Keggfarms (India)Which Came First, the Kuroiler or the KEGG?

Swathy RaviKant Virinchi HariKrishna

Keggfarms
Founded in 1967 by Vinod Kapur with the vision to build a profitable company that would bring Income & nutrition to Indias poor, rural villagers. It engineered a chicken that adapted to rural Indian conditions to produce twice as much meat and five times more eggs than existing varieties. By 2006, (3 years after Kurolier & KEEGS) the company had cracked less than 3.5% of the poultry HouseHolds

The hiccups
The company revenue in 2005 was Rs.160 million, and the social change Kapur dreamed of was decades away with this growth! Imitations, both Kurloire and KEEGS had a bogus market almost equivalent to size of Keggfarms The Imitations was not only effecting the companys revenue but also exploiting the poor Households living on them The issue is to improve all the above 3 aspects and realize the immense opportunity the Indian market provides

The situation
There is an opportunity with the 30 million households in the interiors of India which raise chicken in their backyard for eggs & meat The urban market which had immense demand and capacity to buy did not have access to the produce due to poor infrastructure connecting the villages to cities It is a case of a hugely untapped market divided to two aspects: providing breeders with chicken variety they need (U R) and providing the urban customers the product (R U)

Market demand
The traditional eggs and meat were preferred over the Broiler and Vencobb chicken and eggs as they offer more taste, health benefits & shelf life NECC (acc to website) sites a growth rate of 5% for eggs and 11.2% for meat consumption The market Tasty egg by KEGGS has generated immense demand at a price double than reg eggs, from 1400 cartons/day(2006) to 2000 cartons/day (2007) still not enough to meet the huge demand of 3.5 million eggs in Delhi alone

The rural breeder

A traditional rural breeder raises 5 to 15 chickens in the backyard for eggs and meat which survive on savaged seeds, insects, scarp Hence this chicken has been Naturally selected to have colorful plumage, agility, disease resistance The eggs have a certain tan on the shell and the meat is tastier then regular 2 major dilemmas the raiser faces are: 1) when to convert the mature birds to meat 2) how many chicks to buy as u cannot know the sex of chicks until its several weeks old

KeggFarms solutions/Products
the Kuroiler, an acronym derived from the words Keggfarms, curry, and broiler. had the following characteristics: It was multicolored for camouflage and because Indian consumers believed that white chickens were intrinsically inferior. It thrived on household waste, scraps, bugs, insects, seeds, vegetation, and pulverized sea shells and therefore did not compete with the poor, rural villagers for expensive grain or require any special feeding. It required no special animal husbandry methods, protection, medicines, or sheltering that could not be cheaply provided by using scrap materials readily available to poor, rural villagers. It was big, aggressive, and wily enough to fend for itself in the open backyard environment. It was genetically resistant to disease.

Advantages
The Kuroiler by comparison with conventional rural chickens, was meatier and more productive. Normal Hens attained 2.5 kg within 12 months, began laying eggs at five to six months of age, and then laid 150200 eggs during their 12 to 16 month egg-laying period, initially more than 20 eggs per month. The Kuroiler rooster reached 4 kg in 12 months and a weight of at least 1 kg at around three months,at which weight it could be sold for meat if the owner chose. Kuroiler meat was vastly more tasty than both conventional backyard chicken meat and industrial supermarket broiler meat.

Kuroiler FFG a meat chicken that simply grew faster these chickens required less feed per kg weight attained. Also, chickens sell at a much higher premium over normal broilers. In 2009, plan is to sell 15.8 million Kuroilers and 11.7 million FFGs. KEGGS Tastier, branded eggs Presently sold in NCR, a huge success Both KuroilerFFG & KEGGS are vastly premium products generate extra margins to the company.

The Innovative supply chain

Channel Member Dealer, 500 Kegg Farm dealers

Description Buy 1 day old chicks and breed for a week, the lot size id 1000 chicks, the delivery dates and lots sizes are pre arranged

Units and cost Around 2000-5000 chicks are purchased at Rs.7.5-8 and sold atRs.9 may even sell to vendors/villagers directly

Mother units, 1500 MUs were set up

The chicks from deals stay hear for 3 weeks, a MU can be setups anywhere based on capablity

MU buys 500-1000 chicks fro Rs.9 and sell to Vendors at Rs.20. additional cost of Rs.6-8 for feeding, mortality etc.

Chicken Vendors 1500 vendors Affiliated-independent groups Group buy a lot of 100 chicks of 10 mem each, use bicycles for Rs.20/chick to reach to Households can also breed chicken themsevles Rural Households around A 5 months old hens starts 700,000 rural households raise laying eggs for almost 12 Kuroilers months about 150 eggs, after which the meat can be sold Typically have 10 mature birds, acquire for Rs.30/chick. Could sells eggs & meat directly in market or to dealer for Rs.2.40/egg and Rs.70/kg of meat

The Problems re-defined

The case isnt about marketing per say, the major setback is the funding required for a budding entrepreneur to do social justice and hence has low margins. Its a Entrepreneur Financial case on the macroscopic level. The immediate problems are the imitations and empowering/educating the rural poor/ reaching out more to them and hence grow accordingly. Which requires identifying the entire market in an organized manner and developing distribution infrastructure (which again requires investment)

What now!
The company immediately needs to separate the two aspects of the business (2 SBUs) 1) high margin businesses (Kuroiler FFG& KEGGS) 2) the rural empowerment businesses (Kuroiler meat) Since Kapur personally does not want to be financially liable for expansion funding the company can liquated and venture investors for its fast moving high margin SBU and try to develop one more variety for commercial purposes like Fast foods& restaurants under KeggFarms name to generate revenue for company, brand and invertors. Manage cash flows form this to the rural SBU to empower the vendors and households.

 The problem of imitation in Kuroiler cannot be dealt with immediately without incurring huge costs as well, company need not worry far too much as the market is just getting acquitted to such a product, generating awareness, creating a brand, empowerment is a long way down, and will take huge time efforts and investments to establish. For this, KeggFarms must strategically make tie-ups with NGOs, NECC, and other Govt agencies to achieve the long term mission of the firm to bring Income & nutrition to Indias poor, rural villagers .

Another commercial way of doing it

Go the Suguna way:
Suguna Poultry is one of the major players in the fragmented poultry industry in India. Suguna is a classic case of commodity branding. Suguna Poultry started its operations in 1984. Suguna came into a difficult market with a difficult idea. Branding chicken! But through heavy investment in the media, Suguna was able to create a mind space for itself . Suguna was promoting itself on quality and tenderness. Suguna has sold live birds and eggs worth Rs 2020 crore in 2007 without owning a single poultry farm. That makes their business model interesting. The company pioneered contract farming in the poultry industry in India. The company source their produce through 12000 contract farmers across different states. Suguna owns the day -old-chickens , feed and feed medicine and the contract farmer is responsible for the day to day management of the farm. The farmer gets the assured income while the company takes care of the risk . In that way Suguna can channel its valuable resources to marketing and distribution.

 Then the company entered into another lucrative market of selling branded egg. Each year India produces around 47 billion eggs worth Rs 10,000 crore. Suguna has four egg brands and sells over one million eggs a month. Suguna launched these value added egg which is fortified with vitamins. This is done by feeding the laying hen with specialized nutrient feed.I am a regular customer of Suguna eggs. The brands are Suguna Pro Suguna Active Suguna Heart Suguna Shakthi Suguna is a commercial brand as such different form Keggframs but is successful in fulfilling the social market in its own way.