain.

Chewy

Nature Valley Chewy bars were introduced into the Indian Market early 2010.

There are 2 flavors of Nature Valley Chewy:

• Fruit and Nut

• Mixed Berry

These bars are manufactured in India itself.

Market Size

As stated above the market size for FMCG is approximately US$13.1billion in India.
Of that US$ 13.1 billion roughly US$ 1.0billion is nutraceuticals. “Nutraceuticals can
be broadly categorized as products which are extracted from natural sources…
which supplement the diet to provide nutrition over and above regular food…”
Functional foods hold approximately 54% of that sector. This would mean that the
current Indian functional food market would be valued at US$ 540 million.

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Major Competitors

There are 2 major competitors to Nature Valley, they are:

• Horlicks NutriBar

• RiteBite Energy Bars

Horlicks NutriBar

Horlicks NutriBar is one of the main competitors to Nature Valley in the Indian
market. NutriBar had a larger launch in comparison to Nature Valley and this has
meant that a lot of outlets are stocking it. Also the depth of awareness with NutriBar
is far larger than that of Nature Valley.

Cost wise it is also cheaper to purchase than Nature Valley, this is mainly due to the
fact it is made from cereal, an alternative to wholesome granola, and lower quality
ingredients such as chocolate and milk. However this does seem to be a selling
point for it as that price difference is sometimes why people will purchase it over
Nature Valley.

NutriBar is a nutritional snack available in 3 flavors:

• Choco Crispy

• Cereal ‘n Milk

• Nuts ‘n Raisins

RiteBite Energy Bar

RiteBite is the second competitor for Nature Valley. RiteBite’s main selling point is
the multiple varieties which are suited for every conceivable situation:
• Sugarless Diet bar • Choc Delite Nutrition Bar • MultiVitamin Bar

o Apple • MerryBerry Low Fat Bar • Herbal Nutrition

Cinnamon
• Fruity Choco Nutrition Bar• Work Out Gym Bar
o Choco lite
• Krunch Nutrition Bar
• Smart Nutrition Bar 8
• Women Nutrition Bar

o Honey and Nut

In terms of an advertising campaign RiteBite has had several TV advertisements in
India.

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Findings
For the last few weeks I have visited quite a few modern retail and traditional retail
outlets in various areas of Bangalore. During the first week I was based at
HyperCity, which is a large modern retail outlet. I was conducting some market
research with questionnaires1 to gauge the awareness levels of Nature Valley.
During the week I was there numerous promotions were running, one of which was
Nature Valley related. The promotion was that if you showed your membership
card you would receive a free Crunchy Bar.

So during my market research I found that a roughly 20% of the people saying yes
they had heard of Nature Valley were actually “ex-pats”, however this is not the
most shocking fact I found. The most shocking/interesting thing was that even with
a large banner and free Nature Valley bars people were still saying they had never
heard or seen anything about Nature Valley.

A few weeks after the initial visit I went back to HyperCity to see how Nature Valley
was doing. I was informed that Nature Valley chewy stock had actually been sent to
the outlet so I was looking forward to seeing how it was doing. While looking around
I could not even find one bar. This was worrying until I was told by an employee that
they had sold out of the chewy bars.

During the weeks in the middle I visited several different areas of Bangalore to see
some Traditional outlets, a large proportion of the outlets I visited did not stock
Nature Valley and some had never even heard of it. The fact that there were outlets
not stocking it came as a surprise as there were numerous outlets which stocked
Horlicks NutriBar.

One foreseeable problem was that there were lots of DSMs referring to Nature
Valley as a biscuit or even worse as a chocolate, this would not help if you’re trying
to generate a healthy image for your product. Also I didn’t hear the phrase “Nature
Valley is a snack bar which is 100% Natural” as much as I would have liked.

1
Questionnaire can be found in appendix
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Something in tradition retail that I thought was good was that a few DSMs were
actually getting the Nature Valley jar orders successfully. The jar contains 12 bars of
Nature Valley chewy bar, and I thought as it is at the front of the store it will raise
awareness for the brand very passively. This means with a smallish investment you
can raise awareness in a targeted area.

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