Fool’s gold and cornflakes

By | May 10, 2012

@syamant pointed me to an interesting article on HBR yesterday “Are you targeting a phantom market?” which was at once amusing and yet quite sad in the spectacle that Kellogg’s Cornflakes has made of itself in India. 

How is it possible that Kellogg could envision building a $3 billion business in India, invest $65 million in the first year alone, and end up, 16 years later, with only $70 million in annual revenues? 

From early 1994 to 1996, I had the good fortune to be directly exposed to the first gold rush of multinationals entering India’s emerging market opportunity after liberalization. When the second round of global notice began in the mid noughties, I reminisced on this rush and on Kellogg’s continued errors. In the comments, Chris Gee said back then (January 2006):

To some degree I think we can see the arrogance of these multi-nationals. Almost a mindset that “everyone wants to be like the West anyway. If we offer them the same things WE like, they’ll learn to like it too”.

I remember in college I had a classmate from Portugal. He told us of McDonald’s rapid expansion into Europe during the 80′s and mentioned that the expansion had stalled in Portugal. While this was shocking to McDonald’s executives, it was not shocking to him.

“Chris” he said to me, “McDonald’s is a fast food restaurant. But in Portugal, we like to eat SLOWLY. We sit for hours, enjoy our meal, have coffee and wine and THEN we go back to work! McDonald’s will not be a huge success.” I don’t know if McDonald’s has re-worked the way they approach dining in Portugal in order to position themselves to be more attractive to Portuguese youth but I thought the sentiment expressed was interesting.

Different countries and different cultures have different needs.

Six years later, they’re still quoting Homi Bhabha’s finding on cold milk and cereal in the Indian breakfast job and Kellogg’s is still flailing around. Why is it so hard to acknowledge the need to observe morning habits in Indian households?

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