Reflection point: Assumptions and failures: Kellogg’s Cornflakes in India

5 min readMar 13, 2019

Introduction and bit of history

Kellogg’s is a US based multinational company manufacturing food products like cereal and other convenience foods like biscuits, crackers, toaster pastries etc. It is a super brand and dominates the cereal and snack markets in the US and UK.

In 1980’s Kellogg’s experienced a stupendous growth and the company had reached its all time peak with 20 plants in 18 countries world wide, with yearly sales reaching above US $6 billion. However in the 1990’s Kellogg’s experienced market stagnation and a little room for growth. That was when they decided to expand, look beyond the traditional markets of US and UK and explore the untapped territory of India.

Entering the Indian Market

In 1994, in order to experience growth in sales, Kellogg’s brand entered the Indian market with its prime product that was very popular in the US and UK: Kellogg’s cornflakes. People of India were not accustomed to eating cereal for their breakfast and so entering a potentially new market was filled with lot of opportunities. Entering a country with a population of 942.2 million with 250 million people belonging to the middle class category, Kellogg’s must have done solid research on the Indian market, the Indian people, their pattern of living, their mindset, their spending patterns etc. and must have created a solid plan (and plan B) on entering, competing and winning against the existing food brands and the people must have loved it, right?

No, that was not the case.

The product was not at all well received by the people in India. Let us look into some of the reasons, why this must have been the case.

Here I attempt to list down the faulty assumptions that lead to the failure of Kellogg’s cornflakes in India.

Clumsy Cultural Homework

Kellogg’s was blinded by figures. Given the fact that a country with almost 1 billion population with 250 million middle class people, did not eat cereal for their breakfast or afternoon snacks, might have led Kellogg’s to assume that they had a vast and open market they could conquer.

They did not conduct thorough research about the cultural complexity that India had to offer.

Diversity

With 22 different languages, six major religions spread across 29 states, the amount of diversity is such that you cannot imagine.

Globalization may be an increasing trend, but regional identities, customs and tastes are as distinct as ever

.Focusing only on the diversity of the food and eating habits, each state have their own regular breakfast, lunch, snacks and dinner items.

Variety

Along with diversity, there is a huge variety in the food items. For example, if in Southern India, the basic breakfast items constitute of Dosa, Idli, Upma etc., there are at least 30 varieties of Dosa that are available. Similarly in Northern India, there are at least 10 different types of Parathas.

Lifestyle

In India, there are many options of getting regular breakfast. One option is that the woman of the household prepares fresh breakfast every morning. Second is that there is a cook who comes everyday and prepares the breakfast, lunch and dinner. Third is that there are several roadside, affordable eateries that offer traditional breakfast.

Kellogg’s tried to change the breakfast habits of Indians which in itself is a herculean task. But on top of that, they tried to do so by claiming their products to be superior to regular Indian breakfast items like idli, dosa, paratha etc. Even though they might be right in claiming so, the consumers, especially the homemakers who made breakfast for the family, were not too pleased to be accused of providing unhealthy food to their family.

Basic Liking

Indians like hot breakfast. Regarding milk, it is boiled and preferred to be taken either hot or warm. Given these preferences, mixing cereal into the milk would result in a very soggy texture.

Conclusion: Only those companies which are in tune with India’s many cultural complexities can stand a chance.

Local Competitors

Don’t underestimate local competitors. Although Indian brands were worried they would struggle against a new wave of foreign competition following the market opening of 1991, they were wrong. ‘Multinational corporations must not start with the assumption that India is a barren field,’ said C K Prahalad, business professor at the University of Michigan, in a Business Week article. ‘The trick is not to be too big.

Purchasing power of the Indian middle class

The product proved to be very expensive for the Indian consumers. It was initially bought as a novelty product through one off purchases. Till today, only the affluent class may use this product but not the regular middle class.

A 500-gram box of Corn Flakes cost a third more than its nearest competitor. However, Kellogg’s remained unwilling to bow to price pressure and decided to launch other products in India, without doing any further research of the market. Recollect, India has a great people not a great wallet.

“Indianize” the Kellogg’s products

Kellogg’s did not customize their offerings for the Indian market and this really created a disconnect between their products and the Indian consumers which simply could not be bridged. Simply lifting their products from US and offering them “as is” was a huge mistake which Kellogg’s would always be associated with when branding failures are thought of.

Reflection point: Assumptions and failures: Kellogg’s Cornflakes in India

Introduction and bit of history

Entering the Indian Market

Sources

Written by Aditi Oza