“Trust is the best tool for marketing and if you want your customers to trust you, start trusting them,” said PC Musthafa, Global CEO, iD Fresh. He was delivering the 43rd Ayaz Peerbhoy lecture on January 31, 2023 in Bengaluru.
Musthafa spoke about his journey from a small village in Kerala as a daily wage worker to building a food products company worth Rs 3,000 core and a revenue over Rs 500 crore.
After graduating, Musthafa worked with software companies in India and abroad and after returning he realised his true passion -Entrepreneurship.
“I pursued an MBA from IIM-Bangalore and during the MBA days, I used to discuss business ideas with cousins who were running a small time Kirana stores in Indiranagar, Bangalore. One business idea that popped up during the conversation was about idli, dosa batter. There was a supplier for the batter who supplied the products in a plain pouch and a rubber band on the top. This batter had all sorts of quality, hygiene, and service issues. My cousins tried to fix the issue which failed and that’s when we decided to fix it ourselves. With a capital of Rs 50,000 we bought one grinder, mixer, weighing scale, and a second-hand two-wheeler.”
It took them 9 months to sell 100 packets and get 20 customers.
“That’s the past, fast forward today iD Fresh is a few thousand crore brand spread across 6 countries in around 40,000 outlets, and 2500 employees mostly from rural India and most importantly we feed world’s best idli and dosa to more than 3 million people,” Musthafa added.
He further spoke about how he identified the market opportunity and how a brand has been built on a commodity called idli and dosa batter and how the brand scaled.
Role of Innovation
“At iD fresh we focused on the most important aspect for any business- innovation. We focused on 6 aspects of innovation. First one was business model innovation- as the whole world was busy doing innovation on adding chemicals in food for product life extension. We fought a war against chemicals and preservatives. We keep our products hundred percent natural. Our philosophy is that if our grandmothers cannot identify an ingredient in a packaging- then it’s not food. For this to happen we have to build our own direct retail distribution with the help of technology. We developed a zero-inventory business model with the help of technology and learnt how to sell fresh products and to make money out of it,” he said.
He then spoke about the manufacturing innovation done by the brand.
“If you want to make the best idli, you need the best batter and for that you need to follow the traditional vet grinding, stone grinding system. If you look at the grinders available in the market, it grinds one and a half kgs of dhal per hour. One can imagine the number of grinders and people to make it happen which is followed by hygiene issues.”
Hence, it was very important for the brand to focus on backend innovation.
“Most of the food processing machinery is innovated in Germany, we bring it to Coimbatore and do reverse engineering and make idli and dosa batter. We visited Germany, identified a mustard paste making machine, bought it to India, customised it and started making the batter out of it. The same set of grinders now grinds 5000 kgs of batter per hour.”
Musthafa then emphasised on the importance of product innovation.
He further spoke about the marketing initiatives done by the brand. He delved into the campaigns launched by the brand in different phases.
“For 10 years of iD, we had zero marketing spends. During 2014, when Azim Premji invested in the brand, that’s when we decided to have a proper system in place and ended by going for ERP solutions. When we moved to ERP, we were told that there were some General Ledger (GL) missing in it- marketing expenses were missing. But then we were able to get a few things right from the beginning without spending much money.”he said.
He spoke about the packaging design revamp campaign saluting the army heroes.
“We moved the product pack to tricolour; it attracted people’s attention. But the best part was stores started keeping our packs to decorate our stores. This type of experiment with zero money investment worked for the brand.”
Meet your Neighbour campaign is another initiative by iD Fresh.
“We request our customers to invite their neighbours for breakfast. We will deliver iD products for free and you might think it is a nonsense initiative, but then it is free sampling done for a good cost. At the end of the day, this helped me to build the brand and reach out to more consumers.”
Musthafa further spoke about the smear campaign propagated against the brand where a Twitter user alleged that iD uses ‘Cow bones and calf rennet’ to make the idli and dosa batter.
“People who were propagating that never knew that it was a very expensive thing to add in the batter. Every crisis is an opportunity and we used this as an opportunity. We invited customers to our factory. We said we have nothing to hide and live streamed the factory procedures and the manufacturing processes. The response was amazing. The message reached 280 million people in one week. It helped us not only to fight the hate campaign, it helped us come out clean and stay ahead of competition,” he said.
Musthafa mentioned the print ad innovation which demonstrated the art of making authentic filter coffee, Know Your Coconut campaign, their product innovation of Vada batter, and more.
iD Trust shop campaign
“For any brand, earning customer trust is very important, it is more important for the fresh food brands. Our biggest challenge was to earn customers’ trust, we tried many but failed. Finally, we understood that the best way to make someone trust you is to trust them. During covid period we came up with the campaign called, ‘trust shop’. During the first phase of lockdown, we started getting panic calls from customers to deliver the products directly to home, unfortunately we didn’t have a system in place. We didn’t want to risk our employee’s health. We came with a campaign called ‘Trust shop’. We set up 600 unmanned shops across apartment complexes within a span of one month. There was no camera, salesperson or technology, there was no one watching except Almighty God. It was purely based on trust. Customers were expected to come down, take the product, and drop the money in the money box kept next to it. This got us a healthy mileage. “
According to the CEO, the initiative started giving him better revenue per store than the retail stores and most importantly, better profitability when compared to retail stores.
During the one month duration of the campaign, the brand got 97 percent collection on MRP on day one.
“My best learning during the pandemic period was ‘be the change you wish to see in this world,” he said.
“My learning says that innovation is the best way to build a strong brand and the most important ingredient for innovation is common sense. Innovation is born when we look around, identify customer problems and solve it for them using common sense,” Musthafa added.
On the product front, iD will be launching Chutney varieties in the month of March. The category consists of Coconut, Coriander, and Peanut Chutneys he explained.
Speaking about the IPO plans, Musthafa said,” We are a company with Rs 620 crore run rate, with a close to 10 pc EBITDA. The plan will be to do a thousand crore in two years and with 18-20 pc EBITDA do the IPO.”
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