Kelloggs Case Study In India

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"Our only rivals are traditional Indian foods like idlis and vadas."

- Denis Avronsart, Managing Director, Kellogg India.

Kellogg's Indian Experience: A Failed Launch

In April 1995, Kellogg India Ltd. (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai. There was a 25% decline in countrywide sales since March1995, the month Kellogg products had been made available nationally.

Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek, Michigan. Kellogg Company was the world's leading producer of cereals and convenience foods, including cookies, crackers, cereal bars, frozen waffles, meat alternatives, piecrusts, and ice cream cones. Founded in 1906, Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries. The company's turnover in 1999-00 was $ 7 billion. Kellogg Company had set up its 30th manufacturing facility in India, with a total investment of $ 30 million. The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s.

Launched in September 1994, Kellogg's initial offerings in India included cornflakes, wheat flakes and Basmati rice flakes. Despite offering good quality products and being supported by the technical, managerial and financial resources of its parent, Kellogg's products failed in the Indian market. Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace. Meanwhile, negative media coverage regarding the products increased, as more and more consumers were reportedly rejecting the taste. There were complaints that the products were not available in many cities. According to analysts, out of every 100 packets sold, only two were being bought by regular customers; with the rest 98 being first-time buyers. Converting these experimenters into regular buyers had become a major problem for the company.

By September, 1995, sales had virtually stagnated. Marketing experts pointed out various mistakes that Kellogg had committed and it was being increasingly felt that the company would find it extremely difficult to sustain itself in the Indian market.

The Mistakes

Kellogg realized that it was going to be tough to get the Indian consumers to accept its products. Kellogg banked heavily on the quality of its crispy flakes. But pouring hot milk on the flakes made them soggy. Indians always boiled their milk unlike in the West and consumed it warm or lukewarm. They also liked to add sugar to their milk. or lukewarm.

They also liked to add sugar to their milk. When Kellogg flakes were put in hot milk, they became soggy and did not taste good. If one tried having it with cold milk, it was not sweet enough because the sugar did not dissolve easily in cold milk. The rice and wheat versions did not do well. In fact, some consumers even referred to the rice flakes as rice corn flakes.

In early 1996, defending the company's products, Managing Director Avronsart said, "True, some people will not like the way it tastes in hot milk. And not all consumers will want to have it with cold milk. But over a period of time, we expect consumer habits to change. Kellogg is a past master at the art, having fought - and won - against croissant-and-coffee in France, biscuits in Italy and noodles in Korea."

A typical, average middle-class Indian family did not have breakfast on a regular basis like their Western counterparts. Those who did have breakfast, consumed milk, biscuits, bread, butter, jam or local food preparations like idlis, parathas etc. According to analysts, a major reason for Kellogg's failure was the fact that the taste of its products did not suit Indian breakfast habits. Kellogg sources were however quick to assert that the company was not trying to change these habits; the idea was only to launch its products on the health platform and make consumers see the benefit of this healthier alternative.

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Kellogg’s Gluten Free in India Case

Case Study I reviewed in Winter 2015.

Preferences of Indian Consumers

When Kellogg’s decided to come to India, they began with an aggressive ad campaign to get the word out, this did not work and they did not know why. They began to collect data and reviewed the results. From the data Kellogg’s realized that the average Indian family did not eat breakfast. Also they liked to heat up their milk before mixing it with cereal, which is different than eating it cold and it makes the cereal taste bad. Price was a big thing for the Indian consumers as well. When Kellogg’s decided to try and market their cereal as a health product, Indians began to think of it as a premium, upper-class product.

As of 2013, however, the Indian consumer was beginning to evolve. With the youngest population in the world, the young generation was looking towards the future and was looking forward to globalization. The young people knew they would be making more money soon, thanks to India’s booming economy, and they were beginning to move towards more of a Western-style spending pattern. They knew that celiac disease was spreading and prevalent so they were looking to start spending their money while they were young on products that promoted a healthier lifestyle.

Product/Branding/Product positioning

Kellogg’s thought of a new plan to counteract the Indian’s preferences and came out with Chocos and Frosties. Both of these innovative, yummy snacks caught on immediately, as the Indian population saw them as tasty treats that were cheap and good for eating at any time. Then, in 1998, Kellogg’s expanded its product line to include the Mazza series of cereals. These cereals were made in 3 different Indian flavors and were packed in pouches which made them cheap and easy to use on the go. These special snacks helped Kellogg’s to reposition itself as a healthy, but still tasty and affordable, brand. Kellogg’s came out with different packaging sizes to better appeal to the Indian consumer and so they’d want to use their purchasing power. Kellogg’s tried to expand further with an oats line but struggled at first, but they stuck with it and now they own 31% of the market.


To further save costs, Kellogg’s established storage hubs in all the key areas they were trying to sell to. They hired about 18 different carrying and forwarding agents who could better serve the population through 200 distribution centers across India.


The Indian population placed a high premium on price, so Kellogg’s knew that had to focus on reducing their costs to keep them down. So they began by localizing their packaging and raw materials. They also downgraded from the pretty packaging to just a generic kind to try and save the consumers a little more.


Kellogg’s knew that price sensitivity and awareness were the two main challenges they had to face right away. That is why they unveiled the K-pak portable pouches in a hot spot first and then rolled them out to the entire country. The range of media Kellogg’s used was very diverse. It included the press, posters, radio, television, billboards, and the internet. Their television commercials were their most successful thanks to many Indian actresses that helped to model as spokespeople for the up-and-coming cereal brand. They came up with many catchy slogans to try and get Kellogg’s to stick in people’s minds, but what really helped was when they started listing the nutritional facts and benefits on the packages, that helped to let people know it wasn’t just another sweet treat.

Kellogg’s Adaption

Kellogg’s has taken the approach to adapt their normal cereal brand into assorted snacks that are within their bounds but changed just enough to fit the market. As the market developed they realized that since Indians don’t eat breakfast they had to change the way they marketed their cereal and change the flavor a little. Since India’s food industry was on the rise, everyone was trying to get in on the action since their population is so high. These competitive factors forced Kellogg’s to adapt to strengthen their market position. They realized through their first trial run that there were many market factors to consider. Through this Kellogg’s was able to realize that there was no need for their regular cereal but that there was room for potential growth if they adapted it to better fit India’s needs. They wanted to buy products that were innovative and could satisfy their individual needs.

Another way to look why Kellogg’s is adapting is looking at the product-communications strategy table. Looking through the table we notice that the product need/function is not satisfied. Then we realize that the conditions of the product also were changed, which leads into the ability for consumers to product. After making it through all of those it is clear that they needed to adapt and they made the correct move.

Five Factors

When Kellogg’s decided to evaluate new product ideas, there were five main factors they looked at: societal, business risk, demand analysis, market acceptance, and competitive. The societal factor looked at the safety hazards and the overall benefit to the Indian society. Seeing as there is anywhere from 6 to 8 million Indians with celiac disease and the number is growing, that it is a health issue that needs to be addressed. Also, going along with that, changing to gluten-free products could end up saving lives, which would be a gigantic benefit to the Indian society. Next, Kellogg’s looked to the risk factors. They had done the basic market research that any company coming had, that India was booming and had a large population to work with, but they also knew that India had a need for their particular niche and that adding gluten-free items could boost their sales. They did release a study that pointed out that there were some barriers to managing a gluten-free diet in India, but Kellogg’s saw this as an opportunity to step up and take care of these problems to open up the market. Kellogg’s didn’t exactly know the development costs but they knew there would be some significant cost and time involved if they were to diversify their product lines but there also is great potential for buyers since India was beginning to go through a health phase and that more and more Indians were looking to spend extra on a healthy alternative.

Demand analysis and market acceptance really go hand-in-hand. India is famous for its massive population and its ridiculously low median age. A study by McKinsey Global Institute showed that not only is there a lot of Indians, that there are much more willing to spend their money now, and in the future. The increased prosperity that stemmed from the globalization that has been erupting in India has led to a changing lifestyle that has made the young generation really health conscious. The expected length of the cycle is obviously pretty good considering that most of the people are only in their twenties who are beginning to buy, which means there could be many potential life-long customers. Also according to statistics the Indian nutrition market is growing at a CAGR of 12%.

Kellogg’s is not the first brand to bring in gluten-free products, but they have made some moves with their adaptations so far. They are leading the breakfast cereal market at this point there was only really three main competitors in the gluten-free market: Savoureux Foods, Kalpana Udyog, and Sai Food Products India. These companies have been around a little bit longer than Kellogg’s and they seem to be doing well, but they do not have the Kellogg’s brand identity. Kellogg’s has already established itself in the cereal market, which was also saturated in the beginning and there were some powerhouses that they beat out. So it is not crazy to think that they will get beat out, they may not have an overwhelming majority, but as of right now, they are no reasons to not think they don’t have a solid opportunity for growth.


Assuming that Kellogg’s is going to launch Gluten-Free Corn Flakes in India, I would recommend that they do it as an extension of its current product line because of the tight competition. Kellogg’s has already gotten its foot in the door with its adaptations made in previous years to its cereal. The Kellogg’s brand has already been accepted in India in the breakfast food sector, so they should not try to deviate from their first strategy. Kellogg’s is a breakfast brand, that is what it has been about for decades, it has already established itself as such in the India market, and the Indian population has accepted them, so there is no reason to try and break into another section of the market.

When looking back at the figures, India’s consumer expenditure was expected to grow by 13% the next three years and that the cereal market would play a large part in the growth. Therefore, since India was shifting towards more packaged foods and less of the home-cooked breakfasts, Kellogg‘s had found its place in the market. They weaved seamlessly into the Indian market because they did the correct research and realized that their products were generally what the target audience wanted; they could just tweak a few things to make them stand out more. These tactics worked because they beat out the other top six breakfast companies that were already in India and have taken over the top spot in the cereal sector.

Looking further into the market segmentation, I feel that for many reasons Kellogg’s should launch the Gluten-Free Corn Flakes in the breakfast cereal market. They already have full command of it and it would add an extra boost to put them above their competitors. As well as, they would have a much larger market to sell to then just the 6 million people that have celiac disease, and that number is going down. There are also many solid competitors in the straight gluten-free market, so there is not quite a big enough niche for Kellogg’s to waste their time trying to fit into. Also many Indians are turning toward wanting to be healthier, the entire younger generation is trending towards wanting to eat and feel healthier so there is no need for Kellogg’s to shrink their customer waste.


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