Biyani, Kellogg bury differences

MUMBAI: The Future Group and Kellogg India have decided to break their fast, with the cornflake maker's products returning back to the retailer's shelves, after a three month hiatus. Crunching out competition was paramount for both corporates, who have amicably decided to bury the hatchet. Kishore Biyani's Future group and multinational Kellogg India will now work towards growing the breakfast cereal category as a whole, a win-win situation for both.
In November last, the Future group boycotted the breakfast cereal maker after it had reportedly turned down the retailer's demands for higher margins.Though talks were initiated on addressing the margin issue, sources indicated that the duo stuck to their guns, leading to a deadlock. ‘‘We have managed to find common ground,'' said an official from the Future Group, while confirming to TOI that Kellogg's cornflakes were back on its retail shelves. Kellogg India MD Anupam Dutta was unavailable for comment.
Kellogg's is India's largest breakfast cereal maker, with a value share of 65-70% in the Rs 400 crore market. Other players in the breakfast cereal market include, Quaker Oats, Mohan Meakin and Baggry's. Kellogg India is said to be growing at over 20% annually. The wholly-owned subsidiary of the $13 billion Michigan-based Kellogg Company, recently took a price increase of around 1.5% on account of rising input costs.
Coinciding with the impasse between the two heavyweights, the Future group decided to shore up its own private label brand of cornflakes, called ‘Tasty Treat'. The retailer claimed to have sold Rs 50 lakh worth of cornflakes through its 120 outlets during the time the multinational brand was off the shelves. The Future group also ensured a greater thrust on marketing, since their internal research had shown that consumers were open to trying out new brands.
Tussles over margins between modern retailers and manufacturers is not new to India. Earlier, the Future group had boycotted Cadbury India over similar margin issues, which was subsequently settled as well.