Thursday Nov 14, 2024
Thursday Nov 14, 2024
Tuesday, 4 March 2014 00:01 - - {{hitsCtrl.values.hits}}
The industry
Ceylon Grain Elevators (CGE) PLC is a company of Prima Group of Companies. Through subsidiary companies, CGE has diversified from this core activity into commercial farms, poultry processing and retailing of poultry products, import and sale of a wide range of veterinary vaccines, poultry equipment and pet food, and commercial production of ornamental fish feed and shrimp feed.
It was incorporated in Colombo, Sri Lanka in 1982. CGE continued to grow steadily in its primary activities with the ultimate goal of reaching the status of integrated poultry business. The company mission is to harness the business opportunities by expanding into various vertical integration projects. This has led to the diversified portfolio of agriculture, aquaculture and livestock production, thus encouraging national agenda of nutritious protein-rich food to the people of Sri Lanka.
On the other hand, Bairaha Farms PLC is the pioneer quality poultry producer in Sri Lanka. Bairaha Farms PLC and its subsidiary companies are engaged in integrated poultry production including in the processing of poultry and value added production of meat and production of broiler day-old-chicks. Bairaha is the pioneer, large scale, Halal chicken processor. The company mission is to continue to be the pre-eminent supplier of quality animal protein and related products at affordable prices to supplement the nutritional requirement of a growing nation.
The best practice
Building a strong brand has been shown to provide numerous financial rewards to the firms, and has become a top priority for many organisations its interesting how the poultry industry has used these theories in the development of the brand over the last couple of years.
According to the model, building a strong brand involves fours steps 1. Establishing the proper brand identity, that is establishing breadth and depth of brand awareness. 2. Creating the appropriate brand meaning through strong favourable and unique associations and 3. Eliciting positive, accessible brand responses, and forging brand relationships with customers that are characterised by intense, active loyalty. One can argue if the and finally industry uses branding principles but in actually fact it does use branding very strongly with the works of Keller and Kevin Strategic Brand model.
Findings
During the last three years Prima brand value has shown a stronger position at Rs. 1.6 billion, significantly higher than competitor Bairaha registering a Rs. 504 million value. This could be due to the strong branding of Prima flour, which is a top-of-the-mind brand in the flour industry even though not advertised through above-the-line campaigns whilst Prima Kottu Mee is a highly-advertised product across the spectrum. The significant point is that the industry brand value has doubled as at 2010 performance.
Prima and Bairaha profit are more or less similar in 2010 and 2011 even though 2009 profit of Bairaha shows a comparative higher value. But given that profits are published on two timelines of December and March, comparison is difficult.
In terms of sales, Bairaha maintains in the range of two billion whilst Prima powered by Grain Elevators is touching Rs. 10 billion in sales, which is more group driven. Prima is the market leader with market share of 10.3% and Bairaha has a poultry market share of 5.6% according to 2012 market research data. All though price ranges are very similar, the wide network of distribution has spruced up the sales especially in the business-to-business market. The awareness of availability in B2B market seems to be having a positive relationship with brand equity, according to the data.
Bairaha invests stronger on advertising, especially targeting the consumer market which is four times more than Grain Elevators at Rs. 30 million. The intensive marketing campaign for one of the new value-added products, namely marinated chicken, was a first for Sri Lanka where segmented marketing strategy was seen at its best. But the Prima brand focuses mainly on the target customers of B2B market. That is although the advertising cost is much higher in Bairaha, Prima registers a higher brand value which interesting and needs more analysis of the spill over effect.
The top-of-the-mind recall is again less in Prima chicken according to the survey compared to Bairaha, but stronger spending on brands like Kottu Mee has had a direct impact on the Prima brand name and the add stock. The share price of Bairaha reached a higher level with an all-time best of Rs. 525 per share in 2011. Bairaha paid higher dividends to their shareholders, thus making the company very attractive. They have declared Rs. 2, Rs. 3.5 in year 2010 and 2011 respectively; on the other hand Prima declared only a Rs. 1 dividend in 2011, which was an interesting point that needs a more detailed analysis of the overall logic of the decision. There seems to be no direct relationship between share price and brand value, which once again highlights the sentiments-based behaviour seen of investors.
What drives consumer purchase?
If we focus on the factors that are considered by the consumers when purchasing products, several factors emerge: convenience of purchase, 
price, brand, freshness, accuracy of weight, and other factors. Freshness is the most important factor that emerges at almost 40% weightage; 30% of consumers considered the ‘brand’ as the most important factor and 15% of consumers selected a brand based on the price. Around 5% are more concerned about the weight of the chicken. If one considered the purchasing points, the highest occasions was the chicken stalls at around 55%, a number which can be attributed to the concern on the freshness; 15% of customers like to purchase chicken from grocery shops and supermarkets accordingly.
Analysis
It is clear that there is no clear real top-of-the-mind brand when comes to the poultry industry. The positioning in the minds of the consumer can be sharper but lately this is improving with specialised marketing efforts. Prima’s efforts are 
strongest on the physical distribution side but Bairaha spending on marketing is noteworthy. From Bairaha’s point of view they also play a major role being a pure Sri Lankan company and being pioneers in this industry. They have the highest farm capacity which produces a higher volume which is interesting but this first mover advantage is not exploited via the media.
(The thoughts are strictly the personal views of the author and writing is a hobby he pursues. The author acknowledges the research work done by the University of Colombo MBA batch on this sector.)
