Consumer Market Entry Makes Synthite Upbeat

When the four-decade-old Synthite Group, the world’s largest producer of value-added spices, decided to enter the consumer market, it took everyone by surprise. It was because Synthite, which has been staying away from the public glare till now as a ‘best-kept secret’, was finally coming out in the open with a B2C brand.

“We are a hugely successful B2B business and, like any traditional B2B business, we never looked at B2C. But now a major transformation is happening in Synthite with the next generation entering the business, necessitating a change in outlook,’’ says Ashok Mani, who is leading  Intergrow Foods and Beverages as its MD and CEO, under which the Kitchen Treasures brand is marketed. Ashok belongs to the third generation, being the son of Synthite Group Finance Director Mani Varghese, who is son-in-law of the Group’s Founder-Chairman C V Jacob.

Kitchen Treasures, which was launched in 2013, caters to the HORECA (hotel, restaurant, catering) segment which continues to be a major part of the business registering close to 15-18 per cent of the turnover. In fact, HORECA customers are more concerned about quality than individual consumer segments. Only players capable of high quality procurement and manufacturing can succeed in this business.

Synthite saw a huge market opportunity in B2C as they could offer greater quality. Till the entry of Synthite, the market had something called ‘export quality’ and ‘domestic quality’,  and the common man could not get to taste best quality seafood, tea or pepper as they were all being exported. Through Kitchen Treasures, Synthite decided to offer ‘export quality’ spices to the domestic market.

“If you intend to build a brand it has to be around a mass market product, says Ashok. ‘‘At Synthite we were ready to build a mass brand finally. And in my view, spice, oil or rice which every household uses was suited for that.’’ When Synthite connected all the dots, spice powder was the result. Suddenly the company was spending huge amounts on advertising and today, many more people know Synthite because of Kitchen Treasures which has demystified and democratised ‘Brand Synthite,’ one of Kerala’s biggest manufacturing success stories.

When Kitchen Treasures was launched, the immediate reaction in business circles was: ‘‘Is Synthite competing with its own customers?’’ In reality, it was not. Synthite’s core business of oleoresins is export-oriented and it goes into seasonings. Kitchen Treasures does spice powders and there is a sea of difference between seasonings and spice powders.

Global leaders in the seasonings business like IFF (International Flavours & Fragrances), Givaudan and Kerry are clients of Synthite. None of them do spice powders except McCormick. Kitchen Treasures products do not compete directly with a buyer of a Synthite product. ‘‘Group company Symega competes directly with Synthite’s customers but this has not been a challenge at all,’’ adds Ashok. ‘‘Synthite continues to work with all its seasonings clients. Symega is close to Rs. 150 crore now and is growing steadily for the past eight years. Clients make purchase based on quality, price and timely delivery, and nothing else,’’ he says.

For Synthite, which is in the oleoresin space, one step upwards in the value-added spice chain is Symega with its seasonings and one step downwards is Kitchen Treasures involved in the spice powder business. This business was started about 10 years ago and now generates a turnover of Rs. 300 crore by catering to seasonings clients. Kitchen Treasures consumer business is about one fourth of that.

So, what is next? ‘‘With our R&D capability and market understanding, we want to build innovative products,’’ informs Ashok.

The Middle East is a large-volume market and overseas sales help offset some of the losses suffered owing to poor margins in the domestic market. A volume turnover of at least 10,000 MT per annum is needed in this business to achieve break even, excluding capex. Success depends on how fast you can reach the volume target through market and product portfolio expansion. Today, Kitchen Treasures is number three in volume and number two in brand value. Of the 65-70 lakh households in Kerala, Kitchen Treasures products are used in about one third. Only about 40 per cent of the shops have the brand and this base needs to be grown further.

‘‘We are in a very exciting phase now as a lot of work around ingredients is happening. Beverages, Ready-to-Cook, Ready-to-Eat, snacks and nutraceuticals are all opportunities for us as we have a firm fix on the ingredients,’’ concludes Ashok who returned to the family business five years ago after working for an year in the US and doing a stint with Deloitte in India, post his dual degree in finance and economics from Dallas, Texas.