Published in Jan-Feb 2012
MARYLOU ANDREW: How long have you been with National Foods (NF)?
ADNAN MALIK: Since 2008. After graduating from the Institute of Business Administration (IBA) in 2003, I joined PSO and worked in corporate sales for three years. After that I worked with BP and Continental Biscuits and gained quite a lot of exposure in terms of working on international brands. I then moved to Dubai and worked at IFFCO for one and a half years; when I moved back to Karachi, I joined National Foods and this has been my longest stint in any company so far. It is also quite a challenging job because I work for an umbrella brand with 13 categories from spices to desserts and we have to be very relevant to each segment while staying true to the umbrella brand.
MLA: What was NF like when you joined in 2008, and how has it changed since?
AM: By 2008, consumer lifestyles had evolved dramatically but the company had not kept pace with this change so we were behind in terms of being relevant to the consumer. To bring ourselves up to date, we undertook a complete repackaging and rebranding exercise in 2008, and carried it out over 250 SKUs in nine months. We also revamped our corporate identity. The change certainly brought about results.
We were in second place in the Brand Elections in 2010 (second only to Lux) but we were number one in terms of the most preferred brand by women and most preferred in Punjab. If you look at it in terms of revenue, we have been growing 20% every year. We started off with a base of Rs 6.5 billion and we are now a nine billion rupee company. Growth has been rapid but it would not have been possible without keeping our finger on the pulse of current consumer trends. Before this, if you asked people what NF stood for, they would say spices, now they will say Fruitily, the desserts range, etc.
#### “We started off with a base of Rs 6.5 billion and we are now a nine billion rupee company”
MLA: To what extent has your desserts range grown, particularly in the context of the competition?
AM: I think our desserts range is a marketing case study. In fact we presented it at the IBA recently. Before we launched our new packaging, we had a two percent market share whereas Rafhan – a Unilever brand with a brand investment fives times higher than ours – had 60% market share. Our big challenge was (and continues to be) how to support 13 categories within a limited budget. We relaunched the packaging and did only one campaign where we spent only two million rupees and the desserts range went from two to 12% market share in 18 months. Then Rafhan relaunched and brought in new products. We think it is good to challenge the market leader to realise our own potential.
MLA: NF did extremely well in 2011 with profits soaring. Is this kind of growth sustainable?
AM: It is very difficult to deliver profits at this time because the prices of raw materials are skyrocketing thanks to the floods. However, our procurement department did their job well, so profits have not decreased. Other than that, in spite of reducing marketing spend last year, our top line growth has been great. Now, is it sustainable? Yes, I think so, provided that we do not cut down on investing in brands. I was watching CNN the other day and Indra Nooyi (Chairman & CEO, PepsiCo) was asked why her company was going bonkers in terms of investment when the economy was going down. She smartly replied that when the economy is down, everything is cheap – property, labour, etc. – so companies who realise this and invest in these times, will gain a lot more. In addition to this there is the phenomenon of ROI, a lot of companies have fallen into this trap where they try to justify their spend on brands by making it directly proportional to sales. The most important element in delivering profitability is to remain true to the consumer and develop product stories and propositions without cutting your connection with them, regardless of the medium you use. If you look at the history of NF, there has never been a year without profit and this year has been record breaking in that respect.
MLA: How has your retail strategy evolved particularly with the explosion in modern trade?
AM: Modern trade is a relatively new chapter for us because the dynamics are very different from general trade or kiryana. We are in the process of learning and I believe we are the champions in general trade because we cover approximately 80,000 outlets. We are in the infancy stage as far as getting value from modern trade is concerned but our business remains relatively focused towards urban areas. There is a lot of potential in the rural areas but the question is do we cover the entire urban spread first before venturing into rural? The evolving retail space is one of our biggest challenges and we are putting in a lot of effort into getting it right. Currently, modern trade accounts for five to six percent of sales.
MLA: As a company, your vision is to become a Rs 50 billion enterprise by 2020. What will it take to achieve this?
AM: I think we have to diversify, which means we have to get into categories which are true to the food sector and have scale. Now if you go into those categories, the barriers to entry are high because of the cost of investment. We understand that with the current business setup, we will not be able to achieve our vision. We have a strategic plan in place and we will also be expanding our export business.
#### As National Foods works towards its vision of becoming a Rs 50 billion company by 2020, Marylou Andrew talks to Adnan Malik, Head of Marketing, National Foods about what it will take to achieve this vision and the company’s plans for 2012.
MLA: What categories is NF most likely to get into?
AM: Categories which have scale, where barriers to entry are average and which are not ‘me-too’. We want our proposition to stand out. We want to be in categories where there is depth in terms of expansion, snacks could be one area and we can generate a lot of leverage from powdered drinks.
MLA:2011 saw NF doing a branded cooking show and publish a cookbook for the first time. Why?
AM: There are so many ways to reach consumers and all these ways are increasingly cluttered. Everyone is doing the same kind of campaign. How do you get the message across to consumers and spend less? We also wanted to penetrate the youth market and doing an on-air campaign would have meant a lot of spillover.
So we did the Recipe Princess cooking show instead, going to colleges and future consumers and giving them a hands-on experience. The cookbook (Rivayaton key rang) took a long time because we wanted to differentiate it from Dalda and Seasons. The difference is that we don’t just talk about what you can make with a masala mix; there is also lots of fusion. The book is closely connected to our overall positioning on the food culture of Pakistan.
MLA: A lot of companies are beginning to take social media quite seriously. What are NFs’ plans in that respect?
AM: Creating relevant content is the biggest challenge on social media; you can’t just copy-paste something you have done on another media. Social media is part of your integrated marketing communications and where we lag behind is the availability of software for integrating social media with traditional media. As far as National Foods is concerned, we have a YouTube and Facebook page and a lot of what we do is just a refresher of what we have already done.
Of course, I would love to do something different, and not just limited to social media but digital as a whole, including cell phones and digital outdoor but we lag in terms of infrastructure. However, just because we don’t have the infrastructure doesn’t mean we have no responsibility. The cost of doing something different would be much higher but the first mover advantage would be great.