Agility and innovation helped us stay ahead of Covid-19, says Kellogg’s Mohit Anand

As the country went into a lockdown to curb the spread of Covid-19, breakfast cereals company Kellogg India swiftly adopted a "hyperlocal" strategy to maintain the supply chain. Mohit Anand, Managing Director, Kellogg South Asia, told BusinessLine that the shift to in-home consumption offers significant opportunities for the packaged foods industry. Excerpts:

The nationwide lockdown brought businesses, including ours, to a standstill. Coping with the new norms, we worked closely with the government at national, State, and local levels and within 72 hours of receiving local permissions, both our plants got operational. Since then, we have made steady progress in terms of operations at our plants.

Our focus since the beginning of this exercise, and even before the lockdown, has been to ensure that our people remain safe and come to the plant locations without any risk. In line with our global standards, Kellogg’s KARE programme was introduced to assure our people and their families that safety was upfront and never up for debate.

Some of the measures we have taken include nutrition-focused vitamin-rich diet, hardship allowance, 100 per cent health insurance covers for our employees. which has also been extended beyond to our partners such as distributors, two-hourly sanitation of plants and two-metre social distancing protocols in plants, among others. As the government eases the lockdown, industries should be allowed to lift the cap on manpower.

We put a specialised team together with representatives from our sales, supply chain, legal, finance, and regulatory functions. With help from government agencies such as ‘Invest India’, our team adopted a hyper-local approach across the country to restore our operations and the supply chain. As a result, today, we have all our plants operational, 100 per cent of our warehouses are back and more than 90 per cent of distributors are billing – despite the significant challenges on the ground, ranging from restrictions on movement, people, and labour availability. One current focus area for us is to increase the service levels across channels.

On the retailer front, 30 per cent of Modern Trade stores are still closed, consumers have moved to e-Commerce, the local Kirana has seen a resurgence with its entrepreneurial approach, and new direct-to-home channels have emerged in strength within weeks. Our route to market approach has been that of agility and innovation. The teams have worked on innovative solutions to ensure that the focus is where the shoppers are. This continues to be the area of focus, given the bottlenecks at the local levels. Reverse logistics, direct to store deliveries, almost 200 calls made by our salespeople every day to retailers/distributors, and increased focus on the local kirana stores, which saw an increase in demand during this time, are some measures taken to ensure that our products are available to our consumers at any point of time. B2C has seen some out-of-the-box solutions come up with partnerships with players such as Swiggy and Zomato.

We have seen consumers’ behaviour and consumption patterns drastically evolve during this period. Almost ₹4.5 lakh crore worth of ‘out of home’ consumption has moved to in-home in the food sector. This presents a significant opportunity for industries such as packaged foods. Moreover, the consideration for healthy and nutritious food amongst consumers is at an all-time high. We have seen a surge in demand for our cereals during this time. Breakfast cereals are becoming a staple as it is the simplest way to get a nutritious and convenient breakfast in just one bowl. And finally, affordability and value will become increasingly important. Brands will have to work doubly hard to remain relevant and indispensable as consumers will make hard choices.

The next few months will see an enhanced focus on innovations that deliver nutrition, convenience and value.

Our cost management strategy has rested mainly on three pillars. Firstly, we worked hard at taking a decisive look at all our discretionary costs and pruning everything that was not critical to the business and the organisation at this stage. Secondly, we defined robust controls that helped us manage costs better and we mapped out scenarios under that down to a week-on-week basis. This allowed us to scrutinise cash inflows and outflows with an eagle eye. Thirdly, we also came up with clear strategic principles in managing credit rather than dealing with things on an ad-hoc basis. We have ensuredthat all employees receive their salaries and annual increments on time. In fact, we also announced our annual promotions in April 2020.

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