labels: marketing - general
Cookies are big businessnews
Venkatachari Jagannathan
29 March 2001

Cookies. They are there in most of the bakery shops, but only as an add-on product. No one really spotted its stand-alone market potential. And it took an Indian, a Chennai-settled American and an Australian company decided to experiment with their idea of stand- alone cookie retail outlets.

And where else they would try out their retail idea. Chennai obviously! Thus came into existence Cookie Man Foods India, in the city’s high profile shopping mall, Spencer's Plaza.

After five months of operations, the promoters are really happy the way their cookies melt in their customers’ mouth and crumble into cash in their till box. Recalls Mr. Chandrasekharan, "Initially, I was a bit sceptic about the project. But the more I thought about it, the more confident I was that the project would succeed."

John Lynch, director of Cookie Man, a Chennai-settled American, had mooted the idea of a cookie retail chain and prodded Mr. Chandrasekharan to start the venture. Incidentally, it was Mr. Lynch who did the initial spadework for the Australian beer giant, Foster's, to set up a production base in India. Mr. Chandrasekharan, part of Pierce Leslie group's project consulting wing, had worked with Mr. Lynch in the Foster's project.

Thus, Cookie Man India Foods India was baked with cash and technical ingredients from a the New Southwales-based company, Australian Cookie Man Pty. Ltd., and couple of non-resident Indians (NRIs) settled in the US.

Agrees Mr. Chandrasekharan, "Cookie Man cannot become another Britannia or vice versa." According to him, the unique selling proposition (USP) of the Cookie Man retail shops is the freshness of cookies and the varieties offered. "All I have to do is to slightly alter the ingredients and add a new topping to get a new variety," says he, revealing some of his ‘trade secrets’. According to him, Cookie Man now offers 30 varieties.

For mass biscuit producers like Britannia and others operating their plants on the concept of ‘economic order quantity’, baking variety of biscuits will not be an economical proposition.

Till date, at least Rs. 1 crore has been invested in Cookie Man. The infrastructure includes a retail outlet and a commissary. Set up at an outlay of Rs. 25 lakh, the commissary can produce one tonne of dough per day, though the current consumption is just 150 kg per day. "The commissary was set up to sync with our expansion plans. The dough is sent to Snowman's cold storage from where retail outlets indent their requirements," adds Mr. Chandrasekharan.

Cookie Man plans to open another two to three of its own retail outlets and expand the chain in other major cities to 40 outlets through a franchising model by 2003. The company is looking at Bangalore, Coimbatore, Kochi, Mumbai and Delhi as its target market.

"As per the plans, franchisees will have to source the dough and lease the baking oven from Cookie Man. This way, our investment will go up to Rs. 4 crore by 2003. A franchisee may have to invest around Rs.10 lakh in the venture," explains Mr. Chandrasekharan.

Continuing on statistics, Mr. Chandrasekharan says one outlet clocks a sale of Rs. 9 lakh per month at Rs. 240 per kg. Cookie Man can get 24 per cent return on investment if it sells anything between 50 and 70 kg per day. According to him, the royalty payment for the Australian partner in exchange for the recipe is yet to be frozen. Cookie Man imports some toppings and caramel-based material.

The Spencer's Plaza outlet, apart from selling cookies, also vends coffee, tea and hot chocolate. The outlet averages a sale of 200 cups per day. Interestingly, with the beverage, a customer gets two cookies free.

Speaking on promotion, he says the company has tied up with Konica. Any one, who does business with Konica worth Rs.1, 200 will get 500 gram Cookie Man cookies free. Mr. Chandrasekharan also distributes free samples in schools and at places where women gather in good numbers.

Besides this, institutional sale is the other area of focus. The company has bagged the mandate from a couple of software companies for supplies. He is also planning to have small but separate Cookie Man counters in other retail chains.

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Cookies are big business