At the end of May, FoodBev.com reported that Suntory had entered into a joint venture with Narang Group in India. FoodBev Media group editorial director Bill Bruce talks to Narang Group CEO, Rahul Narang.
Suntory has taken a 51% stake in Narang Connect, to create Suntory Narang. This new joint venture appears to conflict with the existing joint venture with Danone. Please explain the rationale and outline what new opportunities will be brought by the Suntory connection.
The joint venture with Suntory focuses on carbonated soft drinks, as well as ready-to-drink coffee, therefore the scope sets them apart and makes them non-compete. The synergies that both joint ventures sit on is the shared services platform of back office, as well as logistics that they share, thus building economies of scale and cost synergies for both non-competing businesses in the value chain.
For further clarification, the sales/marketing functions are separate in both joint ventures, so that we can have the right priorities in the selling and animation of the brands.
Narang Connect also featured premium international food and drink brands, including Lindt chocolate, illy coffee and Karma Coffee, as well as foodservice coffee machine brands Franke and La Marzocco. Are these activities part of the Suntory joint venture or do they remain separate?
Rahul Narang: These activities are part of the Suntory joint venture and help in building the required scale.
Both the Danone and Suntory joint ventures focus on premium brands. How big is the opportunity for premium beverages in India?
Rahul Narang: The consumer opportunity is approximately 70 million people.
With the Danone joint venture, you offer the imported Evian and Perrier water brands, plus the homegrown Qua range and B’lue. Are other products likely to join this portfolio and what is this joint venture's main consumer focus?
Rahul Narang: We always look for synergistic products to join the portfolio that would help scale in catering to the 70 million consumers in India for the locally manufactured products in our joint venture. Products such as Evian and Perrier sit at the very top of the consumer pyramid and target the approximate 3-5 million subset of consumers.
The Suntory joint venture brings the globally successful Orangina brand. Will other Suntory international brands join the portfolio or will new beverages be created to fulfil specific consumer demand in India?
Rahul Narang: It would be a mix of both. We are, however, looking at the possibility of Suntory’s CC Lemon and Boss coffee joining the portfolio.
It’s been an exciting time for Narang Group in the past 18 months. What’s next?
Rahul Narang: We've built a modern marketing and distribution platform that caters to the top end of the Indian consumer, and we're always looking for opportunities in bringing in creative and innovative products.
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